Report likely to show cold realities of Social Security ills

An overdue report from the trustees of Social Security and Medicare will be released Aug. 5. As if the East Coast needed any more heat.

Normally released around April 1, the 2010 report was delayed until the end of June to allow actuaries time to compute the effects of the health care reform bill. Remember, one of the selling points was massive Medicare savings.

Ideally, the trustee report would be the first arm’s-length assessment of just how realistic those expectations are.

The reports have been issued annually since 1941, the much handier summaries since 1983. When you see or hear news accounts dating Social Security or Medicare insolvency, the trustee reports are the source of that information.

Although some have challenged the economic assumptions built into the forecasts, the reports are generally considered unbiased. They certainly have been sobering.

In 2002, exhaustion of the trust fund for Old Age and Survivors Disability Insurance was forecast by 2042, with withdrawals exceeding income in 2018. Those estimates changed very little until last year, when the prognosis was lowered to 2037 for exhaustion and to 2016 for negative cash flow. Incredibly, in hindsight, little change was expected for 2010.

Incredible because the hour of net withdrawals may have already arrived. Because of the sharp drop in employment well into 2009, and the meager recovery this year, Social Security payroll tax revenues have tumbled below projections. Meanwhile, who-knows-how-many thousands of laid-off workers old enough to qualify for some level of Social Security benefits have entered the system sooner than projected.

No wonder, then, that a recent USA Today/Gallup poll found 60 percent of non-retirees do not expect Social Security to be there for them when they turn off the shop or office lights for the last time.

That cynicism, some of it fomented by those who want the system killed, is unfortunate and overblown. But the upcoming trustees’ report is unlikely to be reassuring. Never since the first of these reports was prepared has the economy been as uncertain, with pessimists predicting a double-dip recession and optimists seeing little progress before 2012.

If you have to make a forecast looking 75 years ahead, as the trustees must, this is not the window where you want your telescope. Make that periscope.

There may also be questions about just how arm’s-length this year’s report may be. The two public trustee positions have been vacant since 2008. The report will be signed only by three administration officials – Treasury Secretary Tim Geithner, Labor Secretary Hilda Solis, and Secretary of Health and Human Services Kathleen Sebelius – and Social Security Commissioner Michael Astrue.

Any suggestion the report is less than totally objective will be pounced on by foes of Social Security and President Barack Obama, who nominated two very qualified candidates for public trustee back in October 2009. Robert Reischauer is a former director of the Congressional Budget Office. Charles Blahous III advised President George W. Bush on Social Security, and its privatization. The Senate Finance Committee will finally get around to a hearing on those nominations this week.

The hearing and trustee report, plus the findings later this year of the president’s deficit commission, will put more pressure on our leaders to solve at least the Social Security piece of our budget problems.

You can almost hear the sweating.