March 07, 2005
Social Security Projections vs. Political Predictions - An Actuary's View
SOCIAL SECURITY PROJECTIONS VS. POLITICAL PREDICTIONS- AN ACTUARY'S VIEW
There's a misapprehension abroad in the land. Politicians, media people, and other societal leaders are drawing unjustified conclusions from mathematical estimates. How? By ignoring the probabilistic nature of long-term forecasts and expressing 100% certitude that Social Security is doomed to fiscal collapse.
These alchemists transmute uncertain projections into hard and fast predictions. For example, in his article in the Wall Street Journal, Bob Kerrey says that in eight years, income from payroll taxes will (emphasis added) be insufficient to pay Social Security benefits owed at that time. More startingly, Treasury Secretary Snow tells Congress that everyone needs to agree that the Social Security System is "headed for ruin." More folksy, but with hardly less hyperbole, George Bush says that Social Security will be "flat bust, bankrupt" in 40 years unless Congress acts now.
Posted by Tom Troceen