Social Security is hard to avoid in 2025. The news, dinner conversations and political debates are all centered on the same issue: running out of money. With the trust fund projected to dry by 2035, retirees could see their checks slashed by 17% if Congress doesn't act.
The anxiety is palpable. But 20 years ago, Charlie Munger, the late vice chairman of Berkshire Hathaway, already had plenty to say about Social Security – and his words are just as striking now as they were then.
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Speaking at the 2005 Berkshire Hathaway annual shareholders meeting, Munger didn't hold back when addressing his own party's approach to Social Security. "The Republicans are out of their cotton-picking minds to be taking on this issue right now," he said, drawing applause and laughter from the audience. Munger was a self-described "right-wing Republican," but he wasn't afraid to criticize his party when he thought they were wrong. And on Social Security, he was adamant: the program wasn't the problem – tampering with it was.
"Social Security is very successful," Munger explained, calling it "one of the most successful things the government has ever done in terms of efficiency and good effects." He had data on his side. Social Security, he pointed out, had remarkably low fraud rates, joking, "It's hard to fake being dead." Beyond the humor, his respect for the program ran deep.
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For Munger, Social Security wasn't a handout but a cornerstone of American capitalism. "It's a reward for work," he said. "All kinds of people are working in this country because they want to eventually qualify for Social Security, just as many people are doing dangerous military service because they want the pension that will come eventually." He saw it as a system reinforcing the value of labor, giving millions of workers a reason to stay engaged in the economy.
Still, Munger wasn't naive about the program’s challenges as America aged. He anticipated the funding shortfalls we're now staring down. His solution? Practical and straightforward. "If the government runs out a little short of money as it gets more Social Security obligations, I see nothing wrong with having some consumption taxes or whatever to pay in a reasonable way for what is a very reasonable expenditure," he said.
Munger argued that as the country grew richer, allocating more of its GDP to Social Security wasn't a problem – it was logical. "If the country is going to get richer at one or two percent per annum for a long time ahead and it's going to have more old people who are living longer and spending money on medical care, the idea that eventually a higher share of GDP would be going through Social Security to retirees and so on than we now have is not anathema to me," he explained. To him, expanding Social Security's share of resources wasn't a crisis; it was a natural evolution for a wealthier and older society.
Now, two decades later, Munger's words feel like a warning that wasn't heeded. Social Security is under real strain, just as he predicted, but the practical solutions he outlined remain as relevant as ever. While today's debates are filled with ideological grandstanding, Munger's approach – focused on the program's long-term value and incremental fixes – offers a sharp contrast.
Charlie Munger may be gone, but his insights still echo. In 2005, he made it clear that Social Security was one of the greatest achievements of American governance, a reward for hard work and a system worth protecting. As Congress scrambles to find solutions in 2025, his wisdom reminds us that Social Security isn't just a policy – it's a promise.
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