Stephen Goss, chief actuary for the Social Security program, defended the administration's assumptions.
"Keep in mind that we are trying to make projections over a very long time, 75 years," Mr. Goss said. "I would suggest that 5 percent [average annual rate of return in the market] at the moment makes perfect sense. But if you buy at another time, when the price-earnings ratio is 10, you would expect a higher return over time."
Consider what he's saying here. Currently the price/earnings ratio in the S&P is about 20. So, in another words, if we're fortunate enough to experience a massive stock market crash sometime soon, then average annual rates of return after that might be as high as George Bush says they will be!