So Chris Christie is going to campaign on the bold idea of reducing Social Security benefits. My guess is that Christie is going to learn that Social Security remains the third rail of American politics, and will get therefore get charred to a crisp before much longer. For this and many other reasons, we probably don’t have to worry much about Christie.
Still, it’s worth looking at his proposal. It has two parts:
- “I propose a modest means test that only affects those with non–Social Security income of over $80,000 per year, and phases out Social Security payments entirely for those that have $200,000 a year of other income.”
Even a lot of us liberal types don’t have a big objection to this. But there’s a problem here: I don’t have exact numbers in front of me, but I’d guess that perhaps 5 percent of retirees have outside incomes of $80,000 and maybe 1 percent have incomes over $200,000. A phaseout that affects such a small number of retirees would hardly save anything. At a guess, maybe it would reduce total payouts by 1-2 percent or so.
But here’s the second part of Christie’s proposal:
- “I’m proposing we raise the age to 69, gradually implementing this change starting in 2022 and increasing the retirement age by two months each year until it reaches 69.”
Ouch! As Matt Yglesias points out, life expectancy for the poor at age 65 has barely budged over the past three decades, sitting stubbornly at about 15 years. A 2-year cut forces the poor to work longer and effectively slashes their lifetime Social Security payout by nearly 15 percent. This is a huge reduction for anyone with a low income, and it’s especially cruel since it would mostly target people who perform manual labor and have the hardest time working into their late 60s.
I am part of a dwindling band of liberals who is willing to cut a deal on Social Security that would reduce future payouts in return for higher funding rates. Unfortunately, this was never going anywhere because conservatives weren’t willing to deal on the funding side, and it’s even deader today because liberals are increasingly demanding increases in Social Security, not cuts.
But regardless of how you feel about all this, you should hate Christie’s proposal. As I and others have pointed out repeatedly, raising the retirement age is the worst possible way of fixing Social Security’s finances, doing its work primarily on the backs of low-income workers while making only token demands on the rich. It’s a cruel and callous proposal and everyone should recognize it for what it is.