Started poking around the new Census numbers more. Not good.
In sum, the assumptions our entitlement engines made are all out of whack. A 2010 population of 308m. is just not at all what current models were expecting. The Social Security Trust Fund expected 316m. in 2010, 330m. by 2015. Ain’t gonna happen.
More importantly, the cash flow negative forecast is no longer in the near future — 2015 — it is in the past. Bruce Krasting explains:
We will never see a return to a cash surplus. The 2037 drop-dead date will be shortened by a minimum of 5 years. I say they system explodes in 2030. These are very material changes. … In 2000 SSA correctly forecast the population for 2010. In the same 2000 report SSA forecast a CASH surplus at SS for 2010 of $93 billion. The actual result of 2010 will be a deficit of $45 billion. The $140b miss is largely a function of the lasting impact of the 08 recession and the continuing high unemployment. … At so many levels we are fooling ourselves as to how wealthy our country is and how quickly we should be growing.
So that’s the feds. Care to imagine what lower population growth means for dozens of state and possibly hundreds of local public pension schemes? Depending on the precise assumptions we are looking at insolvencies over and above the scary headlines on the topic in recent months.
For that reason there is every reason to expect a huge Euro-style clash between 1) public sector employees and the rest of the population 2) Older tax eaters and younger taxpayers. There is just no way to fund all the obligations now on the books. And no way to grow out of the hole at this late date.
