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March 23, 2005

The 2005 Social Security Trustees Report

The 2005 Social Security Trustees Report lowers the estimate of Social Security's deficit through 2079 to 0.6% of GDP. Last year's Trustees Report pegged the deficit through 2078 at 0.7% of GDP.

Social Security's financial status improved even though the new forecast window adds a big deficit year--2079--to the calculation. And its financial status improved even though the Bush administration assumed:

  1. Reduced earnings on the part of the young.
  2. Reduced death rates on the part of the old.
  3. Lower labor force participation on the part of the young and old.
  4. More short term inflation.
  5. No change in long-run productivity growth (in spite of very good productivity news).
  6. No change in immigration (in spite of immigration running ahead of assumptions).

That's six thumbs on the scales, and still the long-run deficit shrinks.

So why is the headline that the financial status of Social Security has gotten worse? Can you say "an easily snowed press corps"? I knew you could.

Posted by DeLong at March 23, 2005 01:13 PM