Over at Investor’s Business Daily, Jed Graham looks at why CBO’s projections for Social Security’s financing are more gloomy than those from the Social Security Trustees. One issue Jed doesn’t highlight, but which I think plays a pretty big part, is that CBO takes a more optimistic view regarding longevity improvements than SSA does. Lower mortality is great for us, but not so great for Social Security.
Jed does hit on one unusual point:
CBO expects ObamaCare to shrink employment by the equivalent of 2.5 million full-time workers a decade from now — reducing Social Security payroll tax revenue. But SSA doesn't see any negative impact on work or earnings.
SSA Chief Actuary Stephen Goss told IBD that his department looked at Medicare's 1966 launch and "did not see any big move in the (labor force) participation rate."
I find the response from SSA confusing: CBO projects lower employment due to the ACA based on a number of very specific parts of the law that lower the return to work and, in some cases, can increase an individual’s income if they work less. While Medicare also provided people with greater access to healthcare, in the vast majority of cases these new beneficiaries were age 65 and up, making comparisons to the ACA dubious, to my mind. I can say for sure that the CBO’s projections for labor supply are correct – though I suspect they are – but SSA should analyze the work responses to the ACA in the same context that the CBO did, not simply by looking back at historical examples that may not be very relevant.