As a rule of thumb, the longer the timeline, the more likely that government projections are wrong. The trustee reports have been relatively consistent in recent years, but there are two critical assumptions contained in them.
First of all, current law mandates a 25 percent reduction in Medicare physician payments starting next year. But Congress always passes a “doc fix” to prevent the spending cut, so an appendix to the trustee report notes that Medicare expenses could be higher than noted in the report.
Secondly, payroll taxes help fund both Medicare and Social Security, so higher incomes matter for generating revenue to cover the expenses of both programs. The trustees project that average real wages—adjusted for inflation—will be 55 percent higher than today at $68,000. Dean Baker at the Center for Economic Policy and Research noted in a Friday post, “In the last three decades, the vast majority of wage growth has gone to those at the top end of the wage distribution. As a result, workers at most points along the wage distribution have seen little gain in real wages over this period.”
Here’s the point: The report assumes that the United States figures out how to do something it hasn’t accomplished since Obama was in his 20s—raise incomes for those squarely in the middle class.
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