Methodologies in Fiscal, Economic, 

and Health Spending Projections

American Enterprise Institute Panel

STEVE GOSS, CHIEF ACTUARY, SOCIAL SECURITY ADMINISTRATION

SEPTEMBER 22, 2023
Initial Concepts

• There are no bad numbers—what matters is being entirely 

clear on what each number represents

• Projecting the future requires understanding the conditions 

and relationships underlying past experience, but then 

imagining how future conditions and relationships may change

• Change is the only constant, and a ruler is not a useful 

instrument for extrapolating into the future

• The choice of a model is itself an assumption

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Model Specification: What Is Assumed

• Projections under a “current-law” baseline to inform on the 

implications—need and timing for change

• What laws are assumed not to change? 

• For OASDI Trustees Reports—the Social Security Act

• Other laws may be assumed to change by “constructive obligation”

• For Budget projections—all Federal laws?

• No, OASDI and HI are assumed to be fully financed as needed from GF

• This is NOT current law and is unprecedented, and should be disclosed

• How about indexing of income tax brackets?

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Social Security Long-Range Actuarial Projections 

Started before 1935! Methods have adapted and evolved

• Example: Level Cost analysis by Bob Myers

• Assumed NO future growth in average earnings or prices

• This was before there were automatic adjustments in the law, as ad hoc 

adjustments were expected to continue, per “constructive obligation” 

• Currently, we assume income tax brackets will be modified on ad hoc 

basis to avoid bracket creep—again by “constructive obligation”

• But we cannot assume that currently scheduled benefits will be provided

• For example, the 1977 and 1983 Amendments reduced scheduled benefits

• Laws represent the intent of one Congress—NOT promises for the future

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Budget Projections by the Administration and CBO

Very different but both assume change in law to fully finance OASDHI;

obviously, assumptions matter!

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Social Security Long-Range Actuarial Projections 

for the Annual Trustees Reports, Starting in 1941

• Careful modeling of mortality by age, sex, and cause

• Fertility rates modeled by cohort

• Employment and labor force modeled considering 

economic cycles and life expectancy

• But assumptions for the long-term future are necessarily 

the main drivers

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How Accurate Have Trustees’ Projections Been?

• The 1983 Trustees Report projected OASDI trust fund 

reserve depletion in the mid-2050’s... 

• But mid-2030’s for the last 12 reports!

• Lower birth rates were anticipated, and mortality 

projections were extremely accurate

• Over 80% of the worsening since 1983 was due to 

unanticipated economic experience

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Earnings “Dispersion” 

Between 1983 and 2000 

Lowered the Percent of 

Earnings Taxable from 

90% to 82.5% • Overall, average earnings 

increased more than 

expected, but real growth 

was 62% for the top 6% of 

workers, while only 17% 

for lower 94% of workers

• Ratio has been stable 

since 2000 except for 

recession effects

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The Reduced Share of Earnings Subject to Payroll Tax Explains Most of the 

Increase in Cost as Percent of Payroll, Compared to the Projection in 1983

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But the depth of the 

2007-09 recession 

and slow recovery 

further reduced 

expected trust fund 

accumulation 

through 2019
Uncertainty about Assumptions (Methodology)

Again, we must be clear and disclose what is assumed

• Future birth rates, disability prevalence, demand for 

employment, labor productivity, etc., are unclear

• International factors, climate, behavioral responses matter

• A few examples:

• Do increased taxes really depress GDP if they increase income for those 

with relatively high propensity to consume? As for Social Security...

• Will tax brackets increase beyond CPI, to avoid compression?

• Other changes in law, like providing GR to cover OASDHI shortfalls

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Thank You!!

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Additional Detail

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Social Security Long-Range Actuarial Projections

Demographic, Economic, Programmatic Factors

• How have we been doing since 1983, the last major legislation?

• Demographic factors have been on target:

• Life expectancy at 65 of 19 years for 2015 was projected accurately in 1983

• Low birth rates after 1965 were anticipated in 1983

• Aged dependency ratio (65+/20-64) was projected at 26.1% for 2015, was 24.7%

• Economic factors are mixed:

• Ratio of workers to SS beneficiaries was projected at 2.74 for 2015, was 2.82

• But drop in taxable ratio by 2000 and impact of 2007-09 recession were not

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