THE NEWSLETTER

Social Security Madman

Wednesday, February 9, 2005

 

The following is a big deal. At least I think so

 

Recently, I asked for and received a memo from the Social Security Administration's press office that outlines the Bush Administration's view of what would happen if the CAP was removed from Social Security. The memo says, in a nutshell, that even when the cap is removed, Social Security will go bankrupt by 2078. Using SSA's numbers, along with those of the Census Bureau and others, I have put together ACTUAL FIGURES that disprove the SSA's theory.

 

Here is the scenario:

Initially, I called the Trustee's Office where I received some good background information from, among others, the Deputy Chief Actuary, Alice H. Wade, a helpful bureaucrat with a pleasant sense of humor. I asked her for the formulas that were used by the the actuaries to determine the Trustee's Report's numbers. She said she didn't have them but assured me that she would get back to me "today". About an hour later, I received a call from a much more subdued and somber Alice H. Wade. She informed me that I would have to call the Public Affairs Office in order to receive the information I requested.

 

As a member of the "press", I called SSA's Public Affairs Office in Baltimore, MD asking for all pertinent information from their Senior Public Affairs Specialist, Mark Hinkle (410-965-8904). I was directed to the SSA website (www.ssa.gov) where I found, among other things, PDF versions of the Trustee's and PAR Report. I read the summary of ALL REPORTS as well as reading much of each of them.

 

(Click on the following links to download the SSA memo's text, as re-typed by www.nationalview.org along with Proposal1, Proposal2 and a PDF version of the National View's Proposal included in the tables below.)

 

There was something conspicuous by its absence from these two- two-hundred-plus page reports: There was NO MENTION of what would happen if the artificial cap of $87,900 was removed. Not a whisper. Not a peep.

 

I have called Mr. Hinkle's office almost every day since asking for the formulas (I'm beginning to feel like a concerned scientist in search of the elusive formula to a rare disease.). Every day I speak to Kia, a public affairs assistant. We have a nice, little chat. I ask her how she's feeing and she tells me Mr. Hinkle will call me back "after his meeting."

 

It must have been one, long meeting.

 

(Tomorrow, we will compare and contrast Social Security with the Capital Gains tax.)

 

Here is what I have come up with:

 

For our purposes, the SSA's Proposal 1 and Proposal 2 are interchangeable, so I am using the numbers from Proposal 1

Financial Estimates for OASDI Trust Fund Program Under Proposal 1
Estimate the Contribution and Benefit Base, Effective 2004
Expressed as a percent of taxable payroll   OASDI Taxable Payroll (in billions of dollars)
Year: Cost Rate Rate Balance Trust Fund Ratio 1-1-year   Proposed Plan TAXABLE INCOME (in billions of dollars) Present law TAXABLE INCOME (in billions of dollars) Increase in Taxable Payroll Over Present Law (*)
2003 10.89 12.70 1.81 288   $4,387 $4,387 0.00
2004 9.23 12.65 3.42 309   $5,402 $4,812 17.40
2005 9.04 12.66 3.51 348   $5,711 $4,966 17.40
2006 9.07 12.68 3.59 390   $6,030 $5,140 17.60
2007 9.07 12.67 3.61 431   $6,375 $5,415 17.70
2008 9.12 12.68 3.57 471   $8,717 $5,702 17.80
2009 9.21 12.69 3.48 506   $7,066 $5,994 17.90
2010 9.34 12.71 3.37 543   $7,424 $6,294 18.00
2011 9.49 12.75 3.26 575   $7,793 $6,601 18.10
2012 9.87 12.76 3.09 605   $8,167 $6,911 18.20
2013 9.90 12.78 2.89 630   $8,565 $7,239 18.20
2014 10.14 12.80 2.86 652   $8,954 $7,575 18.20
2015 10.40 12.82 2.42 670   $9,385 $7,923 18.20
2016 10.69 12.84 2.15 684   $9,790 $8,232 18.20
2017 11.00 12.86 1.66 694   $10,233 $8,656 18.20
2018 11.32 12.88 1.58 700   $10,695 $9,045 18.20
2019 11.84 12.90 1.26 705   $11,176 $9,453 18.20
2020 11.96 12.92 0.94 700   $11,677 $9,878 18.20
2021 12.32 12.94 0.62 704   $12,200 $10,318 18.20
2022 12.66 12.97 0.31 701   $12,143 $10,777 18.20
2023 12.96 12.99 0.03 698   $13,309 $11,255 18.20
2024 13.26 13.01 -0.25 693   $13,898 $11,753 18.30
2025 13.54 13.03 -0.52 687   $14,513 $12,272 18.30
2026 13.81 13.04 -0.77 681   $15,158 $12,815 18.30
2027 14.08 13.06 -1.01 973   $15,620 $13,383 18.30
2028 14.33 13.08 -1.24 665   $16,533 $13,978 18.30
2029 14.55 13.10 -1.45 656   $17,271 $14,801 18.30
2030 14.75 13.12 -1.64 648   $18,043 $15,253 18.30
2031 14.93 13.13 -1.80 639   $18,851 $15,935 18.30
2032 15.09 13.15 -1.95 630   $19,096 $16,649 18.30
2033 15.23 13.16 -2.07 622   $20,579 $17,395 18.30
2034 15.34 13.17 -2.18 613   $21,502 $18,174 18.30
2035 15.45 13.18 -2.27 604   $22,465 $18,987 18.30
2036 15.53 13.19 -2.34 596   $23,472 $19,837 18.30
2037 15.60 13.20 -2.40 588   $24,524 $20,725 18.30
2038 15.65 13.20 -2.45 580   $25,871 $21,851 18.30
2039 15.70 13.21 -2.49 571   $26,766 $22,617 18.30
2040 15.74 13.22 -2.53 563   $27,958 $23,522 18.30
2041 15.76 13.22 -2.56 556   $28,898 $24,670 18.40
2042 15.83 13.23 -2.60 548   $30,492 $25,783 18.40
2043 15.87 13.23 -2.64 537   $31,640 $26,900 18.40
2044 15.92 13.24 -2.68 528   $33,245 $28,066 18.40
2045 16.98 13.25 -2.73 518   $34,707 $29,320 18.40
2046 16.04 13.25 -2.79 507   $36,227 $30,603 18.40
2047 16.10 13.26 -2.84 497   $37,613 $31,940 18.40
2048 16.17 13.27 -2.90 485   $39,485 $33,334 18.40
2049 16.24 13.27 -2.96 474   $41,187 $34,786 18.40
2050 16.31 13.28 -3.03 461   $42,962 $36,302 18.40
2051 16.39 13.29 -3.10 449   $44,851 $37,578 18.40
2052 16.47 13.29 -3.17 433   $46,803 $39,524 18.40
2053 16.56 13.30 -3.26 421   $48,639 $41,241 18.40
2054 16.63 13.31 -3.32 407   $50,964 $43,034 18.40
2055 16.71 13.31 -3.39 392   $53,184 $44,906 18.40
2056 16.78 13.32 -3.46 377   $55,502 $46,560 18.40
2057 16.85 13.33 -3.52 361   $57,925 $48,803 18.40
2058 16.91 13.33 -3.58 345   $60,484 $51,036 18.50
2059 16.97 13.34 -3.63 329   $63,093 $53,261 18.50
2060 17.02 13.34 -3.68 312   $65,557 $55,582 18.50
2061 17.07 13.35 -3.73 295   $69,719 $58,004 18.50
2062 17.12 13.35 -3.77 276   $71,716 $60,530 18.50
2063 17.16 13.35 -3.82 260   $74,544 $63,187 18.50
2064 17.23 13.36 -3.87 241   $78,103 $65,913 18.50
2065 17.28 13.36 -3.92 223   $81,501 $68,776 18.50
2066 17.34 13.37 -3.97 203   $85,048 $71,788 18.50
2067 17.40 13.37 -4.03 183   $88,740 $74,879 18.50
2068 17.46 13.37 -4.08 163   $92,594 $78,127 18.50
2069 17.51 13.38 -4.13 142   $96,611 $81,512 18.50
2070 17.57 13.38 -4.19 121   $100,795 $85,037 18.50
2071 17.63 13.39 -4.26 99   $105,157 $88,712 18.50
2072 17.69 13.39 -4.30 77   $109,708 $92,545 18.50
2073 17.75 13.39 -4.36 54   $114,448 $96,540 18.60
2074 17.81 13.40 -4.41 30   $119,383 $100,705 18.60
2075 17.87 13.40 -4.46 6   $124,547 $105,056 18.60
2076 17.92 13.41 -4.52 1/   $128,821 $109,573 18.60
2077 17.98 13.41 -4.57 1/   $135,529 $114,296 18.60
2078 18.03 13.41 -4.82 1/   $141,378 $119,220 18.80
                 
SSA "Estimated Long-Range OASDI Financial Effects of Eliminating the OASDI Contribution and Benefit Base -- INFORMATION" Memorandum - October 20, 2003 From Alice H. Wade, Deputy Chief Actuary and Chris Chaplain, Acuary TO Steve C. Goss, Chief Actuary
Summarized Rates: OSDAR OSDAI              
2003 Cost Rate Income Rate Actuarial Balance Change in Actuarial Balance
2077 13.65 13.64   -0.22   1 70    
Trust fund ratio:
A measure of the adequacy of the trust fund level. Defined as the assets at the beginning of the year, including advance tax transfers (if any), expressed as a percentage of the cost during the year. The trust fund ratio represents the proportion of a year's cost which could be paid with the funds available at the beginning of the year.
In other words, this is the money available at the beginning of the year, and how much will be left over after all Social security recipients are paid by the end of the year.
http://www.ssa.gov/OACT/TR/TR02/IV_SRest.html
The ratio of tax income (including both payroll taxes and income from taxation of benefits) to taxable payroll is called the "income rate" and the ratio of expenditures to taxable payroll is the "cost rate."
http://www.ssa.gov/OACT/TR/TR98/trig.html
Assets                
Treasury notes and bonds, other securities guaranteed by the Federal Government, certain Federally sponsored agency obligations, and cash, held by the trust funds for investment purposes.
http://www.ssa.gov/OACT/TR/TR02/IV_SRest.html
The trust fund ratio asks the question "Where is the balance of the money, plus interest from the previous year?"

 

Compiled from US Census Data by Noah Greenberg
Year: Additional Retirees (2004 all over 65 years old) (*) Retirees (Recipients) Less Deceased @ 65% of all deaths (*) Percent of Retiree Increase (*) Deaths Aged 65 and above (*) Total Deaths (*) Total Population Including Immigration (*) Payroll Taxes to be Collected @ 6.2% for employers up to $89,900 - 5.95% WITHOUT a CAP on employees & NO TAX on 1st $10,000 using SSA Figures from Column "G" (Proposed Plan TAXABLE INCOME) SSA Surpluss/ Deficit SSA Expenditures - Yearly CPI Increase of 2.53% (4-year average) Per Capita Income US Average SSA Payment Per Recipient
2003                      
2004 33,589,853 31,872,064 0.00% 1,717,789 2,453,984 293,655,404 $631,900,000,000 $1,378,000,000,000 $479,100,000,000 $18,396 $15,031.97
2005 2,297,675 32,437,641 1.77% 1,732,098 2,474,426 298,941,201 $654,937,480,000 $1,532,999,417,688 $499,938,062,312 $19,104 $15,412.28
2006 2,973,130 33,664,245 3.78% 1,746,526 2,495,038 304,322,143 $691,520,400,000 $1,692,550,271,138 $531,969,546,550 $19,815 $15,802.21
2007 2,973,130 34,876,300 3.60% 1,761,075 2,515,821 309,799,941 $731,085,000,000 $1,858,569,168,567 $565,066,102,571 $20,578 $16,202.01
2008 2,973,130 36,073,685 3.43% 1,775,745 2,536,778 315,376,340 $999,665,560,000 $2,258,981,585,397 $599,253,143,171 $27,640 $16,611.92
2009 2,973,130 37,256,279 3.28% 1,790,537 2,557,909 321,053,115 $810,328,880,000 $2,434,754,050,048 $634,556,415,348 $22,009 $17,032.20
2010 2,973,130 38,423,957 3.13% 1,805,452 2,579,217 326,832,071 $851,384,320,000 $2,615,136,378,231 $671,001,991,817 $22,715 $17,463.12
2011 2,973,130 39,576,596 3.00% 1,820,491 2,600,702 332,715,048 $893,701,240,000 $2,800,221,356,671 $708,616,261,560 $23,422 $17,904.93
2012 3,973,361 41,714,301 5.40% 1,835,656 2,622,366 338,703,919 $936,591,560,000 $2,971,024,829,618 $765,788,087,053 $24,113 $18,357.93
2013 3,973,361 43,836,715 5.09% 1,850,947 2,644,210 344,800,589 $982,234,200,000 $3,128,147,614,194 $825,111,415,424 $24,840 $18,822.38
2014 3,973,361 45,943,710 4.81% 1,866,365 2,666,236 351,007,000 $1,026,844,720,000 $3,268,343,556,407 $886,648,777,787 $25,509 $19,298.59
2015 3,973,361 48,035,159 4.55% 1,881,912 2,688,446 357,325,126 $1,076,271,800,000 $3,394,151,193,835 $950,464,162,572 $26,265 $19,786.84
2016 3,973,361 50,110,932 4.32% 1,897,588 2,710,841 363,756,978 $1,122,717,200,000 $3,500,245,355,748 $1,016,623,038,086 $26,914 $20,287.45
2017 3,973,361 52,170,898 4.11% 1,913,395 2,733,422 370,304,604 $1,173,520,440,000 $3,588,573,420,844 $1,085,192,374,905 $27,634 $20,800.72
2018 3,973,361 54,214,925 3.92% 1,929,334 2,756,191 376,970,087 $1,226,502,600,000 $3,658,835,352,784 $1,156,240,668,060 $28,371 $21,326.98
2019 3,973,361 56,242,880 3.74% 1,945,405 2,779,150 383,755,548 $1,281,663,680,000 $3,710,661,073,799 $1,229,837,958,985 $29,123 $21,866.55
2020 3,973,361 58,254,631 3.58% 1,961,611 2,802,301 390,663,148 $1,339,118,360,000 $3,743,723,576,623 $1,306,055,857,176 $29,890 $22,419.78
2021 3,973,361 60,250,041 3.43% 1,977,951 2,825,644 397,695,085 $1,399,096,000,000 $3,757,852,015,089 $1,384,967,561,534 $30,677 $22,987.00
2022 3,326,617 61,582,231 2.21% 1,994,427 2,849,182 404,853,596 $1,392,559,240,000 $3,699,006,204,264 $1,451,405,050,825 $29,994 $23,568.57
2023 3,326,617 62,897,807 2.14% 2,011,041 2,872,915 412,140,961 $1,526,276,120,000 $3,705,366,015,747 $1,519,916,308,517 $32,292 $24,164.85
2024 3,326,617 64,196,632 2.06% 2,027,793 2,896,847 419,559,498 $1,593,822,640,000 $3,708,638,500,292 $1,590,550,155,455 $33,125 $24,776.22
2025 3,326,617 65,478,565 2.00% 2,044,684 2,920,977 427,111,569 $1,664,350,840,000 $3,709,633,244,631 $1,663,356,095,661 $33,979 $25,403.06
2026 3,326,617 66,743,465 1.93% 2,061,716 2,945,309 434,799,577 $1,738,319,440,000 $3,709,568,380,530 $1,738,384,304,101 $34,862 $26,045.76
2027 3,326,617 67,991,192 1.87% 2,078,890 2,969,844 442,625,970 $1,791,301,600,000 $3,685,184,367,670 $1,815,685,612,860 $35,289 $26,704.72
2028 3,326,617 69,221,601 1.81% 2,096,208 2,994,582 450,593,237 $1,896,004,440,000 $3,685,877,312,027 $1,895,311,495,643 $36,692 $27,380.35
2029 3,326,617 70,434,549 1.75% 2,113,669 3,019,527 458,703,916 $1,980,638,280,000 $3,689,201,541,509 $1,977,314,050,518 $37,652 $28,073.07
2030 3,326,617 71,629,890 1.70% 2,131,276 3,044,680 466,960,586 $2,069,171,240,000 $3,696,626,800,728 $2,061,745,980,782 $38,639 $28,783.32
2031 3,326,617 72,807,478 1.64% 2,149,029 3,070,042 475,365,877 $2,161,832,680,000 $3,709,798,906,862 $2,148,660,573,866 $39,656 $29,511.54
2032 3,874,261 74,514,808 2.34% 2,166,931 3,095,615 483,922,462 $2,189,929,280,000 $3,645,045,798,596 $2,254,682,388,266 $39,461 $30,258.18
2033 3,874,261 76,204,088 2.27% 2,184,981 3,121,402 492,633,067 $2,359,999,720,000 $3,640,911,942,807 $2,364,133,575,789 $41,773 $31,023.71
2034 3,874,261 77,875,166 2.19% 2,203,182 3,147,403 501,500,462 $2,465,849,360,000 $3,629,660,454,230 $2,477,100,848,577 $42,875 $31,808.61
2035 3,874,261 79,527,893 2.12% 2,221,535 3,173,621 510,527,470 $2,576,286,200,000 $3,612,274,184,234 $2,593,672,469,996 $44,004 $32,613.37
2036 3,874,261 81,162,113 2.05% 2,240,040 3,200,057 519,716,965 $2,691,768,960,000 $3,590,104,888,314 $2,713,938,255,921 $45,163 $33,438.49
2037 3,874,261 82,777,675 1.99% 2,258,700 3,226,714 529,071,870 $2,812,412,320,000 $3,564,527,633,955 $2,837,989,574,359 $46,353 $34,284.48
2038 3,874,261 84,374,421 1.93% 2,277,515 3,253,592 538,595,164 $2,966,886,280,000 $3,565,494,570,649 $2,965,919,343,305 $48,034 $35,151.88
2039 3,874,261 85,952,196 1.87% 2,296,486 3,280,695 548,289,877 $3,069,524,880,000 $3,537,197,423,948 $3,097,822,026,701 $48,817 $36,041.22
2040 3,874,261 87,510,841 1.81% 2,315,616 3,308,023 558,159,094 $3,206,223,440,000 $3,509,627,235,551 $3,233,793,628,397 $50,090 $36,953.06
2041 3,874,261 89,050,197 1.76% 2,334,905 3,335,579 568,205,958 $3,314,022,640,000 $3,449,718,191,580 $3,373,931,683,971 $50,858 $37,887.98
2042 3,722,190 90,418,032 1.54% 2,354,355 3,363,364 578,433,665 $3,496,822,560,000 $3,434,112,933,703 $3,512,427,817,877 $52,715 $38,846.54
2043 3,722,190 91,766,255 1.49% 2,373,967 3,391,381 588,845,471 $3,628,475,200,000 $3,407,597,021,961 $3,654,991,111,742 $53,732 $39,829.36
2044 3,722,190 93,094,703 1.45% 2,393,742 3,419,631 599,444,690 $3,812,536,600,000 $3,418,421,341,929 $3,801,712,280,032 $55,460 $40,837.04
2045 3,722,190 94,403,211 1.41% 2,413,682 3,448,117 610,234,694 $3,980,198,760,000 $3,445,936,972,452 $3,952,683,129,476 $56,875 $41,870.22
2046 3,722,190 95,691,614 1.36% 2,433,788 3,476,840 621,218,919 $4,154,512,360,000 $3,492,452,806,456 $4,107,996,525,996 $58,316 $42,929.54
2047 3,750,134 96,987,687 1.35% 2,454,061 3,505,802 632,400,859 $4,313,458,840,000 $3,536,935,314,813 $4,268,976,331,643 $59,477 $44,015.65
2048 3,750,134 98,263,317 1.32% 2,474,503 3,535,005 643,784,075 $4,528,139,800,000 $3,630,525,433,813 $4,434,549,681,001 $61,333 $45,129.25
2049 3,750,134 99,518,335 1.28% 2,495,116 3,564,452 655,372,188 $4,723,325,160,000 $3,749,035,847,674 $4,604,814,746,139 $62,845 $46,271.02
2050 3,750,134 100,752,569 1.24% 2,515,900 3,594,143 667,168,888 $4,926,882,160,000 $3,896,047,337,822 $4,779,870,669,852 $64,394 $47,441.68
2051 3,750,134 101,965,845 1.20% 2,536,858 3,624,083 679,177,928 $5,143,512,680,000 $4,079,742,501,631 $4,959,817,516,192 $66,037 $48,641.95
2052 4,218,171 103,626,026 1.63% 2,557,990 3,654,271 691,403,130 $5,367,368,040,000 $4,279,012,107,002 $5,168,098,434,628 $67,693 $49,872.59
2053 4,218,171 105,264,899 1.58% 2,579,298 3,684,711 703,848,387 $5,577,920,520,000 $4,474,278,563,007 $5,382,654,063,996 $69,104 $51,134.37
2054 4,218,171 106,882,287 1.54% 2,600,783 3,715,405 716,517,658 $5,844,551,520,000 $4,715,198,368,872 $5,603,631,714,135 $71,127 $52,428.07
2055 4,218,171 108,478,010 1.49% 2,622,448 3,746,354 729,414,975 $6,099,141,120,000 $4,983,158,604,262 $5,831,180,884,610 $72,913 $53,754.50
2056 4,218,171 110,051,888 1.45% 2,644,293 3,777,561 742,544,445 $6,364,969,360,000 $5,282,674,725,273 $6,065,453,238,989 $74,746 $55,114.49
2057 3,974,985 111,360,553 1.19% 2,666,320 3,809,028 755,910,245 $6,642,839,000,000 $5,632,653,319,414 $6,292,860,405,859 $76,629 $56,508.88
2058 3,974,985 112,647,007 1.16% 2,688,530 3,840,758 769,516,629 $6,936,305,120,000 $6,042,353,341,157 $6,526,605,098,257 $78,600 $57,938.56
2059 3,974,985 113,911,066 1.12% 2,710,926 3,872,751 783,367,929 $7,235,505,240,000 $6,511,039,694,902 $6,766,818,886,254 $80,541 $59,404.40
2060 3,974,985 115,152,544 1.09% 2,733,508 3,905,011 797,468,551 $7,518,076,760,000 $7,015,481,987,810 $7,013,634,467,093 $82,206 $60,907.33
2061 3,974,985 116,371,251 1.06% 2,756,278 3,937,540 811,822,985 $7,995,374,920,000 $7,743,671,319,673 $7,267,185,588,136 $85,880 $62,448.29
2062 3,905,334 117,497,347 0.97% 2,779,238 3,970,340 826,435,799 $8,224,390,880,000 $8,444,914,866,521 $7,523,147,333,152 $86,777 $64,028.23
2063 3,905,334 118,600,292 0.94% 2,802,389 4,003,413 841,311,643 $8,548,705,920,000 $9,207,731,520,432 $7,785,889,266,090 $88,605 $65,648.15
2064 3,905,334 119,679,893 0.91% 2,825,733 4,036,761 856,455,253 $8,956,852,040,000 $10,109,044,366,494 $8,055,539,193,938 $91,193 $67,309.04
2065 3,905,334 120,735,956 0.88% 2,849,271 4,070,387 871,871,448 $9,346,534,680,000 $11,123,353,736,201 $8,332,225,310,292 $93,478 $69,011.96
2066 3,905,334 121,768,285 0.86% 2,873,006 4,104,294 887,565,134 $9,753,304,640,000 $12,260,582,301,993 $8,616,076,074,208 $95,822 $70,757.97

 

(*) Compiled from US Census Data and Centers for Disease Control and Prevention
  OASI DI OASI + DI
Assets (end of 2002) $1,217.50 $160.50 1378
Income during 2003 543.8 88.1 631.9
Outgo during 2003 406 73.1 479.1
  Net increase in assets 137.8 15 152.8
Assets (end of 2003) 1,355.30 175.4 1,530.70
http://www.ssa.gov/OACT/TRSUM/trsummary.html

 

-Noah Greenberg


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-Noah Greenberg