August 4, 2014 3:50 AM
The 2014 Trustees Report for Social Security was released on July 28th. The coverage of that report demonstrates once again that the media is focused on the length of the fuse rather than the size of the bomb.
The report tells us that the Social Security system lost 1 year of projected solvency over the course of 2013. Instead of providing 19 years of full benefits, the system now should provide benefits for 18. That according to the media is the good news. Michael Hilzik of the LA Times, for example, said "The release of the annual trustees reports for Social Security and Medicare customarily give rise to an outburst of disinformation from the enemies of these social insurance programs -- that comes with the territory when you're putting out documents of hundreds of pages densely packed with graphs, charts and statistics." It is an ironic statement coming from someone who could not possibly have read the hundreds of pages by his press deadline. He quoted someone Kathy Ruffing who spent even less time with the matierail who apparently pronounced that there was no news in the report.
Here is the bad news :
The actual shortfall (the cost to fix the system) increased by 1.8 trillion. That is roughly $2 of broken promises for every $1 that the system collected from ALL sources of revenue.
The solvency shortfall (the cost to make the problem of Boomers a problem for their children) grew by 1 trillion to more than 10 trillion dollars. This is the cost to kick the can.
Social Security reached two dubious milestones. 2013 was the first time in history in which the average person turning 66 - that's normal retirement age - expected to live long enough to feel the impact of the shortfall. The time frame of solvency in the Trustees Report means that more than 50% of voting age Americans expect to retire after the Trust Fund is gone.
There is a troubling side to this report. The projections in this report vary substantially from the projections of CBO. CBO projects that the system will pay depleted benefits in 2030 rather 2033. That type of difference can be attributable to things like the long term jobs picture or life expectancy tables. More troubling is the differences in the short-term picture. CBO projects that the Social Security Trust Fund will peak in 2017 where as the Trustees put the figure at 2019. In the short run, these projections should not be that far apart.
What is lost in all of the popular coverage is that the bomb size is growing.