Economy

After Destroying His State’s Retirement System, Christie Sets His Sights On Social Security

CREDIT: AP

Gov. Chris Christie (R-NJ) proposed cutting Social Security benefits in a speech in New Hampshire on Tuesday, proposing a similar approach to national retirement systems as the one currently failing in his home state.

The likely 2016 White House candidate proposed trimming future payments to anyone earning over $80,000 a year, with anyone earning $200,000 or more per year getting nothing out of the system they paid into. Christie stressed that no one currently receiving benefits would face the cuts, but ignored proposals that would improve the program’s solvency without requiring any reduction in benefits.

Christie has a track record in New Jersey of making big promises to retirees and then walking away from them. And this newest, national promise isn’t even a particularly effective one. Opponents of benefit cuts denounced the governor’s approach as the first stage in a gradual assault on an immensely popular program.

“Christie has various proposals for our earned benefits, including raising the retirement age for Social Security and Medicare, making seniors pay more for their Medicare, and reducing the cost of living adjustment Americans receive each year. Each and every one of these is spelled the same way: C-U-T,” Social Security Works executive director Alex Lawson told ThinkProgress. “Americans have earned their benefits, and I am confident that Governor Christie’s plan to take them away will be soundly rejected by the American people regardless of political affiliation.”

Groups like Lawson’s argue that means testing proposals like Christie’s are a bad idea both because the math doesn’t work – the savings from means testing are too small to close long-term funding holes program-wide, and increased administrative costs would wipe out much of the too-meager savings from the change – and because it “contradicts the essential nature and spirit of the program” as an earned benefit accessible to all working people.

The extreme popularity with voters that has traditionally prevented cuts to Social Security owes in large part to the basic fairness of a system that pays out what workers put in. Cutting the wealthy out of that bargain as Christie proposes would shrink the voting coalition that protects Social Security from politicians whose Wall Street backers would benefit if aging Americans had to depend on the investment houses instead of the government for their retirement security.

“It’s all part of a coordinated attack on Americans’ retirement security,” Lawson said, drawing connections between Christie’s proposals and the quieter work to derail pension systems that billionaire John Arnold funds around the country. “They’ve already destroyed private pensions. If they can get rid of public pensions as well, there will be nothing for people to do but put their money in Wall Street,” he said.

Christie’s handling of the public retirement system in New Jersey makes it hard to buy the straight-talking image he presented in Tuesday’s benefit-cuts speech. The governor agreed to make $3.8 billion in payments to the state pension funds as part of a compromise in which workers agreed to make higher contributions to the fund themselves. Barely a year later, Christie reneged on his end of the deal and declined to fork over $2.4 billion of the promised total. He claimed it was “the only decision we’re left with,” but his tax subsidies and decision to let hedge fund managers invest state retirement funding cost a combined $3.3 billion. In February, a state judge found that he is still obligated to fulfill his payments promise. But that same month, Christie proposed further cuts to the pension system.

The governor’s Social Security speech is similarly disingenuous about the choices America has for closing Social Security’s oft-exaggerated long-term funding gap. Current law caps payroll tax collections so that only the first $117,000 or so that a person earns each year is subject to the collections that fund Social Security. The cap means that the highest-paid Americans only pay Social Security taxes for about two days each year. Eliminating the payroll tax cap and making the best-paid American pay on all of their income in the same way that most workers do would raise almost all of the money required to make Social Security fully solvent for the next 75 years, up from about 20 years now.

Congress is headed for a showdown over Social Security spending in the coming years whether or not Christie becomes president. But the political landscape for those fights is changing rapidly. In recent years Democrats were so afraid to oppose spending cuts that they entertained GOP ideas about cutting Social Security and even proposed some of their own. Now, thanks to the leadership of Sen. Elizabeth Warren (D-MA), large numbers of Democrats in both chambers are calling for expanding the program instead of cutting it.

On the first day of the current Congress, GOP leaders used a covert rules measure to ensure a manufactured funding crisis within the Social Security Disability Insurance program that is separate from Social Security retirement benefits.

The move will force a showdown over the disability program sometime next year, something Christie enthusiastically endorsed in Tuesday’s speech. “I believe we should use this moment to reform the system and incentivize getting back to work,” he said.