Chris Christie dangles the keys

April 17th, 2015 at 12:53 pm

As I stressed on CNBC this AM, Chris Christie’s entitlement plan is not a good plan. It is instead a classic “key dangle” (“look over here, not over there!”), as the folks at Vox nailed yesterday,

–While all the attention has been on benefit cuts for wealthier recipients, that part by itself does very little in terms of boosting the program’s long-term solvency.

–He gets his solvency bucks from raising the retirement age, and that is an across-the-board cut for affected retirees. As my CBPP colleagues noted: “Raising the retirement age amounts to an across-the-board cut in benefits, regardless of whether a worker files for Social Security before, upon, or after reaching the full retirement age.  A one-year increase in the full retirement age is equivalent to a roughly 7 percent cut in monthly benefits for all retirees who are affected.”

–Given that the increase in longevity has been concentrated among higher income elderly, the incidence of this benefit cut is particularly pernicious to those who need Social Security benefits the most.

–Which, by the way, is most elderly: 2/3 of Soc Sec beneficiaries depend on the program for half of their income; for 1/3, it’s 90% of their income. That also why these means-testing ideas targeting the wealthy don’t do much to boost solvency; to really make a difference, you’d have to whack retirees who very much depend on this income source. (This seems a good place to mention the Soc Sec is fully solvent for 18 more years; after that, if we do nothing–and woe betide us if that’s the case–benefit payouts would have to fall by 25%.)

–Raising the Medicare eligibility age is another bad Christie idea. It saves money for Medicare but actually raises national health care costs. Why? Because you’re taking the youngest, healthiest seniors out of the more efficient program, and passing them over to the less efficient private system, where they’re relatively older, sicker, and more costly.

–Finally, his idea for a per-capita cap on Medicaid, as Catherine Rampell points out today, whacks another group of vulnerable people:

Limiting federal funding on Medicaid spending would indisputably accomplish one objective: Limiting federal funding on Medicaid spending. But that’s it. It won’t make the growing costs of the program magically disappear. It would just dump them onto someone else’s doorstep, in this case the states’, which are likely less equipped to deal with complex management and cost control given their smaller scale. State governments would either have to contribute more of their own funds or, more likely, institute deep cuts to poor beneficiaries and the providers that serve them. Medicaid already spends so little per beneficiary — about 27 percent less for children, and 20 percent less for adults, than private insurance does on similar patients — that further cuts would almost certainly cause providers to exit the program, reducing access to care.

I don’t know where Gov. Christie stands on the estate tax repeal, but this week’s Republican agenda, including his own, appears to be based on the realization that what’s hurting America is that there’s just too damn much retirement and health-care security being enjoyed by the low-income elderly and the poor, and b) the richest estates aren’t rich enough.

But hey, good for them for making the “hard choices!”

Print Friendly, PDF & Email

4 comments in reply to "Chris Christie dangles the keys"

  1. Smith says:

    So I don’t bury the lead, you and others missed the bigger story, nothing needs to be done about Social Security right now, per Krugman’s analysis, but any shortfall should be made up of raising the maximum wage which is a huge issue for the rich who would begrudge even a single percent increase of taxes on their income, let alone two or three (even though top income tax rates need to go from 43% back to Eisenhower 90%)

    A common mantra of the right is to means test government programs, a back door way of killing them. A bedrock principle of successful social programs is that they be universal. Hence the voucher system for medical care, opt out alternative for Social Security, vouchers in place of public school funding are all terribly destructive proposals. Means testing is destructive in the same manner.

    As a first order analysis, quite good. But there is another perhaps bigger aspect to the story, which you could call second order or perhaps meta analysis. What am I talking about? In plain English, is there a deeper strategy aside from the short term political calculation of cited in the article of
    a) Seeming to make hard choices
    b) Riding the Very Serious People Simpson Bowles cut entitlements wave the media loves
    c) Targeting the bottom 2/3, and doing it most repressively (the poorer you are, the more you are hurt).
    d) Hiding this rob from the poor trick right before your very eyes (he’s a magician)
    e) Seeming to hurt the rich while decidedly not (second magic trick)
    Doing all these things, in one fell swoop, the man is genius, albeit evil genius.

    What’s my point?
    This analysis ignores the more important aspect of the maneuver.
    1) Once again, progressives are put on the defensive, the right is controlling the agenda.
    2) The media needs to be held accountable for not exposing the man behind the curtain with a fake issue, and a fake solution.
    3) There are those who do not sit back in the comfort of incumbency, catering to contributors, fending off conservative attacks, trying to get credit for doing nothing
    4) Again one sees the huge difference between the Warren Sanders Brown vs Obama Clinton Webb wings of the party.
    5) The craziest thing is how anyone can get away with any proposal to cut benefits or raise the retirement age and think they have any political future. It is fundamentally hugely unpopular. Up is down and black is white?

  2. Jill SH says:

    Big hint: Social Security is not enough to live on. I have a friend who had to start collecting at 62 and gets less than $500 a month. She’s still working. As am I; started collecting at 63 at 1100 per month and still work. So here we are COLLECTING, while still PAYING IN. I have an IRA I can go to in a few years. My friend does not.

    And then Medicare/Medicaid. I can afford Medigap/Rx policies. My friend cannot. Here excess medical expenses will be picked up by Medicaid. She was uninsured prior to Medicare (pre-ACA). What I’m concerned about is a lot of Boomers do not have sufficient private/IRA savings, will not be able to afford Medigap, and will end up on Medicaid after being stripped of assets, especially if they end up needing long term care.

    I think we need a version of Medicare that is 100% coverage, including long term care. One could enroll in such a version of Medicare by paying a “premium” (tax) of, say, 7% of non-SS income. Protect certain assets like one’s home, car, and up to a certain amount of savings. People without that income or assets would end up on Medicaid anyway. This would provide Medicare with an extra revenue stream. If implemented now, it could build some cushion against Boomers in long term care busting Medicaid. (I also think elderly Medicaid needs should be completely taken over by Medicare, and put an end to the exhaustive paper work of double-dipping, and get the load off of states, who are always penny-pinching in nasty ways.)

    But we always run up against that (GOP) thing of “saving money.” What they really mean is saving the GOVERNMENT money, not ordinary people, or even saving cost all around. Supposedly this is good for the taxpayer(s). But more likely the true cost is shift to those who cannot afford the extra out-of-pocket, or need to be on one’s feet for more work hours a week, or just go without for so many small things.

  3. Fred Donaldson says:

    If the austerians can finally kill Social Security – by dozens of bleeding cuts – businesses will no longer have to pay some 6.2% FICA – their share of the tax. This is money for the bottom line, as you can be assured that 6.2% will never go to increasing wages or to lower consumer prices. Christie’s approach to entitlement reform is just another one of his efforts to put lipstick on a pig.

    • Richard Solomon says:

      You got that right save for one thing: the lipstick goes on an elephant (the symbol of the GOP).