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Monday, August 31, 2015

Christie is wrong on Social Security

Once upon a time, I liked Governor Chris Christie of New Jersey. He seemed tough but now as he seeks the presidency, I realize he is not too bright. He keeps touching thee third rail of American politics: Social Security.

He wants to means test it.

No, no, no, no, and hell no.

This pandering to those envious of successful people eventually bites the middle class in the butt.

That is how the income tax began. The Chris Christies of a century ago said it was only fair to tax the super-duper rich.

Today, half the country is now super-duper rich according to the IRS.

Here is what he told Fox News on Sunday about Social Security:
WALLACE:  Finally, what should voters think of any of your rivals who say we can preserve Medicare and Social Security without cutting benefits?
CHRISTIE:  They're not telling the truth.  They're just not telling the truth.  Or, I guess, the alternative could be, Chris, they want a massive tax increase on the American people.  If they want that, that's fine. Here's my attitude about it, you have two choices, to either get rid of some benefits for the very wealthiest in America who don't need a Social Security check and I've talked about that, or you can give the government that's already lied to us and stolen from the trust fund more of your money.  I'm going to tell you the truth -- I don't want to give the government more of our money so they can lie more to us and steal more from us.  
This anti-government rhetoric comes from a career government employee who became a politician.

The way to fix Social Security is to raise the interest Congress pays on the money it borrowed from Social Security from the 3.6% it now pays to 6%.

No muss. No fuss. No means testing. I began paying into Social Security when I was 16. The government had better keep its promise and not punish me for having a 401-k instead of blowing my paycheck every week.


  1. It seems to me that if they means test it will have to be on only the very wealthy otherwise there will be too much push back (and probably some serious social upheaval). Social Security is probably safe for you if you are over 50, however if one is younger than that I would be very worried.

  2. There are a couple of other fixes that need to be done. Mainly with SSD. Benefits should be based on what the person contributed factored for age at disability, in other words, they should get less than a retiree. Considerable less in most cases. And their disability should be factored on what the can still do. For instance, these people who go into mental tizzies when they have to work can still be used by local PD as training tools in the tazer class.
    A friend of mine was a quad. Crippled when surgery to remove a tumor from his spine didn't go right. He still worked an office job until about four months before he passed away. If he can work, I can work, and so can most of the people who claim SSD.

  3. An interesting suggestion there, Don. It would have two beneficial effects that I can see: one, on paper it would add to the balance sheet of the SS account (Al Gore's "lockbox"), and two, it might give Congress pause about using the SS fund as the federal piggy bank to fund deficit spending in place of crafting a balanced budget. In the end, however, the first necessary step I see is to raise the early retirement age from 62 to around 65, based on the same logic that justified raising the full retirement age. Even now, the majority of retirees take early retirement instead of postponing their benefits until full retirement age or until age 70, something that was not anticipated when SS was first passed. Raising the early/full retirement ages restores the program to what the original intent was, before people began to live so much longer because of vast improvements in health care and medicine.

  4. For someone who's otherwise well-versed in American history, your blindness on this topic is astonishing. Of course Social Security should be means-tested. That's why it was started - to provide a "social safety net" to those who had no other means of support.

    It wasn't intended to be an automatic entitlement - safety nets don't normally work that way. When started, the expectation was to pay for very basic life support, for the few months or years between retirement and death. Most people bought in to the necessity of paying in to a system they'd never (by the grace of God) have a need for.

    1. It was never intended to be means tested. FDR called it a right, not charity. Means testing does nothing. If you deny the top 1% of Americans this stipend which they earned, you won't balance the plan. You would have to lop off the top 30% to do that. That's why I oppose this BS. (How about we means test presidential pensions?)
      From the National Archives: "The act created a uniquely American solution to the problem of old-age pensions. Unlike many European nations, U.S. social security "insurance" was supported from "contributions" in the form of taxes on individuals’ wages and employers’ payrolls rather than directly from Government funds. The act also provided funds to assist children, the blind, and the unemployed; to institute vocational training programs; and provide family health programs. As a result, enactment of Social Security brought into existence complex administrative challenges. The Social Security Act authorized the Social Security Board to register citizens for benefits, to administer the contributions received by the Federal Government, and to send payments to recipients. Prior to Social Security, the elderly routinely faced the prospect of poverty upon retirement. For the most part, that fear has now dissipated."
      I paid into it from when I made $1.30 an hour flipping burgers at 16. Now 46 years later, I am collecting what this nation promised me
      Now two things, Medicare did as much to eliminate elderly poverty (now below 10%) Two, 80% of Republicans in Congress voted for it.

    2. "It wasn't intended to be an automatic entitlement"

      That's not my understanding. The Social Security Act of 1935 had two components to it: the first was a general welfare program under Title I, which provided block grants to states to fund their welfare programs for the aged (the social safety net part), and a contributory program funded by mandatory employment taxes, Title II, which is the social insurance program that provides SS retirement benefits to all covered workers. As distinct from the welfare component of the original SS Act, the latter was contemplated to be an automatic entitlement in view of its nature as long-term INSURANCE for workers.

      It is a misconception to think that the Title II SS benefits were ever intended to be a "social safety net". Quite the opposite. From the beginning, Title II was intended to use a worker's own income to establish a mandatory retirement savings account for each worker that would RELIEVE the government of having to provide such welfare payments to someone in his old age.

    3. You have the answer in your "National Archives" quote - the Social Security Board administered the benefits, and at least early on, it was done on a means-tested basis.

      The nation promises you nothing. Anything granted by a government can (and likely will) be nullified by a future government. That should be obvious at this point (think 18-year-old right to drink as a modern instance).

      The major problem is one of simple demographics - what happens when this table converges and crosses over?

      Christie understands accounting. Not perfectly, but better than most. When the ratio of pay-in to pay-out converges and crosses into more pay-out than pay-in, things will get ugly very quickly... look at Detroit and various cities in California over the past couple of years for examples.

      I don't know about you, but I'd really rather have a little less over a longer period of time than not at all.

    4. The solution is really simple, base the retirement age now 66 same as the original. In 1935 the life expectancy was 61 years or 5 years lower than the eligibility age. It was expected many would die before eligibility. Depending on when you were born it is now 70+ years, 78yrs if born in 2005. For the sake or argument set it at 80 years old. Problem solved. However, the best solution eliminate it for anyone under 50. They would still have time to start IRA's or 401K's.

    5. T says:

      First off, Social Security was never intended to be an exclusive retirement for anyone; it was always meant to be supplemental.

      Secondly, (IMO) Social Security was designed as just another way for the govt to reach into the working man's pocket. Payroll taxes are levied on wages and earned income (IRS W-2 and 1099) NOT on capital gains and interest which make up the bulk of the income of the wealthy.

      Thirdly, it was passed with a full retirement age of 65 when the average life expectancy of a working male was about 58 years. One can easily argue that this was yet another scam BY the govt to FUND the govt; IOW it was means-tested by age (age-tested?) from its inception.

      As to current means-testing, I would hope that any administration would have an impossible time arguing that anyone forced to pay into a system should be prohibited from seeing any direct benefit from it otherwise it would be nothing more than another wealth redistribution scheme. And THIS from a Republican contender fro the presidency?

    6. It was meant to be a supplemental income, not a primary means of support, but that's completely immaterial. It has been sold for at least 3 generations, maybe more, as retirement income. So sure, one can make the claim that this was nothing more than a supplemental and was set up to kick in near the end of life, but the government stopped telling people that decades ago, and avoided making any changes to reflect that.

  5. Don, I love you like a brother, but (there is always a but), for a country that spends more than it takes in as taxes, where will the extra 2.4% interest come from? This solution is the flip side of the $15.00/hour 'living wage' fallacy.


    1. Well, Brother JJ, we shall get it by privatizing EPA to Kool-Aid who will turn our rivers orange for $1 a packet

  6. This is only one of many issues Christie is wrong about.

  7. "the Social Security Board administered the benefits, and at least early on, it was done on a means-tested basis."
    @wpw: What's the documented basis for your claim? I can find no evidence to support what you've written. At most, it appears that FDR may have originally wanted the program to be means-tested, but he changed his mind in order to get support for the enabling legislation.

    While it is true the benefits are not MEANS-tested, they certainly are INCOME-tested. Benefits do not rise in proportion to one's income, being heavily weighted toward low income earners (even before the FICA tax cutoff). This is done by a benefits formula that, when it comes to determining your actual retirement benefit, counts your lowest earnings the most and gives progressively lower weight to the highest levels of your taxed earnings. Thus, someone who has earned minimum wage over his working lifetime gets proportionally higher benefits than someone who has earned much higher wages over his working lifetime.

    In fact, people from other countries (e.g., the Philippines) that have much lower wages and a lower standard of living than the US can "game" the system this way: if they take low paying jobs in the US, they can still retire in their own country where the cost of living is much less than in the US, the basic SS payment being more than enough to ensure them a comfortable retirement in old age.