http://econospeak.blogspot.com/The folks at Econospeak have done a public service by charting the GDP growth predicted in 10 years of Social Security Trustees Reports against actual GDP growth in the same years.
If you don't know how the SS Trustees Reports work, here's the short version.
Using economic & demographic data, the trustees make 3 forecasts every year:
1. Low-cost (optimistic about SS's future viability/cost)
2. Intermediate cost
3. High cost (pessimistic about SS's future viability/cost)
The intermediate forecast is the one considered most likely to occur; it's the one all the numbers you hear in the media come from. You know, the headlines like: "Trillion-dollar SS Shortfall!"
GDP growth is a key variable in these forecasts, & is itself aggregated from other data.
However, as it turns out, in 6/10 years, real GDP growth not only exceeded the growth predicted in the intermediate forecast - it exceeded the growth predicted in the "low-cost" (optimistic) forecast.
And in the low-cost forecast, SS chugs along forever, paying rising scheduled benefits, without going into deficit, without additional taxes - while accumulating a growing surplus! That is, current evidence suggests we need to reduce SS collections rather than increase them, & certainly there's no evidence for any radical overhaul or benefit reductions.
In only 2 years did GDP = the intermediate (supposedly most sound) forecast. In one year (the year of 911), reality was worse than the intermediate forecast. In one year, reality was in-between the optimistic & intermediate forecasts.
On average, though, over 10 years, reality turned out better than even the supposed "optimistic" prediction.
That is, the forecasts used to hype the SS crisis in the media are dramatically skewed to the negative.
But I'd bet that for most people reading this, it's the first time you've heard anything about it -- but you've heard A LOT about the coming SS "shortfalls," the "crisis," & the need for "change".
Why the deafening silence on this key point?
Year IC LC Actual
1997 2.5% 3.2% 3.8%
1998 2.5% 3.1% 3.9%
1999 2.6% 3.4% 4.0%
2000 3.5% 3.9% 5.1%
2001 3.1% 3.5% 1.0%
2002 0.7% 1.6% 2.4%
2003 2.9% 3.8% 3.1%
2004 4.4% 4.9% 4.4%
2005 3.6% 3.9% 3.6%
2006 3.4% 3.8% 4.7%
1997-2006 average IC = 2.92% LC = 3.51% Actual = 3.60%
2001-2006 average IC = 3.02% LC = 3.58% Actual = 3.37%