Since 2005 each Social Security Trustees report that I have read describes 3 scenarios, low cost, medium cost and high cost, that tries to predict when SS will go broke. These scenarios utilize varying values for things llike GDP growth, job creation, population growth, immigration, wage growth, population health and age to generate a prediction of when SS will be broke.
In the 2011 SS trustees report, we are given the 3 scenarios in Table IV.B3. The High cost scenario says SS will be broke in 2029. The Intermediate cost scenario says 2036, and the Low cost scenario shows that SS never goes broke, in fact after 2067 SS gains assets very quickly, because it is assumed that by 2067 the Boomers are dead and will not be collecting SS benefits.
http://www.ssa.gov/...
The High cost (2029) scenario is reliant on a number of unrealistic assumptions, It assumes GDP growth will average about 2.2% growth. This scenario assumes an economic downturn twice the length of the Depression in the 1930's, a 20 year recession. Most mainstream economic thought is that GDP growth is likely to average between 3% and 3.5%.
The Low cost scenario assumes much greater GDP growth ( about 2.8%) all focused in the bottom 80% of income earners. in order to get this prediction to work, we must make 2 key assumptions 1) widespread job creation and 2) real wage growth (above inflation) among other minor factors.
Stochastic Modeling see figure VL.E1
http://www.ssa.gov/...
Stohastic modeling has an advantage over a hand picked list of demographics picked by a committee in an office, plugging numbers into software. This chart shows a 97% confidence rate that SS will go broke in 2055. Simply put, if we have significant job creation, some wage growth, and the Boomers dont all live past expectancy..... then the 2055 date is very realistic.
If we have widespread job creation (right now we need 15 million jobs according to Paul Krugman) and raise median Individual income from the current 26k, 30%, back to where it was during Clinton- 38k, we will see considerable increases in FICA contributions... then that 2055 date can be pushed back even further to 2065 or 2067.
It is more than likely if we fix the economy, we also fix Social Security.
Summary of the 2011 SS Trustees report
If we leave Social Security alone it will go broke by 2055. The 2029 date requires an additional 20 years of recession, this is extremely unlikely. The 2085 date is far more realistic than the 2029 date but 2085 requires that most or all the variables go our way.
Bruce Webb from the Daily Kos Social Security defenders group has used the CBO numbers to create a worksheet that allows you to pick your SS policy to see the effect. The total SS shortfall over 75 years is considered to be .6% of GDP. To use this worksheet your choose a line, look at the second line that says "Increase the payroll tax rate by 2% over 20 years", and then look to the right at the blue bar with the number .6%. This change to SS taxes would equal the projected shortfall. Or line 7, raises the cap to 250k, this gains .5%.... 5/6ths of the shortfall
http://2.bp.blogspot.com/...
This is important in respect to the Progressive Caucus House budget referred to as The Peoples Budget, which calls for raising taxes on the uber wealthy and investing the money in job creation and only raising the SS cap to 170k. The combination leads to SS being good thru 2085 with an extremely hi confidence rate..
The Peoples Budget:
http://grijalva.house.gov/...