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PRESS RELEASE


THERE IS NO SOCIAL SECURITY DEFICIT

Bush Has SSA Forecasting a Century of Depression: Does He Mean To Create One?

March 1, 2005 (EIRNS)—The Bush Administration's and the Social Security Administration (SSA)'s claims about when the Social Security Trust Fund will become insolvent—the SSA says that will happen in 2042—are wholly dependent on extremely pessimistic starting economic assumptions, amounting to a century of deep recession. Given new monetary arrangements to halt the dollar's collapse, rapid productive jobs creation under an "American Marshall Plan" would solve the predicted "problems" of the Social Security Trust Fund (see Executive Intelligence Review, March 4). The same is true for the assumptions about GDP growth in the future, built into both SSA and CBO projections for Social Security.

The Bush Administration uses two very different sets of assumptions about real GDP growth for the same time period: one for its budgeting process, as reported by the Office of Management and Budget (OMB); and one in the projections of the SSA.

For the next five years, the projections for the growth rate for real GDP, prepared by the OMB and by the SSA, are, respectively:

Year
OMB Estimate
SSA Estimate
2006
3.5%
3.2%
2007
3.3%
3.0%
2008
3.2%
2.8%
2009
3.1%
2.7%
2010
3.1%
2.6%

In every year, the OMB's projections are higher than those of the SSA's. These differences between the OMB and the SSA set very different paths with regard to the solvency of the Social Security Trust Fund, even for the next five years. Starting in 2015, the SSA assumes a still lower real GDP growth rate of 1.8% per year until 2080. Commenting on the SSA's assumptions, Bloomberg News Service noted on Feb. 28, "Sustained annual Gross Domestic Product growth that low would be the worst economic performance since the 1930s [Great Depression]."

Not surprisingly, a projection based on such an assumption does, eventually, produce a deficit in Social Security—as the least of our problems. Does this represent lying about the likely future of Social Security by the White House? Or is it worse, a statement of intent to further "Hooverize" the United States economy?

An alternative higher projection for GDP growth, which dramatically reduces any projected Social Security deficit in the first half of this century, is given in the SSA's report, but ignored in discussion of its forecasts.