He’s earned a reputation as a straight talker. And there’s one issue he always gets deadly serious about. Could Chris Christie finally be the president who fixes Social Security?
Gov. Christie has made Social Security one of the central issues of his campaign, “telling it like it is” and introducing a major new plan to reform the entitlement program that accounts for almost a quarter of the government’s budget.
In last Wednesday’s debate, Christie seemed at his best when talking about the future for Social Security. “[The government] told you that your Social Security money is in a trust fund,” said Christie. “All that’s in that trust fund is a pile of IOUs for money they spent on something else a long time ago.”
When challenged by Huckabee about wanting to cut benefits, Christie’s response was golden. “The only way we’re going to be moral, the only way we’re going to keep our promise to seniors is start by following the first rule we should all follow, which is to look at them, treat them like adults, and tell them the truth.”
Understandably, many are put off by Christie’s direct style and unshakeable habit of being constantly angry. But his message on Social Security is worth hearing.
Christie is particularly right on an important fact – much of what Americans believe about Social Security is detached from reality.
He has drawn criticism for using confusing (some say misleading) language, claiming Social Security will be “insolvent” in seven to eight years. That’s not quite true. The program won’t technically be insolvent for about 20 years, when the trust funds will run dry and the program will still be running deficits.
But the seven-to-eight year timeline is important for another reason, because the money in the Social Security trust funds doesn’t really exist as an account full of cash. Though the previous surpluses from Social Security were designated as a “trust fund” and are treated as assets of the program, the money was already loaned to the Treasury’s General Fund and has been completely spent on other government programs.
That means that we will have a tough financial decision to make in less than a decade. Even the liberal Center on Budget and Policy Priorities acknowledges this. Senior fellow Paul Van de Water writes, “When Social Security needs to start cashing in its holdings of Treasury securities to meet its benefit obligations, the federal government will have to increase its borrowing from the public, or raise taxes or spend less.”
Most notably, Christie’s proposal to fix Social Security adopts a controversial proposal to phase out benefits for high earners. Those making more than $80,000 a year will see their benefits begin to decline on a sliding scale, while people making over $200,000 will not receive benefits at all. Surprisingly, the most ardent opponents of benefit cuts for the rich are those on the left.
Most of the long-term financial sustainability gained through Christie’s proposal will come through raising the retirement age to 69, indexing it to future life expectancy increases, and raising the early retirement age to 64. These changes will begin in 2022, and the retirement ages will increase 2 months per year until they reach the new limits.
Christie’s proposal also adopts the Chained CPI, a more accurate measure of inflation that may also lead to small benefit reductions, and eliminates the payroll taxes for seniors working past age 62 in order to encourage longer working lives.
The Committee for a Responsible Federal Budget estimates that Christie’s plan would close 60 percent of Social Security’s financing shortfall over the next 75 years. It may not be the perfect solution, but it’s a good place to start.