Looking over the 2005 Trustees’ report on Social Security, the new “pessimistic” projections—which bring the date of imbalance one year nearer—seem to depend on four small assumptions that have changed since last year, as the report explains on this page. The assumptions:
Young people are going to be making less money in the future than was predicted by last years’ report. Americans aged 65 through 69 are going to die less frequently. Both teenagers and older workers are going to work less. More inflation in the near-term future.
Now all of these assumptions seem to be grounded in solid historical data, but like all assumptions and projections, they’re prone to a good deal of uncertainty. They’re also, except for the death rates of Americans aged 65 to 69, mostly amenable to policy solutions. Is higher inflation in the future, for instance, a foregone conclusion? Not necessarily. Is low labor force participation among teenagers? Why not figure out ways to boost employment among the young? It’s easier said than done, but still.
Meanwhile, the Trustees’ report decided not to change assumptions about immigration rates, even though those rates have increased in recent years, and there’s every reason to think they’ll continue to increase in the future if we set sensible policies. The Trustees, however, think immigration rates will decline. Now perhaps they assume that the xenophobic wing of the GOP—like Rep. Tom Tancredo (R-CO)—will one day rule the country and shut our borders, but that’s no way to calculate long-range actuarial balance. Same with fertility rates; many think the Trustees’ projections on this front are too pessimistic. Maybe, but it’s also worth noting that there’s certainly the option of instituting pro-natalist policies that encourage people to have kids (subsidized child care, perhaps?). The government of the United States of America isn’t helpless here.