1) The 2004 Social Security Trustees report was predicated on not counting interest on the roughly 12 trillion in the various trust funds, represented by bonds.
2) The 2004 Social Security Trustees report relied on 1.8% growth in the GDP. To my eye 1.8% growth in GDP represents a "Mad Max scenario", an economic collapse on the order of the "Great Republican Depression" of the 1930's.
3) Apparently the 2004 Social Security Trustees report factored in the Boomer generation retiring and drawing checks from the system, but did not factor in what happens when the Boomers died.
My gut level assessment (not based on any actual economic knowledge) of the 2004 Social Security Trustees report was that assuming 3.6% growth in GDP, Social Security would be fine until 2062. Since it's not likely that many Boomers would be around in 2062 to collect checks, the big drawdown of funds would be over. The 2004 Social Security Trustees report was easy to navigate, easy to find the fine print. About an hour of poking around got me to all the details I sought. The 2007 Social Security Trustees report is a wee bit more complicated and not so easy to navigate. Never the less, I think I found the dirt in the details.
The 2007 Social Security Trustees Summary makes a most compelling statement:
Social Security could be brought into actuarial balance over the next 75 years in various ways, including an immediate increase of 16 percent in payroll tax revenues or an immediate reduction in benefits of 13 percent or some combination of the two.
And what data was used to come to this assertation? I found it organized here. Many of the interesting titles linked to huge charts that quite frankly were overwhelming. But slowly a picture of the basic assumptions behind the doomsayers words became clear. Looking at the "Principal Economic Assumptions" I noted that the Trustees had developed 3 scenarios, Intermediate cost, low cost & high cost. But which scenario was the one the trustees relied upon for their date of 2041?
Additional Economic Factors and Selected Economic Variables lead to some interesting information which could lead one to think the Trustees used some faulted economic assumtions, but these tables did not present to me, a smoking gun. I found what I was looking for, titled Estimated Trust Fund Ratios.
On the Estimated Trust Fund Ratios table I found where Social Security went broke in 2041. This was listed under the "intermediate" scenario. Looking at the "High Cost" scenario made things look worse, Social Security would go broke in 2030. While looking at the "Low cost" scenario showed Social Security would still be solvent in 2085.
I wish I had that audio clip from the Rachel Maddow show, the one where the prospecter shouts "Eureka"!
It is interesting to note that under Additional Economic Factors the "intermediate" scenario assumes GDP growth of 2% or under after 2020. While the "Low Cost" scenario assumed GDP growth of 2.5% to 3% in the outgoing years. IIRC the US has averaged 3% or 3.5% GDP growth over the last 100 years. While during the Clinton years the US saw growth in GDP between 2.5% and 4.4%.
If we don't get hold of our government, our future, this could get seriously bad. World oil production peaked in May of 2005, the global fish catch has peaked, all the easy to mine iron ore in the US was gone by by 1971, global warming needs to be reversed. If we don't provide solutions to these problems in the coming decade, it may be too late.