You can argue that New Jersey Governor Christie was so far behind in the Republican Presidential sweepstakes that he had throw the equivalent of football’s “Hail Mary” long pass. If so, it is a beaut – and every candidate should catch and run with it.
The Governor has spelled out - in substantial detail – how to get a major portion of Federal entitlement spending, which currently accounts for 60% of a $3 trillion budget, under control - almost. Drawing heavily on recommendations from the Obama-appointed Simpson-Bowles Commission in 2010, Christie makes sensible belt-tightening proposals that address Social Security, Medicare and Medicaid.
Here are the most significant measures:
- Gradually increase the normal retirement age from 67 to 69. Increase the earliest retirement age from 62 to 64.
- Phase out entirely benefits for the highest earning seniors (over $200,000 in annual income).
- Eliminate the payroll tax for seniors 62 and older.
Social Security Disability:
- Encourage employers to retrain and rehabilitate disabled workers
- More timely reviews of recipients who may be able to work after temporary disability.
- Substantially increase premiums for high income seniors.
- Gradually increase eligibility age from 65 by one month a year, e.g. to 67 in 2040.
- Federal government financing be limited to a fixed per capita amount, adjusted for inflation, for each enrollee.
A rough estimate by the respected Committee for a Responsible Federal Budget suggests the savings in Christie’s package of reforms would save over $1 trillion in the next decade.
It may be hard for instinctive opponents of tax increases and “the welfare state” to support reforms of the sort that Christie has suggested. Sometimes they behave like the current Greek government, protesting reforms insisted on by their European Union peers. On the other hand, supporters of “doing nothing” resemble Detroit’s city council before bankruptcy or today’s government in Puerto Rico.
So far as Social Security is concerned, Governor Christie’s speech argued very much in the spirit of Adam Smith, Friedrich Hayek, and Milton Friedman. (See, for example, my blog Economists Who Made a Difference – IV Hayek.)
I’m suggesting that Americans pay into this system throughout the course of their life knowing that it will be there if they need it to support them. So that seniors will not grow old in back breaking poverty. But if you are fortunate enough not to need it, you will have paid into a system that will continue to help Americans who need it most.
Entitlement reform is a necessity. Chris Christie has made a major contribution to starting a serious discussion, even if the touchdown of becoming the Republican presidential nomination is still a long shot.
Let’s hear from all the other candidates, including Hillary Clinton.