Letters to the editor
Will there be enough to fund Medicare?
I wish I had paid more attention in conomics 201 as an undergraduate. It just didn’t make much sense to me. I mean it didn’t seem relevant to someone who didn’t even have a checking account because I didn’t have any money left after tuition and fees to put into a bank. How times change. Economics at the state and national level have become the outside driving force in my life and probably yours. You can’t reach my age and not wonder if you will have enough money to live the rest of your life, in the style you prefer, after you quit work. Every day you read another article about pension and health care debt and how large both state and federal unfunded liabilities are.
Will there be enough money to fund Social Security? To fund Medicare? I’ve always known that Atiming is everything. Now that I’m eligible for those two programs, Social Security, which I have paid into since I was 15 years old, and Medicare, which I’ve paid into since the first month it was required, suddenly both programs are unaffordable. I, like all senior citizens, have paid into these programs all my life. What is so irritating about this is, other than the GI Bill, I’ve never applied for, or even qualified for, another government program.
Let’s expand this topic to a larger group of people than just the senior citizens. Let’s talk figures first: $1.26 trillion. That is the cumulative total of the unfunded liability of the 50 states for pensions and health care for teachers and other government employees. Unfunded Liability! Under the benefit packages currently being drawn down by retirees or in effect for current employees, this is money the states will have to come up with. This is what is committed to people working today. Fortunately, around four years ago in Alabama the Teacher’s Retirement System began working to lower a $20 billion unfunded health care liability. Dr. Bronner set up a trust fund, got the board of directors to agree to a slight increase in employee contributions and began chipping away at the huge liability. Today, Mark Reynolds, deputy director to Dr. Bronner is very happy to state that unfunded liability as of Sept. 30, 2009 had been reduced to slightly more than $11 billion. The 2010 numbers won’t be available until later this summer; however, I’ll wager that because of the Retirement System’s commitment to this problem they have reduced that high number even more.
I am certain that most readers of this op-ed are aware the state legislature is trying to keep the system viable right now. In addition to requiring greater contributions from beneficiaries they are now considering requiring longer tenure before the employee qualifies for the benefit package. They are considering increasing the number of years, from 25 years to 30 years, before a teacher or a state employee is eligible to retire. You don’t have to be an economist to recognize a lifetime health benefit after 25 years when people can reasonably be expected to live another 40 years is an expensive liability for the retirement systems to continue to fund without a tremendous amount of new funding. Although the legislature is receiving considerable criticism from the beneficiaries, down deep, many of them recognize it is a system with many funding problems and will probably eventually fail without major adjustments. Which is worse, a system that fails altogether after you have retired or one in which you have to make adjustments to sustain it while you are still earning the money to do so? I know what I would choose.
As I write this I am also struggling with an additional over-shadowing concern, the federal government with it’s major, expensive, entitlement programs, and its own hundreds of thousands of employees with benefit packages. I have seen the figure $62 trillion of liability without enough trust funds, if any, to pick up the costs. Everyone knows our federal government spends every dime it collects and borrows much more just to sustain itself. We, as a nation, have reached the point where the U.S. Congress and the President are going to have to make the same hard decisions being made in Alabama and other states today. The time of buying the people’s votes by promising the largess of the treasury in the form of government checks, on a regular basis, has to be over.
The federal government has two choices. It can make the hard decisions and get back on a pay-as-you go, balanced budget or it can turn on the money printing presses again. With a concerted effort to live within a budget equal to income through tax receipts this country will sustain itself and the freedom of its people for a long time to come.
If the Feds turn on the printing presses as the easy way out of its borrowing debt, its unfunded liability and its penchant for over-spending, eventually even the central bank, the Federal Reserve, won’t be able to hold down inflation. As more and more money is printed the unfunded liability will become less of a problem because meeting your set financial liabilities with a hyper-inflated currency will be easy. All of us who are owed a retirement, either Social Security or private pension, and all of us who have been promised retirement health insurance, either Medicare or some government funded pension and health program will get the money we were promised. It just won’t be worth anything!
I hope you prefer the hard choices now rather than a bankrupt country whose currency has been devalued to the point of insignificance on the world market. Let’s demand that those in power make these changes now so we don’t become a nation of poor people with plenty of worthless money. Maybe, for some of those in the Federal Government, meeting fiscal commitments with plenty of newly printed, worthless money is the game plan.
Former Alabama State Senator
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