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April 17, 2015

Christie’s Third Rail Gamble

The New Jersey governor unveiled a plan to tackle major entitlement reform.

New Jersey Governor Chris Christie unveiled a plan to reform entitlements while visiting New Hampshire this week. The potential GOP presidential candidate noted that entitlement spending is “growing the deficit and slowly but surely taking over all of government. In the long term, it will steal our children’s future and bankrupt our nation.” He’s certainly right about that.

Christie’s proposal would change means testing for Medicare, with wealthier recipients paying more for their premiums on a sliding scale. Those at the top of the scale with incomes above $196,000 per year would pay 90% of their premiums out of pocket. The retirement age for Medicare would slowly rise to 69, but not until 2064.

As for Medicaid, Christie suggests simplifying the program so states receive fixed amounts per enrollee. This, according to the Congressional Budget Office, would reduce the deficit by $500 billion over the next decade.

Christie’s plan for Social Security calls for restructuring the system into essentially a retirement insurance policy. He proposes raising the retirement age for Social Security to 69, again very gradually as with Medicare. Means testing would affect payees with incomes over $80,000, and Social Security would be phased out entirely for those with incomes over $200,000. The overall plan wouldn’t kick in until 2022.

The facts aren’t all in yet regarding Christie’s plan, but facts never stop the Left from attacking it. Any time entitlements are mentioned in the same sentence with reform, statists get nervous. A shrinking entitlement means a shrinking government, and a shrinking government means less power for the Left. And that won’t be tolerated.

Senators Bernie Sanders (Socialist-VT) and Elizabeth Warren (Unannounced Socialist-MA) have called for simply raising taxes on higher incomes to cover the rising entitlement costs that threaten to swamp the rest of the federal government’s fiscal responsibilities. Raising taxes is such a novel idea, after all.

Ramesh Ponnuru, senior editor at National Review, notes that there is no way to tax ourselves out of the coming entitlement train wreck. The numbers are so vast that for any tax increase to work it would have to be so large as to bury individual taxpayers, discourage investment and productivity, and bring the economy to a grinding halt.

But Ponnuru isn’t much of a fan of Christie’s plan, either. While the idea of lower benefits for wealthier people makes sense, Ponnuru notes that Christie’s plans for means testing would discourage people from saving for retirement or working in retirement at a time when both should be encouraged.

Ponnuru writes, “Ideally we would move toward a better system that guaranteed all senior citizens a decent floor of income — something Social Security does not do — while expanding people’s ability to use their own savings to finance retirement above that floor.”

Christie’s proposal brings entitlement reform back into the national debate. He’s the first possible GOP presidential contender to do so, which raises his profile a bit. The one-time shining star of the GOP has suffered a significant fall from grace over the last couple of years. His bold style was once considered to be a game-changer in the famously corrupt blue state of New Jersey, but, after the smoke cleared, his blustering and not-very-conservative policies have done relatively little to reverse the state’s dire economic situation. His fortunes weren’t improved by literally embracing Barack Obama after Hurricane Sandy or by the Bridgegate scandal, which the New York Times gleefully reminds us is not over.

None of these facts should discourage an honest assessment of Christie’s proposal for entitlement reform. He has staked his political career on shaking up the established government order, even if to varying degrees of success. He makes valid points about the dangers we face to the growing rate of entitlement spending. And the longer we wait to make a decision on how to fix the problem, the more painful the solution will be.

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