Chris Christie is showing how to lose an election — by 'reforming' Social Security
New Jersey Gov. Chris Christie is already losing—and he hasn’t even declared his candidacy yet.
Christie, who may eventually join the pack of candidates battling to be the Republican presidential nominee in 2016, has attempted to demonstrate his readiness for office by tackling a big and important idea: The need to make Social Security and Medicare more financially stable. Without any changes, Social Security will run short of money sometime in the mid-2030s and Medicare will flatline a few years earlier. Everybody in Washington knows these entitlement programs need to be revamped. But few politicians are willing to propose specific ways to either cut back benefits or raise taxes to keep the program fully funded.
Christie, who fashions himself the rare politician willing to tell voters “hard truths,” isn’t afraid of the details. He wants to limit Social Security benefits for wealthier retirees, phasing them out for households with non-Social Security income of $80,000 or more and eliminating them completely above $200,000. He also wants to raise the future retirement age at which seniors can start drawing benefits, from 67 to 69. The elegibility age would begin to rise in 2022 and go up gradually, to minimize disruptions. There would be similar changes for Medicare eligibility. Such changes could save hundreds of billions of dollars per year and make Social Security stable for decades more.
Those ideas aren’t novel and Christie is hardly the first person to suggest them. Commission after commission has proposed similar ways to revitalize entitlement programs and get Washington’s entire budget on more stable footing. But every reform plan involves tradeoffs that generate winners and losers and impose an unpleasant cost on somebody. Meanwhile, the government is able to borrow seemingly infinite amounts of money at record-low interest rates, and voters seem content to pay today’s bills by borrowing instead of enduring the pain of paying in real time. Any politician who tells them otherwise won’t stay in office for long.
Budget experts are applauding Christie’s straight talk on entitlements — but ordinary people are booing. A scan of the remarks posted at the end of this Associated Press story on Yahoo Finance—“Christie to Propose Overhaul of Social Security Benefits” — shows commenters opposed to Christie’s plan by a ratio of about 15 to 1.
The most prevalent objection is the idea that retirees who contributed to Social Security their whole working lives would get short-changed in retirement if the government cut back benefits — no matter how wealthy the recipient. Here’s one of many examples:
The assumption behind such logic is largely incorrect, however. Virtually all Social Security recipients today get back more than they put in, according to data from the Urban Institute. A typical two-income couple earning average pay who turn 65 in 2020, for example, will have paid $634,000 into Social Security but will get back $1.02 million in benefits, after adusting for inflation. In fact, nearly everybody who enters Social Security by 2030 will get back more than they paid in. If anybody’s getting ripped off, it’s younger people paying to fund programs for their elders while money for other priorities runs out—a point Christie made when he discussed his plan during a speech in New Hampshire on Tuesday.
Among the commenters on Yahoo Finance, there’s the usual disgust with freeloaders (either real or perceived) who stand to collect money somebody else earned, as this reader argued:
And a few folks who weighed in (the 1 vs. the 15) agreed with Christie, even if voters don’t want to hear what he has to say, such as this commenter:
For what it’s worth, the many experts who have studied entitlement reform generally agree that several conditions are essential before the U.S. political system will be able to make the changes and tradeoffs required to keep Social Security and Medicare stable:
1. The majority of voters will have to understand why reforms are necessary. It may take a crisis, such as an actual shortage of funds, before this happens.
2. The pain—whether cuts in benefits, new taxes or a combination of both—will have to be shared in a way that seems fair.
3. Key lobbying groups such as AARP will have to back the changes.
4. It will have to be phased in over a long period so changes won't affect current enrollees or those soon to retire.
5. Even then, it will be tough.
Still, in 20 or 30 years, Chris Christie might seem like a visionary. Even if he doesn’t get elected.
Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.
