Social Security Doom Mongering

SOCIAL SECURITY DOOM MONGERING….As we all know ? because President Bush told us yesterday ? Social Security “is headed towards bankruptcy down the road.” Specifically, according the Social Security trustees, the point at which full benefits can no longer be paid out comes 38 years from now in the year 2042. This prediction is based on a complex model that takes into account future economic performance, population growth, demographic changes, and so forth.

But anyone who’s been listening to the Social Security doom mongers for a while knows that there’s a problem with this prediction ? and since a picture is worth a thousand words I commissioned the chart on the right from the crack Political Animal graphics team. It shows the last decade’s worth of Social Security predictions, and it turns out that back in 1994 the Social Security trustees were predicting that doomsday was….

35 years away.

That’s right: even though ten years have passed, doomsday is now farther away than it was in 1994. As every year goes by, the doomsday schedule moves out another year too. Why? Because the doomsday predictions are extremely sensitive to the economic assumptions behind them, and if those assumptions are off by a little bit, so are the predictions.

In other words, Social Security doom mongering has a pretty checkered past ? which means that perhaps the current doom mongering isn’t quite on target either. In fact, maybe Social Security is in perfectly good shape and doesn’t need “rescuing.” The most prudent course might be to wait a few years and find out.