The Congressional Budget Office (CBO) has analyzed the effects of the Social Security 2100 Act currently pending before the House Ways and Means Committee. They find that it doesn't quite stabilize the Social Security Trust Funds until the year 2100 as the bill's sponsors have believed. More important, the CBO finds that along the way the bill would cause the Trust Funds to run out of money in 2041. In other words, in the long run if the bill would be adopted would come pretty close to solving the funding problem but there would be a crisis in 2041. This conflicts with the projections of Social Security's Office of Chief Actuary that under the bill the Trust Funds would be fully solvent until at least the year 2100.
I think the Trust Fund problem- brought up by the CBO could probably be addressed fairly simply by modestly speeding up the tax increase included in the Social Security 2100 Act.
Another problem, though, is that while the CBO projects that the bill would decrease the overall federal deficit, it would increase on-budget deficits by hundreds of billions of dollars in each decade "because a portion of income taxes paid on Social Security benefits would no longer be allocated to the Medicare Hospital Insurance (HI) trust fund (which is on-budget) and because of the reductions in income tax revenues that would result from the increase in payroll taxes." I don't understand this. My guess is that it's an conceptual problem in the byzantine world of federal budgeting rather than a real world problem.
Where are all the people from this board that were calling this the greatest thing since sliced bread and screaming for it to be passed immediately??? Seems that it falls very very short of its goals, by several decades.
ReplyDeleteAnd again, the younger generation will be punished for the current generations lack of vision and ability to handle this.
CBO always makes more pessimistic projections than SSA's actuary.
ReplyDeleteIn the past, the actuary's projections have been more accurate.
https://www.ssa.gov/oact/testimony/HouseWM_20160921.pdf is the actuary's testimony from a hearing where the CBO and actuary each testified about how their methods differ. It was technical, but very interesting. I would not assume CBO is better than the SSA actuary on projecting how bills like this will work decades into the future. It requires a huge amount of (educated) guesswork: birth rates, death rates (and who dies, and when), disability rates, inflation, interest rates, workforce participation, income distributions, and a lot more.
Ahh the old "i dont like what it says so I will discredit it" approach. How trumpy!
ReplyDelete