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Answers to Questions for the Record from Ranking Member Becerra following a Hearing by the House Ways and Means Subcommittee on Social Security on Understanding Social Security's Solvency Challenge 1 (December 9, 2016)

handle is hein.congrec/cbo3267 and id is 1 raw text is: Answers to Questions for the Record From Ranking Member Becerra 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, Ranking Member Becerra submitted questions for the record. This document provides CBO 's answers. Question: Please describe the model or approach the Congressional Budget Office (CBO) uses for making long-range projections, and what you know of the model and approach used by the Office of the Chief Actuary of the Social Security Administration, comparing and contrasting the relative strengths and weaknesses of each approach. Answer: The Congressional Budget Office's long-term projections for Social Security spending and revenues are based on a detailed microsimulation model that starts with data about individuals from a representative sample of the population and projects demographic and economic outcomes for that sample through time.1 For each person in the sample, the model simulates fertility, death, immigration and emigration, marital status and changes to it, labor force participation, hours worked, earnings, and payroll taxes, along with Social Security retirement, disability, and dependents' and survivors' benefits. The amounts of Social Security taxes paid and benefits received, and the resulting gap between total revenues and benefits, depend on estimates of life expectancy, conditions in the labor market, and other factors. CBO's microsimulation model is designed so that, on average, the simulated economic outcomes of the sample equal the agency's long-term economic projections. Those economic projections are extensions of the 10-year economic 1. The core individual-level data used in CBO's model come from the Continuous Work History Sample, an administrative data set provided by the Social Security Administration. Those data contain a history of individual earnings records for a sample, beginning in 1951, of 1 percent of all people who have been issued Social Security numbers. The data also contain demographic information and Social Security information for each individual. The information for Old-Age, Survivors, and Disability Insurance includes claiming dates, claim type (retiree, survivor, or disability), primary insurance amount, monthly benefit amount, and the reason for disability. For more detail, see Jonathan Schwabish and Julie Topoleski, Modeling Individual Earnings in CBO's Long-Term Microsimulation Model, Working Paper 2013-04 (Congressional Budget Office, June 2013), www.cbo.gov/publication/44306; and Congressional Budget Office, CBO's Long- Term Model An Overview (JUnte 2009), www.cbo.gov/publication/20807.

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