Latest News
Means-Testing Won’t Save Social Security
….Christie’s proposal contained a controversial policy option of means-testing benefits. Some believe that phasing-out benefits for higher-income Americans should be the first option to consider for addressing the financing gap in Social Security. This alternative should be the last. It introduces terrible incentives to the system, and begs questions about how we pay for benefits….Would eliminating the benefits of the affluent make a difference? Not really. In one example, the Social Security Administration projected that means-testing benefits would not even change the date of the projected exhaustion point of the trust fund. Mind you, that projection assumes that no one tries to avoid the reduction in benefits. The fact is that people will try to avoid losing benefits. A means-test serves as an implicit tax on savings, which will discourage savings and deflate economic activity. The consequence is to discourage people from saving outside of the system. These rules would unintentionally change the system that was created to provide a buffer against poverty-ridden old-age, into one that fosters it. Read more…