The main PoliticsDebunked.com page

Facebook has a bug directing all links here to the blog. For the main site please go to http://www.PoliticsDebunked.com

Saturday, March 30, 2013

Social Security forecasts are very unrealistic, we don't have good estimates for what it will cost.

A new site  page is up, or here is an intro:
 
In the US Treasury's annual "Financial Report of the U.S. Government" released in January 2013, the Government Accountability Office reports that the numbers for Social Security are so problematic it couldn't audit them to even render an opinion, saying: "In addition, GAO issued disclaimers of opinion on the 2012, 2011, and 2010 Statements of Social Insurance (SOSI)".  They don't attempt to audit projections of future finances which are even more problematic, and may underestimate worst caste costs. Their claimed "high cost" scenario is high cost in nominal dollars, but if you adjust it for inflation it becomes the lowest cost scenario. 

  It is important to note the SSA has  a history of not just being  wrong on their expected demographic estimates (which is understandable for a long term forecast), but more importantly being overoptimistic about how much variation to consider for best/worst case scenarios. The 1950 annual SSA report projected US population in 2000 to be worst case 199 million, best case 173 million. In reality it turned out to be 282 million, 42% above their highest projection. Imagine if their real costs turn out to be 42% higher than their current projections. 

The SSA claims to be able to forecast things like GDP yearly growth through 2090  more accurately than 2  or 5 year forecasts have proven to be for the past few decades from the Congressional Budget Office, the Administration, the Federal Reserve and blue chip private consensus estimates.  Their estimates indicate they think they can forecast future GDP even more accurately than GDP is measured. Their projections have questionable estimates, and exhibit overconfidence in the accuracy of those estimates.

 
Imagine by analogy someone were to document the most sophisticated  weather forecast system existing today. They might provide lots of numbers,  but if it gave a forecast for the weather 1 year from today and claimed it would be off at most by 1 degree we would still be wise to be rather skeptical without better evidence their methods were realistic.
  The US needs to plan for the possibility 
Social Security system could wind up  in far worse shape than it admits since the estimates should be considered far less certain than it claims. For more details see this new site  page
 

Govt. overestimates future economic growth.

There are reasons to expect  the US economy to grow more slowly in the future than it has in the past. It  doesn't seem to be growing at an exponential rate,  which means its yearly % growth will go down over time.

Unfortunately government entities often perform estimates of future tax revenue, debt  and spending ( e.g. of social security and medicare)  based on   unrealistically optimistic  hopes for how fast our economy will grow.   Private retirement plans are often made assuming future percentage returns on investment will match past returns, which may not be the case for those who invest only in the US.

Supporting details on on this new site page here. 

Friday, March 29, 2013

Usually the faster government spending grows, the slower the private economy grows (and vice versa)

A new page is up showing that usually the faster government spending grows, the slower the private economy grows (and vice versa). This pattern appears throughout the world and isn't unique to  the US.

The graph above shows the % growth in real total   government expenditures (federal,state and local) compared to  the % growth in  real  private GDP. The median growth rate is subtracted from each to more easily see the pattern (when the graph is above 0 it is growing faster than the median value).
In this case 80.49% of the time government spending and private GDP are on opposite sides of 0. If the line is headed up the growth rate is increasing.  The lines are headed in opposite directions 72.5% of the time.

There are many factors at play which complicate the pattern so the curves aren't exactly mirror images. Worldwide economic factors have an influence as do government policies  that impact the economy but don't change spending, advances in technology, etc. For more info check the new page.

Wednesday, March 27, 2013

Federal reports show government hides spending&debt (e.g. $6.5 trillion in pension liabilities not in national debt).


  A new page was added to the site: Federal reports show government hides spending&debt e.g. $6.5 trillion in pension liabilities aren't included in the official national debt (without even addressing the issue of unfunded liabilities) 15-20% of spending is left off almost  all  budget figures and has been for decades despite objections from  US Comptroller Generals. Most economic data which includes figures for   "total government spending" leave off large amounts of government spending which they hide in their "business categories".  See the web page for more. 


Stay tuned. A few pages on more important issues will be posted within the next few days. A minor update was made to the about page noting why tips would be useful.