Social Security Trustees Report Tuesday

This coming Tuesday the Social Security Trustees will release their annual Report on the financial status of the program. When the Report is released it should be available here.

During the almost five years I spent at the Social Security Administration I was involved with the preparation of the Trustees Report. By the time I became Deputy Commissioner I led the SSA staff who took part in the Trustees working group, which is the day-to-day staff level group that effectively prepares the Report. As I left the agency only in February I was involved in the preparation of the 2008 Report, but like current staff will not discuss the results of the Report prior to its release.

However, this might be a good opportunity to briefly discuss the Trustees process, which I never understood particularly well before I became involved with it. Several issues may be of interest.

First, the White House is almost totally insulated from the process of producing the Trustees Report. White House staff are not involved with the Trustees working group in any way and do not attend Trustees meetings. The White House is not told of changes in the Trustees assumptions and does not know the overall results until the Report itself is released. This is designed to limit political influence on the Trustees Report.

Second, there are often questions of whether the Trustees themselves attempt to exaggerate the size of the problem, either to accomplish political goals or simply to push the public toward action. In the time I spent working on the Trustees Report I never witnessed anything at all along those lines. In fact, it is refreshing how professionally the staff, both political appointees and career, go about their business. I have on several occasions witnessed political appointees arguing for changes in assumptions, purely on the merits, that would make the actuarial deficit smaller. Likewise, I have seen career staff arguing for changes in assumptions that would tend to make the measured deficit larger. The are obviously disagreements about both assumptions and methods, and how these disagreements are resolved would tend to affect the size the of deficit. But among the individuals involved, I have found that these disagreements tend to be normally distributed – that is to say, the fact that a given person holds a certain view that would make the measured deficit larger does not mean that all of his/her views would do so. In short, in my experience issues tend to be examined on the merits.

Third, many people don't understand how strong is the role of the SSA actuaries (who are career staff) within the Trustees Report process. Technically, the Trustees and their staff decide on the assumptions while the actuaries run the numbers to determine what outcomes those assumptions would produce. In practice, however, the actuaries have a very strong influence on the assumptions – both the "headline" assumptions as well as numerous sub-assumptions needed to model the Social Security program. The actuaries first present their own preferred assumptions, that the working group takes as a starting point for their own discussions. The actuaries' assumptions can and are changed, but they are not a silent voice in the process. This has both pros and cons. On the pro side, the "political" influence on the Trustees Report is very small compared to reports from any other executive agency. This lends (or should lend) credibility to their findings. On the other hand, it is intended that the Trustees have a strong role in producing the Report, and it can be questioned whether that role is strong enough.