Monday, March 14, 2005

Trustees' Report

I know I keep banging on this, but it really is something we need to keep an eye on. Sometime this month, presumably, the SSA Trustees will release their annual report on the health and wealth of the trust fund. Included in that will be a "high," "medium," and "low" cost projects about the solvency of the system, each with different economic and demographic assumptions. The "medium" cost one will be adapted as the most accepted number for use in the media.

Last week Krugman wrote:

Many people involved in the debate over Social Security's future worry that the 2005 trustees' report will be slanted in favor of privatization.

I don't expect to see books that are literally cooked: Stephen Goss, the agency's chief actuary, has an excellent reputation. But it's not out of the question. After all, in 2003 the chief actuary of Social Security's sister agency, which oversees Medicare, was told that he would be fired if he gave Congress accurate information about the cost of the Bush Medicare bill.

Even if the numbers aren't fabricated, however, it's a good bet that they will be presented in a way intended to make Social Security's financial outlook seem much bleaker than it really is.

From what I understand he's underestimating the potential for tricksyness. Goss may have an excellent reputation, but there is a lot of wiggle room for the choices of projected numbers to throw into the model. And, most importantly - the Trustees themselves, a bunch of Bush cabinet officials and other assorted hacks, will be the ones choosing the final numbers.

The real story won't be the bumper sticker results, but what sort of massaging was implemented to get there. There will be tremendous political pressure to make the report look "bad," even though given that last year's productivity increase (a key variable) greatly exceeded what was projected for last year's report.