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Answers to Questions for the Record from Chairman Johnson following a Hearing by the House Subcommittee on Social Security, Committee on Ways and Means, on the Comparison of CBO's Long-Term Projections with Those of the Social Security Trustees 1 (November 16, 2016)

handle is hein.congrec/cbo3266 and id is 1 raw text is: ~NOVEMBER 16, 2016 Answers to Questions for the Record From Chairman Johnson Following a Hearing by the House Ways and Means Subcommittee on Social Security on Understanding Social Security's Solvency Challenge On September 21, 2016, the House Ways andMeans Subcommittee on Social Security convened a hearing at which Keith Hall, Director of the Congressional Budget Office, testified about CBO's long-term projections (www. cbo.gov/publication/51988). After the hearing, Chairman Johnson submitted questions for the record. This document provides CBO 's answers. Question: The Congressional Budget Office has made changes to assumptions that have significantly changed the projected actuarial balance from one year to the next. This seems to be different than the Trustees' approach where it's more about gradual changes. Can you please discuss why CBO takes this approach? Answer: CBO produces independent and impartial analyses of budgetary and economic issues and considers it a priority to ensure that the agency's current-law budgetary and economic projections reflect the middle of the distribution of possible outcomes. The agency reviews historical data, the forecasts of other government agencies, and the academic literature, and it consults with its panels of advisers and other experts in the process of developing its projections. CBO strives to update its projections as new information becomes available. Such updates sometimes can lead to substantial changes from one year to the next in CBO's projections of the 75-year actuarial balance for Social Security's trust funds, but CBO believes its approach provides the Congress with projections that incorporate the most current thinking. When the agency decides that relatively large revisions are warranted by new information and analysis, it explains the basis for those revisions. Question: CBO and the Trustees are looking at the same, or at least very similar, historical data on earnings growth, but come to very different conclusions about the share of earnings that will be subject to payroll taxes. Can you please explain why this is? Please also provide the dollar values equivalent to 90 percent of covered earnings for each of the next 10 years. Answer: The differences between CBO's and the Social Security Trustees' projections of the share of earnings that will be subject to payroll taxes are found in the two agencies' projections of growth in earnings for higher-income people. CBO's projections of the share of earnings below the maximum taxable amount ($118,500 in 2016) are made on the basis of its projections of the entire distribution of compensation; those projections underlie the

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