    [Public Papers of the Presidents of the United States: William J. Clinton (1998, Book I)]
    [June 4, 1998]
    [Pages 880-883]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks at the SAVER Summit
    June 4, 1998

        First let me say a special word of thanks to the Members of Congress
    who are here and especially those who sponsored the legislation which
    created this summit. I thank Governor Allen and
    Secretary Herman for doing their sort of
    bipartisan introduction thing. I couldn't help wondering what all of us
    look like up here to all of you. [Laughter] I bet we look like a bunch
    of schoolboys in the spelling bee dying for the recess bell. [Laughter]
    But this has actually been rather--it's been enlightening for me.
        The most encouraging thing of all that was said to me, from a purely
    selfish point of view, was when the Speaker
    said, ``If I got to be 50, I could look forward to living another 30
    years.'' Yesterday I was in Cleveland, and I went to an elementary
    school to see some work that some of the AmeriCorps volunteers are
    doing, and I was shaking hands with all these little kids. And it really
    is true that they say the darnedest things. And this young boy was 6 or
    7 years old, maybe, a little bitty boy, and he

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    said, ``Are you the real President?'' And I said, ``Yes.'' And he said,
    ``And you're not dead yet?'' [Laughter] And I realized--I didn't know
    what he meant. First I thought he'd been reading the local newspaper
    here. [Laughter] And then I realized that to him the President was
    George Washington or Abraham Lincoln, and he actually thought it was a
    qualification of the job that you had to be deceased to hold it.
    [Laughter] It was an amazing encounter. But now I've been reminded of
    the actuarial tables, and I'm ready to go back to work. [Laughter]
        Let me say just a couple of words by way of introduction. Most of
    what should be said has already been said and very eloquently, and I
    thank all the previous speakers. But I would like to make one point that
    has been alluded to, but I want to try to drive it home.
        We're living in a time where we have the lowest unemployment rate in
    28 years, the lowest welfare rolls in 27 years, the lowest crime rates
    in 25 years, the lowest inflation rate in 32 years, the smallest
    Government in 35 years, and the highest homeownership in history. And
    we're about to have a balanced budget and a surplus for the first time
    in 29 years. This has given this country enormous self-confidence. We
    know that when we work together, we do get things done. We do not know
    when we'll have a time like this again.
        All of our reading of human history teaches us that nothing ever
    stays the same forever. If we can't deal with this issue now, when will
    we ever deal with it? We have an obligation to deal with this challenge
    and deal with it now. And we have an opportunity to do so.
        The balanced budget has freed up capital. It's led to an increase
    in--the efforts at fiscal responsibility have led to a significant
    increase in our national savings rate, even as individual savings has
    gone down. And that's been very good to this point because it's enabled
    us to have lower interest rates, higher investment, and higher growth.
    And you see here the relationship between savings and investment and
    growth, which has already been alluded to. So we've had an increase in
    net national savings and a decline in the budget rate, and it's led to
    more growth.
        But the problem is that we have to have more personal savings as
    well. And we have to deal with the problems presented especially by
    Social Security and by the fact that there are 50 million Americans
    without private pensions and by the fact that very few people are doing
    any savings above Social Security in whatever pension they have or don't
    have for their own retirement. So this is a deeply personal issue that
    Senator Lott, I thought, grippingly discussed,
    and it's also a big issue for our country.
        We have the opportunity and the obligation, I believe, to deal with
    a lot of our other long-term challenges. But a lot of our other long-
    term challenges affect our children and affect children who have a
    poverty rate much higher, almost twice as high as senior citizens.
    Unless we deal with this issue, unless we nail down Social Security for
    the 21st century and stabilize it, and unless we deal with the need for
    more private pension coverage, and unless we deal with the need for more
    savings, it will also--make no mistake about it--it will impair in a
    direct financial way our ability to fulfill our responsibilities to our
    children who are living in difficult circumstances and who now we can
    help to chart a different future, and eventually it will undermine the
    self-confidence we're now enjoying, and it will make people very short-
    sighted again when we could be dealing with these issues that will shape
    the future 10, 20, 30, 50 years from now. So I think it's a very, very
    important thing.
        And the answer to Senator Lott's question,
    let's begin with Social Security. And I want to thank him for what he
    said and for what he said to me in private. And to both the
    Speaker and Senator Lott and the other
    Democratic leaders of the Congress, I believe, while I think this SAVER
    Summit should keep meeting, I don't believe we should wait until all of
    your meetings, years in advance, to deal with the Social Security issue.
    The demographics are too clear. We now have until 2032 before it starts
    to run a deficit, but that's very misleading. With modest changes now,
    we can have huge impacts later. If you wait, the closer you wait, the
    more dramatic the changes you have to make just to pay the bills.
        So my view is that we should continue to have these forums around
    the country, these bipartisan forums; we should continue to solicit
    advice; but our goal ought to be to have the Congress take up Social
    Security reform as the first order of business early next year and
    finish in the first half of 1999, saving Social Security for the 21st
    century, so that we baby boomers do not bankrupt our children in their
    ability

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    to raise our grandchildren. And my commitment is to try to get that done
    on that timetable.
        In order to do it, I have to say I still believe that we have to
    resist two temptations with the budget surplus. The first temptation is
    to say, ``Well, it's large and projected to be growing,'' and maybe I've
    just been in executive positions too long in public life, but those
    projections don't mean a lot because sometimes they don't pan out.
        Now, we've been real lucky for the last 5 years; all our projections
    have been too conservative, and we've done better than we've projected.
    But I think the first thing we have to do is to resist the tendency to
    spend the surplus on spending or tax cuts until we have dealt with the
    Social Security issue. The second thing I think we have to do is to
    resist the temptation to take one thing, even it seems like a very good
    thing to a large number of people, like the individual accounts, and
    deal with that without knowing how you're going to deal with the whole
    system. So what my view is--that we ought to say that we're going to
    pass comprehensive reform. And I don't rule in or out any ideas here on
    that. That's not my purpose. And I solicit all of your ideas.
        But I just think it would be a big mistake, knowing what the
    magnitude of the money we're talking about is, to miss this chance to
    say we're going to hold on to this surplus until we pass comprehensive
    reform. Then if there is money over and above that after we do this--I
    hope in early 1999--we can have a wonderful, old-fashioned American
    political debate about what the best way to proceed is, whether we
    should cut taxes, invest the money, pay down the debt. We can have that
    debate. But I think we should commit ourselves again to the idea that
    saving Social Security first is the right policy for America and the
    right thing for the 21st century. And I hope we will do that.
        Now, let me say, in addition to that, we have some very specific
    proposals which I think respond at least in part to the concerns which
    were raised by earlier speakers on pension matters. The Vice
    President mentioned the Retirement
    Protection Act, which passed, I believe, with an almost unanimous vote
    in Congress in late 1994, to protect the pension benefits of more than
    40 million workers. But I want to build on that.
        In the balanced budget proposal that I have presented to Congress, I
    proposed to offer tax credits to small businesses who start pension
    plans to help them deal with the problems, the costs that you mentioned
    of starting it, starting the programs up and getting the advice. It
    could be worth, I think, in the first year, about $1,000 for small
    business, which should cover the costs involved in the startup.
        It would encourage employers who don't provide pension plans to give
    workers the option of contributing to IRA's through payroll deductions,
    the budget would. The budget also cuts the vesting period for 401(k)'s
    from 5 years to 3 years. Eventually--I'll make a prediction--it may not
    happen in our time here, but eventually we will have to figure out how
    to have people paying, investing continuously, no matter how frequently
    they change jobs, because you're going to have--if you look at all
    modern advanced societies, you have a higher and higher percentage of
    people doing part-time work, you have a higher and higher percentage of
    people doing more than one job, and you have more rapid turnover. You
    have a very high rate of vitality and activity in the business
    community. It means a lot of places being started, but the more
    businesses that start, the more you're going to have that also won't go
    on, that won't make it. And in the increasingly churning, dynamic world,
    we are going to have to focus very carefully on that.
        This is something I believe, by the way, that I think the SAVER
    Summit could really work on in the years ahead because of the
    congressional legislation, you know, having you meet again in a couple
    of years and then again in a couple of years after that. But for right
    now--we know enough now to know we can preserve financial stability in a
    responsible way and cut this vesting period from 5 to 3 years. And I
    hope very much that we'll be able to do that in the budget discussions
    with the legislation that passes this year.
        Finally, there's an easy-to-administer, defined benefit plan that's
    part of our budget proposal, and I hope the Congress will pass that.
        Also, in an effort to encourage more workers to enroll in the
    401(k)'s that are already available to them, we have made it clear that
    employers can automatically enroll workers in the 401(k) plans unless
    the workers themselves choose to opt out. Now currently, most companies
    require the employees to opt in to the 401(k) plans,

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    a process that takes some time and some paperwork. Companies that have
    cut out the paperwork with automatic enrollment policies that then the
    employees can opt out of report participation rates of about 90 percent,
    as compared with an overall participation rate of 67 percent for
    companies offering 401(k)'s. So that's something that you will discuss.
    It sounds like a small thing, but it's one thing that can really affect
    a very large number of people in getting them into the business of
    saving for their own retirement.
        Let me just say, lastly, we all know we have to do more about
    personal savings. We have worked together in a bipartisan way to expand
    the availability of IRA's and the attractiveness of them so that people
    could invest in IRA's and then withdraw tax-free if the money were used
    for education purposes or health emergencies or other things of that
    kind. But we need, clearly, to do more. And this is an area where, quite
    apart from the 401(k) issues and the pension areas, I invite you to give
    your best ideas to the administration and to the Congress, because--let
    me just give you an idea of what a difference it could make. A person
    who could afford to save $5 a day for 40 years would have $300,000 by
    the time he or she retired, at just a modest return, above and beyond
    Social Security and pensions. Young people have a unique opportunity, if
    we can get it into their minds early: If you save $2,000 a year
    beginning at age 25 and you retire at 65, you have $328,000; if you wait
    until you're 45 to start, you only have $78,000. So that really matters.
        And let me finally say that--let me begin--let me end where I began.
    This is a moment of real self-confidence for our country. People have
    the emotional space to think about the long term. If you just think
    about your own businesses, your own families, raising your kids; if your
    child is sick and you're really worried and your child is 10 years old,
    it's hard to work up the emotional space to think about where your child
    is going to college and how much it will cost. If you think you can't
    pay the electric bill at your business, it's pretty hard to think about
    whether you're going to buy a piece of expensive equipment next year
    that will make you productive 5 years from now.
        Events intrude on nations just as they do on people in their
    individual, personal, and business lives. We have been given a gift, and
    we have to use it. This is a wonderful moment, but it is a moment of
    responsibility that we dare not squander.
        Some of you probably know this, but it makes the point, finally,
    that if we have a saving nation, it means we have a nation of people who
    think about the future and who believe in it. When Benjamin Franklin
    died--you know, ``a penny saved is a penny earned''--he left
    £2,000 sterling to the cities of Boston and Philadelphia,
    with only one caveat: Nobody could spend any of it for 200 years. By
    1990, the £2,000 sterling had matured into $6.5 million,
    quite conservatively invested.
        By leaving that money to people 200 generations removed from himself
    and his family--I mean, 200 years removed, Benjamin Franklin made a
    simple, powerful, eloquent statement that he believed in the promise of
    America, he believed in the future of America, and he was prepared to
    contribute to it in a truly astonishing way. Well, we don't have to ask
    the American people to save for 200 years, but we do have to make sure
    they can think about tomorrow and prepare for it. And this is a magic
    moment to do it.
        Thank you very much.

    Note: The President spoke at 12:15 a.m. at the Hyatt Regency Hotel to
    participants in the national summit on retirement income savings
    authorized by the Savings Are Vital for Everyone's Retirement (SAVER)
    Act of 1997 (Public Law 105-92), to be convened again in 2001 and 2005.
    In his remarks, the President referred to former Gov. George Allen of
    Virginia.