NEW SOCIAL SECURITY REPORT….The eagerly anticipated 2005 Social Security Trustees Report is out, and guess what? The system is going broke faster than we thought. We’re do-o-o-o-med! Max is at the press conference and has the skinny.

Yeah, I know: big surprise from this crowd, right? But why are things allegedly getting worse? The report lists several reasons here, but the biggest by far is “Economic data and assumptions.” Fine. But which economic assumptions?

It’s hard to say. If you compare the principal economic assumptions in the 2004 report vs. the 2005 report, the long term assumptions are nearly identical in all categories. The short term projections are slightly different, but not all in the same direction. Some are higher, some are lower.

So my initial take is this: the trustees made minuscule changes in a bunch of categories, and the net result was to change the projected date of trust fund exhaustion from 2042 to 2041. Considering that the economy did pretty well last year, it’s not clear why an honest update would choose to make a bunch of teensy changes with a net negative direction, but there you have it. I guess they figured it was easier to defend that than to defend some big change in any single variable. And the net result was still the one they wanted: an official looking report that the president can wave around to prove that Social Security is doomed.

Naturally, smarter people than me will be going over the report shortly. I’ll let you know what they have to say later.

UPDATE: Both Max and a persuasive emailer with firsthand knowledge have convinced me that there was no monkey business with the economic assumptions. Employment growth and wage growth in 2004 were worse than projected, and inflation was higher than projected. Net result: current benefits have gone up more than taxable income, thus depleting the trust fund slightly faster than projected last year.

However, longer term solvency is slightly better than last year. Bottom line: there’s still nothing all that serious to worry about. Social Security’s problems are modest and can be dealt with more effectively in the future than they can be today.