The problem with Chris Christie's plan to fix Social Security

While Christie is telling the truth that Americans are living longer, he isn't telling the whole truth. The research of the Social Security Administration reveals that the largest increases in life expectancy occur at a time of life when people are generally contributing to rather than collecting from Social Security. 

Christie's proposal also includes the adoption of the Chain-CPI for future COLA adjustments. He says that this measure tracks inflation more accurately. This, however, is not true.

If we are going to be honest, Chain-CPI does not measure actual inflation. It measures in part how people respond to inflation. If I decide, for example, that my health insurance is too expensive, and increase my deductible so that my premium remains the same, Chain-CPI says that the cost of living hasn't changed because I use less expensive insurance.

The use of Chain-CPI is a benefit cut which reduces buying power of benefits over time. This alternative is a very strange way to fix old-age insurance because the change progressively reduces benefit levels as someone ages. The use of Chain-CPI for Social Security's COLAs is somewhat like fire insurance which decreases its coverage as more rooms of a house burn.

The governor's proposal would introduce the idea of means-testing the program. While some estimate that this change will save the program a lot of money, this alternative breaks a founding principle of the program. Social Security should provide benefits without a means or needs test. 

The reasoning for this principle is sound. The program was created to lower the likelihood that a retiree might fall into poverty-ridden old-age. A means-test tends to discourage the savings that actually prevents poverty-ridden old-age. This approach is a strange way to fix Social Security. 

If we are going to be honest, the worker who is 50 and younger is likely better off rejecting Christie's proposal, and accepting the estimated 23 percent reduction in benefits when the Trust Fund is exhausted. The governor's vision of Social Security offers even less benefits, and less protection of those benefits. It secures the future mainly for politicians who get to argue about who is 'fortunate enough not to need' Social Security as today's workers approach retirement.

But let's be completely honest. Governor Christie's solution is a stop-gap measure that solves the problems for today's politicians rather the concerns of the retirees who depend upon the system. In 20 years, today's 50 year-old will be back at the table of politics explaining to his children's generation that Social Security will work if they just accept less.