A pair of Nobel Prize winning economists see major flaws in New Jersey Gov. Chris Christie’s (R) recently rolled out Social Security and tax plans.
A week after The Wall Street Journal published an editorial by Christie laying out his plan to simplify the U.S. tax code, Princeton University economics professor Christopher Sims and Massachusetts Institute of Technology professor emeritus Peter Diamond said that the plan, and Christie’s proposal to raise the retirement age and cut Social Security, have significant problems.
Christie argued in the Journal editorial for reducing the tax code to three income brackets and cutting the highest tax rate to 28 percent.
“It seems to me there’s not much to say about it,” Sims told nj.com of the New Jersey governor’s tax plan. “At this point in the process, candidates are very specific about the taxes they’re going to cut and not very specific about the spending they’re going to cut.”
Sims, who won the 2011 Nobel Prize in economic sciences, added that it’s hard to really call Christie’s proposal an “economic plan” and even harder to offer serious analysis, according to nj.com.
Similarly, Diamond said that Christie’s proposals to roll taxes back to levels matching the Reagan era are ” a terrible idea” and “a plan to continue on the wrong track.”
“We’ve been under-investing in capital infrastructure, research and in people —both in education and the health of children,” Diamond said. “And there’s a fact that people should be reminded of: Reagan raised taxes. When the tax cuts made the deficit too big, some of those cuts got erased.”
Diamond called Christie’s proposal to raise the retirement age from 67 to 69 and eliminate Social Security benefits for those whose salaries start at $80,000 a year “mostly distributional policy.”
“By itself, it’s clearly inadequate,” Diamond said of Christie’s Social Security reform plan, and that the plan to raise the retirement age was essentially a benefit cut.
“Very heavily, the people who claim at 62 tend to be lower earners, fewer opportunities and poor health. If you don’t have a decent job or your back hurts [early retirement] becomes very attractive,” Diamond said.
Christie’s Social Security proposal started a chain reaction of other likely and declared 2016 Republican presidential candidates voicing support to cut Social Security, including Wisconsin Gov. Scott Walker (R) and former Florida Gov. Jeb Bush (R).