Entitlement Reform and Fertility:

• Post by: Allan C. Carlson
• June 15, 2011

Restoring the Family-Friendly Roots of Social Security When Rick Perry called Social Security a Ponzi scheme, the Republican presidential hopeful did himself few favors if he becomes the GOP nominee to challenge President Obama in 2012. At the same time, the Texas Governor may believe that his characterization of the relatively successful and popular social-insurance program is justified, in part, by the data in Chart 1. That chart shows the assets held in the Old Age, Survivors, and Disability Insurance (OASDI) Trust Fund as a percentage of projected annual costs. “Projection 2” is the Social Security Administration’s most recent “intermediate” estimate for the future, showing a near-peak surplus of 353 percent in the trust fund as of this year (2011), but falling to 272 percent in 2021; to 107 percent in 2031; and then to zero in 2037, just twenty-six years from now. Even as the “intermediate” projection represents the Social Security Administration’s “safest” projection seventy-five years into the future, the OASDI Trustees’ report concedes that “significant uncertainty” surrounds all three alternative projections, as the numbers are influenced by a number of demographic and economic assumptions, as identified in Chart 2, that may or may not hold true. Chart 1: Long-Range OASDI Trust-Fund Ratio Projections(Assets as a percentage of annual cost) Source: 2011 OASDI Trustees Report, Figure II.D6,http://www.ssa.gov/oact/tr/2011/II_D_project.html. The OASDI Trustees base their three projections on eight variables: the Total Fertility Rate, or TFR (the average number of children born per woman over her reproductive lifespan); the average annual change in age- and sex-adjusted death rates; annual net immigration; annual productivity changes; shifts in the average wage; the Consumer Price Index (CPI); the unemployment rate; and the annual trust-fund interest rate. Again, the assumptions used to produce the claim of trust fund “