The latest jobs report from the Bureau of Labor Statistics (BLS) sheds new light on the 2024 Social Security Trustees Report, and the direction of Social Security reform as a whole. The nation spends too much energy on hand-wringing over the issue of long-term solvency, and too little effort on simply making Social Security better.
In May, the Trustees of the Social Security Trust Funds released an upbeat report citing the strengthening economy, pushing the projected solvency date out another year to 2035. Per usual, Washington insiders called the results good news.
In sharp contrast to this “good news,” the Bureau of Labor Statistics issued a sobering revision to its employment report over the past year with the estimated number of new jobs falling by more than 800,000. Were those jobs part of the “strong” economy that was cited by the trustees in their latest report?
While no one has an answer yet, the revision to the jobs report opens an opportunity to talk about reforming Social Security without the discussion-killer of benefit cuts or tax hikes. Let’s make the program better because what we are doing is designed to fail in spectacular fashion.
Currently, the Trustees Report is produced by six political appointees, who are required by law to produce the report annually by March 31. According to the General Accounting Office the government missed the deadline 17 out of 25 years from 1995 to 2020. In 2021, the report was five months late, by which time the data were nearly two years out of date.
Generally speaking, the data that drive the discussion of Social Security is at best four months out of date, and will be 15 months past its use by date by the time the trustees release fresh data in 2025.
On top of the tardiness of the information, the media broadly perpetuates reckless misconceptions about the Trustees Report. The forecast is not a guarantee. On a good day, the Trustees Report is simply one possibility within an infinite set of outcomes, serving as a warning to Congress about what might happen to the program under a favorable economy.
Yet, journalists are comfortable with the language assuring voters that they can depend upon 83 percent of their scheduled benefits in 2035, regardless of what happens in the job market. As things are, the discussion of Social Security reform is framed in overly optimistic analysis of overly optimistic data, which is well out of date.
To illustrate how the passage of time affects the discussion of Social Security, the media cites the Social Security Expansion Act of 2019 as a basis for the position of the Democrat candidate for president. That proposal was scored in 2019 based on the Trustees Report of 2018, which reflects data as of year-end 2017.
Whether Harris co-sponsored the proposal is irrelevant today, as it was designed to deal with a problem that was nearly $10 trillion smaller than what policymakers face today.
The Social Security debate is the manifestation of the Joker’s observation in the movie The Dark Knight: Do you ever notice that no one panics when things go according to plan, no matter how frightening that plan might be?
The plan at this point is or should be horrifying. Experts believe that about half of Americans who are 80-years-old will outlive Social Security’s ability to pay scheduled benefits. No one knows how the benefit reductions created by insolvency would be allocated to individuals.
Despite this backdrop, candidates come and go with no particular interest in the subject of what happens next to those who depend upon the program. While both candidates for president have assured voters that they will protect Social Security, neither has offered any thoughts on how they hope to accomplish that goal.
Instead of what our government currently does, Congress needs to establish a new and permanent board of trustees who are full-time employees, managing the largest pension in the world in a manner consistent with the standards of the private sector. The board must produce an annual report on time, with quarterly updates on the accuracy of the initial forecast, expressed in language that could not possibly be confused with a worst-case scenario.
That board might look like the Federal Reserve Board of Governors, but the specific framework is beside the point until voters realize that what we are doing is not working. What we are doing currently has only one end, seniors waking up to the reality that their Social Security benefits will not be paid in full.
Honestly, timely data and accurate projections is hardly too much to ask from a program on which millions literally depend.
