New Jersey Gov. Chris Christie, a probable candidate for president, put forward on Tuesday a set of ideas to reform the Social Security program. These include:
- Allowing the Social Security retirement age to continue its gradual increase, from the current age of 66 today, to the already-legislated level of 67 in the year 2020s, and eventually on to 69 by 2034.
- Instituting a mean-test under which retirees with non-Social Security incomes between $80,000 and $200,000 would gradually see their Social Security benefits eliminated; and
- Eliminating the 12.4% Social Security payroll tax for individuals aged 62 and over.
My take: I’m okay on raising the retirement age along with longevity, though I didn’t include it in the plan I outlined in National Affairs. Also in National Affairs, I wrote against means-testing Social Security benefits. A means-test is an effective tax on work and saving, and those are things we want more of. I also don’t believe any politically-viable mean-test will produce significant savings, so I’m not sure it’s worth the effort. The payroll tax cut for older workers, however, is a good idea that I championed in the Wall Street Journal. Social Security pays very poor returns to workers on the cusp of retirement, but these individuals are very sensitive to changes in after-tax wages. Reducing the payroll tax could significantly increase labor supply from near-retirees, improving both the economy and their own retirement security.