The latest report on Social Security indicates that its trust fund will run out of money in 2034, only 11 years from now. In 2021, the fund began paying more in benefits than it was receiving in payroll taxes. The river of monthly retirement benefits is drying up, and the stream of monthly payments will have to be cut by 20% once the reserve balance is gone.
A separate report indicates the Medicare hospital insurance trust fund will also be depleted in 2031. Yet the D.C. swamp of establishment politicians does nothing. In fact, both Democrats and Republicans have said Social Security and Medicare are off the table for negotiations related to the looming debt ceiling.
For years, Democrats have mercilessly attacked Republicans’ ideas to reform the retirement systems, claiming they are heartless cuts that will reduce benefits. Fearful of losing their next election, Republicans have been too timid to counter with appropriate facts and leadership to save the systems from insolvency.
We dealt with this kind of problem in Oklahoma when the combined pension systems of the state were among the worst in the country with over 50% of unfunded liabilities. When I was in the state senate, however, we kept insisting that doing nothing was unacceptable, because the benefits would get reduced, or taxes would have to go way up.
Politics led to many false accusations that we were trying to cut benefits. Even a teacher who was a client of mine asked, “Mike, why are you trying to cut our teacher retirement benefits?” After learning the truth and facts of our plan, she became a supporter of our reform efforts like thousands of other Oklahomans.
In the end, our series of changes worked. No retired teacher or state employee benefits were cut, and today the combined systems are 82% funded and, on their way to being fully funded. Let’s hope someone in D.C. will take up the cause of saving our critical retirement systems, instead of worrying about the next election.
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