Common Sense on Social Security

Sponsor of the Social Security Solvency Simulator

An Objective, Nonpartisan Resource
on Social Security Reform

Our work is guided by three principles:   (1) Facts are more important than ideology;   (2) The public deserves access to the facts;   (3) Provide simulation tools so people can make sense of the issues.

Note: This is archival material. It was current in 2004. As the Social Security solvency problem remains unsolved, this website's analytic framework remains relevant, but the website has not been updated for some time.


Sensibly-Asked Questions (SAQ's) on Social Security Reform

This section could be called "FAQ's on Social Security Reform," but we like Sensibly-Asked Questions better. Here we address the following SAQ's: How does Social Security work? Is there really a financing problem? What's the reasonable way to go about fixing it? Why is the debate so polarized? What can I do to help?

Briefing Book on Social Security Solvency

How to critique the Republican approach - the unfounded optimism of the GOP, and how its reform plan shrivels when analyzed realistically. How to critique the Democratic approach - the four evasions that make up the sum of the Democratic reform approach. A responsible Republican strategy. A responsible Democratic strategy. If the economy grows faster than predicted - its potential effects on both strategies. An all-sided analysis based on Simcivic's simulation modeling tool.

Bush and Kerry on Social Security

Prepared Summer 2004.

Both candidates offer disappointing platforms.   George W. Bush wants to change Social Security by diverting a portion of the payroll tax to fund Personal Retirement Accounts. John Kerry opposes privatization, supports pay as you go funding, favors a faster economic growth rate. Kerry disappoints with a website that is woefully poor in framing Social Security's looming solvency crisis. (His new campaign book, "Our Plan for America," is even less substantive.) Bush's website disappoints by making promises that fail key tests of evidence and logic.

The heart of the difference.  Bush wants to protect benefits by changing the structure of the Social Security program. Kerry wants to protect benefits by generating a faster GDP growth rate. To see what this really means, both for the solvency of our Social Security system, and for its ability to pay benefits to retirees, we have run simulation tests on realistic versions of the Bush and Kerry approaches using our java-based Social Security Solvency Simulator.

Here's what we find.  In the slow growth scenario Social Security Trustees use for making long-run solvency forecasts, a realistic Bush strategy is a bit weaker than a realistic Kerry strategy for a time, then matures to become slightly stronger. In a faster growth scenario, Bush's strategy loses its eventual advantage. In fact, Kerry's likely reform strategy actually outperforms Bush's in a fast growth economy. In cumulative benefits paid to retirees over the next 70 years, how much is at stake? Perhaps $10 trillion in a slow growth economy ride on the fate of Bush's private accounts issue. $220 trillion in additional benefits ride on the fate of Kerry's faster growth issue.

The open issue - honest leadership.   Social Security goes cash negative in the late teens or the early twenties. Will candidate Kerry level with the American people about the looming shortfall and the need for action? Bush's current strategy for Personal Retirement Account is spun from dreams about long-run stock market returns that cannot be squared with the real world. Will candidate Bush set aside his fantasies and intelligently discuss the real world pros and cons of his proposed strategy? An honest acknowledgement of Social Security's shortfall problem would be a welcome step forward from Kerry. An honest acknowledgement of the limitations to Personal Retirement Accounts would be a welcome step forward from Bush.

Do Members of Congress Pay Into Social Security?

Perhaps you've read the e-mail message: "Social Security could be very good if only one small change were made. And that change would be to jerk the Golden Fleece Retirement Plan from under the Senators and Congressmen. Put them into the Social Security plan with the rest of us and then watch how fast they would fix it." Has the author of this email gotten the facts straight? Do Members of Congress receive Social Security or not?

Simcivic Updates

Visit our Simcivic Updates - newsletters that use the Simulator to analyze contending reform strategies.   Is President Bush on the Right Track?     Is Congressman Matsui on the Right Track?    Is CBPP's Greenstein on the Right Track?    Is the Cato Institute on the Right Track?     .   .   .

Social Security Solvency Simulator - Early Release Version

Click on the link above to use the Internet's only fully-featured Social Security Solvency Simulator. Our simulation tool allows you to test all the key strategic options - cutting benefits, raising the payroll tax, allowing the Trust Fund to invest in stocks and corporate bonds, creating Personal Retirement Accounts (PRA's), a new injection of capital, ongoing federal subsidies, borrowing - and see their impact.

Has lasting solvency been achieved? Have scheduled benefits been cut? Will benefits be payable as scheduled? Has an overly aggressive PRA program swallowed the stock market alive? The Simulator's charts show you the likely results.

By the way, some notes of thanks. To Dwight Bartlett, former Chief Actuary, for his advice and counsel. To Alice Wade, Steve Goss, Michael Miller, Jason Schultz, Pat Skirvin, Steve McKay, and several others in the Office of the Actuary, for their patience and responsiveness. To John Trollinger, in Social Security's public affairs office. They are all wonderful public servants.

Social Security Reform Simulator - A Halted Upgrade

A significant upgrade to our Simulator was begun, but halted in late 2002. Its status as of mid-2002 can be viewed at the link above.

Congress having done nothing useful on Social Security for the past ten years, our past work retains its relevance. See the articles below.

Three Pioneering Articles on Social Security Reform
(plus a very interesting solvency forecasting model)

Social Security Reform: Breaking the Stalemate

Social Security reform faces a difficult dilemma. Leave the program unfunded, and face the inevitability of deep benefit cuts in the future? Turn Social Security into a funded retirement program using personal accounts, and bear an up-front conversion cost that exceeds $5 trillion? Or use a stock-rich Trust Fund as the investment vehicle, and watch Social Security soak up nearly a quarter of the stock market?

It's no wonder Congress and the nation are stalemated on how best to fix the program. But there is a way out. "Breaking the Stalemate" offers a centrist strategy for ensuring solvency, protecting benefits, and holding the line on the payroll tax.

Section 1. Three Critical Themes
Section 2. The Quarter Century From Hell
Section 3. Closing the Gap: Six Options
Section 4. Narrowing the Choices
Section 5. The True Meaning of Long-Term Solvency
Section 6. Removing the Stock Market's Rose-Colored Glasses
Section 7. The Conservative Morality Play
Section 8. The Liberal Morality Play
Section 9. Evaluating the Two Arguments
Section 10. Combining the Best of Both
Section 11. A Low Risk Trust Fund Strategy
Section 12. A Low Risk PRA Strategy
Section 13. Are Any of the Strategies Affordable?
Section 14. A Multi-Stakeholder Rating Test
Section 15. One Program, One Decision

Are Seven Percent Returns Realistic? (2005 Revision)

Many argue that real returns to stock investors have averaged seven percent in the past and will continue to do so in the future. The key linkages that drive stock market returns suggest otherwise. Fresh analysis, solid research, significant graphs.

Are Seven Percent Returns Realistic? (1999 Original)

The Size/Return Paradox

Reformers need to take a hard look at the Size/Return Paradox. An overpriced stock market can soak up more investment from Social Security, but its long-run returns are certain to be somewhat lower. An underpriced stock market will have much higher returns, but it won't be able to absorb as much Social Security investment.

Our Solvency Forecasting Spreadsheet Model

Anyone interested in learning more about Social Security reform can test a wide range of options by using our Solvency Forecasting Spreadsheet Model. This page explains the Model's Input-Output Section. By experimenting, maybe you'll find the best possible solution. You can obtain a copy for yourself by emailing us at 

(Our Excel spreadsheet is not nearly as advanced as our Solvency Simulator, but it does have two advantages. You can see all the calculations. And solution scenarios can be saved electronically.)


Who we are. Steve Johnson's resume reflects an unusual and valuable mix of insider credentials and outsider credentials. The story behind the story involves a reformer's heart and a systems thinker's mind, but you'll have to read between the lines to pick it up here.

Just For Fun - Mandelbrot Point Tester

Who knew that Mandelbrot point testing could be so beautiful? Visit this applet on your way to the Simcivic Home Page.


Common Sense on Social Security
An initiative of The Wallcharts Workshop
A Non-Profit Successor to the Collaborative Democracy Project

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For more information on Social Security, the following web sites are suggested

The Concord Coalition

The Social Security Administration

Page Version 1.40
Revision Date March 16, 2009