Editor’s note: This article first appeared on The Hill. Click here for the original post.
Last week, Gov. Chris Christie (R-N.J.) dedicated time to champion entitlement reform at a 4-stop tour through New Hampshire. The governor said “Washington is afraid to have an honest conversation about Social Security, Medicare and Medicaid with the people of our country. I am not.”
So let’s be honest.
The Trustees will soon release the 2015 Trustees Report which will give us new insight to the financial imbalances in Social Security. In the report issued last year, the Trustees projected that the financing constraints of the system will emerge in 2033, forcing a 23 percent reduction in benefits. That exhaustion point means that someone who turns 67 today on average expects to outlive scheduled benefits.
To be honest, the proposal that Christie laid out does not “fix” Social Security. The changes do not even assure us that Social Security will function for 75 years, roughly the time to get most existing contributors through retirement. The Committee for a Responsible Federal Budget projects that his changes create about 60 percent of the savings necessary to kick the can once again.
The biggest problem with Christie’s proposal is that the components do not address the structural issues within Social Security that are causing the imbalances reported by the Trustees. The package in total simply takes the projected reduction of benefits and codifies on whom the reductions will fall.
His proposal calls for the normal retirement age to increase gradually to 69. What does a change in retirement age mean to someone who is 50? The person can still retire at 67, but with the lower benefit levels offered by early retirement. Those rules translate into a 13.3 percent reduction of benefits for someone who elects to keep the retirement age that he has today.
This change would make sense if the problems within Social Security derived from increases in life expectancy of future retirees. The Social Security Administration projects that the life expectancy of a retiree will rise about 2.5 years between 1980 and 2030. If adopted, Christie’s plan would increase the normal retirement age by 4 years over that time.