Social Security's Smoking Gun
The Social Security Administration Actuaries Smoking Gun
By Kenneth B. Jackson Jr.
Any one who has heard the George Walker Bush Social Security Administration reform stump speech has heard the line " un-funded liability computed over an infinite time horizon". This scare tactic has been deployed and used to convince the masses of seniors that the projected Social Security Administration Trust short fall is an intractable and un solvable problem which is false. The actuaries at the Social Security Administration have tested a number of possible minor tweaks to the Social Security system that will close the projected short fall of the intermediate model.
Note the three curves ( I , II , III ) curve I is the " low cost " model live birth rate much grater than 3 million per year, job growth rate grater than 133,000 per month ( jobs filled ), GDP stays above 2.5 % per year through out the 75 year valuation period. This is proclaimed as the best of all worlds.
Curve II is the infamous "Intermediate" model calls for a live birth rate to flatten out and decline far below 3 million / year, job growth rate well below 100,000 per month, and a GDP that drops below 2.4% in 2010 and keeps on dropping to 1.8% and stays there for 10 years????? This is a depression. Not very likely to happen.
The high cost model ( III ) is insane ( ThatÂ’s the end of the world ).
There are two charts that directly refute the RNC / Cato/Heritage Alliances argument for the emanate destruction of the Social Security Administration Trust. The first is the one chart group that shows the true character of the projected Social Security Administration Trust Fund short fall
If one notes the 2034 date as an inflection in the negative cash flows from increasing in the negative direction to decreasing ( getting smaller) and smaller. This curve is a representation of the death of the BOOMERS. Nobody lives for ever and any problem caused by the BOOMERS will not last for ever.
As can be seen a 1.8% increase in the FICA tax will result in a new family of "wage" curves that stop short of the "zero" ( Social Security Administration trust fund balance 0 ) line and as the BOOMERS die off the Social Security Administration Trust Fund balance will start rising again.
Now this next chart from the CBO is in the ' what were they doing last year " category. For the last year every body has been talking about 2041 as the year of Social Security Administration Trust exhaustion now that seams to have changed to 2053.
What was George Walker Bush talking about???
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Kenneth B. jackson Jr. |