Experts at odds on looming Social Security shortfall
A recent study published by Harvard and Dartmouth academics accuses Social Security's Office of the Chief Actuary of underestimating the coming shortfall in funding for Social Security.
The study claims that forecasts by the Office of the Actuary underestimate how long people are living and overestimate the birth rate, making the system's finances look better than they actually are.
In its 2014 annual report, the Social Security board of trustees projected the Social Security retirement and disability trust fund would be depleted in 2033. If that happens, under current law, Social Security benefits would be cut to the level supported by the amount of FICA taxes being paid by workers at that time. The trustee report estimates tax income would be sufficient to fund about three-quarters of all scheduled benefits.
One of the co-authors of the academic study, Gary King, says his team hasn't estimated how much sooner the Social Security trust fund might be depleted, but he described it as in "significantly worse shape" than the official forecast indicates.
This isn't the first time that King and the Office of the Actuary have clashed on the assumptions used to forecast the cost of the Social Security system. King co-authored an editorial in The New York Times in 2013 claiming that Social Security's funding was worse than official forecasts.
Chief Actuary Steve Goss and his staff responded with an analysis and critique of the editorial, describing the methods and assumptions used by Social Security to estimate the system's costs and pointing out conceptual errors in King's analyses. The actuary office's methods have been audited since 2006 by an independent accounting firm, and the assumptions used by the office are subject to extensive scrutiny.
It's somewhat puzzling why King and his colleagues are making all this fuss over the methods used to estimate the looming Social Security deficit. The 2014 annual report sent a very clear message about the looming shortfall in its opening lines: "Neither Medicare nor Social Security can sustain projected long-run program costs in full under currently scheduled financing, and legislative changes are necessary to avoid disruptive consequences for beneficiaries and taxpayers." It's not as if Goss and his staff are trying to hide the serious funding problems that Social Security is facing.
This debate is much like arguing whether the Titanic is one mile or two away from the deadly iceberg. Whether the Social Security trust fund will be depleted in 2033, as forecast by the Office of the Actuary, or at some earlier date, as King asserts, we still have a major problem in need of attention.
Americans need to put pressure on elected officials to take steps to shore up the system's funding to restore confidence in a program that's the bedrock of financial security for millions of older Americans.
