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?
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.
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.
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.
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.
Who knew that Mandelbrot point testing could
be so beautiful? Visit this applet on your way to the Simcivic Home Page.
A Non-Profit Successor to the Collaborative Democracy Project
Page Version 1.40
Revision Date March 16, 2009