New Jersey Governor Chris Christie has just demonstrated that he can redistribute money as well as any Democrat. Why he thinks such efforts would attract Republican primary votes is a mystery.
Christie was in New Hampshire this week testing the presidential waters and decided to roll out a Social Security reform plan: Take money away from wealthier seniors and give it to lower-income seniors.
Except for the “senior” part, that sounds exactly like President Obama’s solution for every problem.
Specifically, Christie wants to raise the Social Security retirement age, which is already on its way from 65 to 67, to age 69. He also wants to cut benefits for seniors making $80,000 or more (not including their Social Security income) and eliminate benefits entirely for seniors making more than $200,000.
That change would likely delay the day the Social Security Trust Fund runs dry, currently estimated to be about 2030—whether that trust fund is an accounting sham is a debate for another day—whereupon benefits will be cut by about 25 percent. So Christie’s plan redistributes money from higher-income seniors to lower-income seniors by delaying the day their benefits are cut.
The Wall Street Journal reports that, “When asked if his plan constituted a tax on the wealthy, Mr. Christie said: ‘I quite frankly think that my friend Mark Zuckerberg doesn’t need to collect Social Security, Warren Buffett doesn’t need to collect Social Security. Their lives will not be materially changed by it.’”
Obama couldn’t have created a better straw man himself: Point out that two of the world’s richest people don’t need Social Security benefits and then conclude that seniors with incomes as low as $80,000 wouldn’t be harmed by reducing or eliminating them.
And notice that, like Hillary Clinton, he avoided answering the question. The question was whether his plan was a tax on the wealthy, which it absolutely is.
So you work hard and pay into the Social Security system for 45 years and if you were successful, Christie would penalize you by cutting or eliminating your benefits.
But what about some of the other problems with Christie’s plan, I bet he hasn’t considered. He says the changes wouldn’t apply to current retirees or those near retirement. So let’s look at someone born in 1970 who will turn 69 in 2039.
According to the U.S. Census Bureau, a white male born in 1970 can expect to live 68 years—one year short of Christie’s 69-year-old threshold. Worse yet, a black male born in 1970 can expect to live to 60 and black females 68.3. Under the Christie plan the only ones who would actually be able to claim Social Security (on average) would be white females.
Of course, lots of people live longer than the Census Bureau’s average expected life span, but actuarially blacks tend to have shorter life spans than all other races. So delaying the retirement age hurts them most because more on them will die before age 69 and never get a dime from Social Security—after paying in perhaps 50 years.
Here’s another political problem: Democrats are leaning toward expanding Social Security benefits as a way to attract more seniors, who tend to vote Republican. And the Dems will almost surely propose paying for that benefit increase by raising taxes on the wealthy—all of them, not just seniors.
What Christie should be is proposing a way to allow younger workers to opt out of Social Security and put their 12.4 percent FICA payroll tax into a personal retirement account. That money would belong to the individual, not the government. People could retire when they wanted to and if they died early, that money would go to their estate. (If you die early under Social Security you get $255, even if you had paid in 40 years.)
In short, Christie—and other Republicans—should propose Social Security options that would attract younger voters, not redistribution schemes that would hurt some seniors.
And note that Christie’s plan would not solve Social Security’s financial unsustainability, just delay it. His “solution” is neither bold nor original. It only puts a bandaid on a broken system, just like a Democrat would do.