    [Public Papers of the Presidents of the United States: George W. Bush (2005, Book I)]
    [January 11, 2005]
    [Pages 34-41]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks in a Discussion on Social Security Reform
    January 11, 2005

        The President. Thank you all. Please be seated. Listen, thanks for
    coming today. As you can see, I am joined by some fellow citizens here
    on the stage who have come to talk about one of the great causes of our
    generation, and that is how to strengthen and save Social Security for
    generations to come.
        I know this is an issue that some would rather not be talking about.
    It's an issue that is kind of--I think some think has got too much
    political danger attached to it, and so therefore let's just kind of,
    maybe, move it down to the next group of people coming to Washington, or
    maybe things will get better by ignoring it. That's

    [[Page 35]]

    not what I think. And today I want to talk about why we have an issue
    with Social Security, why I believe those of us who have been elected to
    office have an obligation to do something about it, and then I want--and
    give some ideas, some constructive ideas to Congress as to how to deal
    with the issue, and then I want others to share with me their ideas.
        And we've got some people who have come a long way--flown all the
    way to Washington, DC, to share some thoughts with the President. And I
    think you'll find their stories interesting. I certainly did when we had
    a little discussion a little bit ago.
        First, let me tell you how much, I understand, Social Security has
    meant for generations of Americans. I mean, Franklin Roosevelt, in
    thinking boldly, envisioned a Social Security system where Social
    Security would help seniors with their retirement. And the system worked
    for a lot of people. And it's been a--an incredible achievement, if you
    think about a piece of legislation being relevant for nearly 70 years.
        The problem is, is that times have changed since 1935. Then, most
    women did not work outside the house, and the average life expectancy
    was about 60 years old, which, for a guy 58 years old, must have been a
    little discouraging. [Laughter] Today, Americans, fortunately, are
    living longer and longer. I mean, we're living way beyond 60 years old,
    and most women are working outside the house. Things have shifted.
        The Social Security system is not a personal savings account. The
    Social Security system is not an account where money is earned. The
    Social Security system is an account where money comes out to pay for
    retirees and is put in the system by people who are working. And that's
    changed. More and more retirees have taken out money relative to the
    number of people putting money in. In the fifties, there were 16 workers
    for every beneficiary, so the system was in pretty good shape. Today,
    there's three workers for every beneficiary. Relatively quickly, there's
    going to be two workers for every beneficiary. And that's a problem. And
    that's a problem because in the year 2018, in order to take care of baby
    boomers like me and--[laughter]--some others I see out there--
    [laughter]--the money going out is going to exceed the money coming in.
        That's not a good thing. It means that you're either going to have
    to raise the taxes of people or reduce the benefits. And the longer you
    wait, the more severe the pain is going to be to fulfill the promise for
    a younger generation of workers coming up. As a matter of fact, by the
    time today's workers who are in their mid-twenties begin to retire, the
    system will be bankrupt. So if you're 20 years old, in your mid-
    twenties, and you're beginning to work, I want you to think about a
    Social Security system that will be flat bust, bankrupt, unless the
    United States Congress has got the willingness to act now. And that's
    what we're here to talk about, a system that will be bankrupt.
        Now, I readily concede some would say, ``Well, it's not bankrupt
    yet. Why don't we wait until it's bankrupt?'' The problem with that
    notion is that the longer you wait, the more difficult it is to fix. You
    realize that this system of ours is going to be short the difference
    between obligations and money coming in by about $11 trillion, unless we
    act. And that's an issue. That's trillion with a ``T.'' That's a lot of
    money, even for this town.
        And so I'm looking forward to working with Congress to act. We've
    got an expert from the Social Security system that will talk about ``the
    problem.'' And I'm going to talk about ``the problem.'' You know, ``the
    problem'' is that some in Congress don't see it as ``the problem.'' They
    just kind of think that maybe things will be okay. But the structure of
    Social Security is such that you can't avoid the fact that there is a
    problem. And now is the time to get something done.

    [[Page 36]]

        Now, I've talked about this, and I want the people to clearly
    understand, if you're a senior receiving your Social Security check,
    nothing is going to change. Those days of politicizing Social Security,
    I hope, are in the past. A lot of people who ran for office and if they
    even mentioned the word Social Security, there would be TV ads and
    fliers and people knocking on doors saying, ``So-and-so is going to ruin
    Social Security for you.'' There is plenty of money in the system today
    to take care of those who have retired or near retirement. The issue
    really is for younger folks.
        That's why we've got some younger folks up here. Not all of us are
    younger folks, are we? [Laughter] Most of them are younger folks. I no
    longer qualify. [Laughter] But younger people are listening to this
    issue. You know, I've traveled a lot. I campaigned on this issue of
    Social Security and the need to strengthen it and reform it. I didn't
    shy away from it in 2000. I certainly didn't shy away from it in 2004. I
    laid it out there for the people to hear. I said, ``Vote for me, and I'm
    going to work with Congress, see if we can't get something done to solve
    the system.''
        This is part of what--this is part of fulfilling a campaign pledge.
    I wouldn't be sitting here if the people said, ``We don't want anybody
    to touch it. We think it's okay.'' Most younger people in America think
    they'll never see a dime. That's probably an exaggeration to a certain
    extent, but a lot of people who are young, who understand how Social
    Security works, really do wonder whether they'll see anything. My
    attitude is, once we assure the seniors who are--receive Social Security
    today that everything is fine, I think we've got a shot to get something
    done, because younger Americans really want to see some leadership.
        I said we're not going to run up the payroll taxes. I think running
    up payroll taxes will slow down economic growth. This economy is
    beginning to kick in. It's beginning to make sense. I think we can solve
    the problem without increasing payroll taxes.
        I also threw out another interesting idea--it's certainly not my
    idea, because others have talked about it--and that is to allow younger
    workers, on a voluntary basis, to take some of their own money and set
    it aside in the form of a personal savings account, a personal savings
    account which is their own, a personal savings account which would earn
    a better rate of return than the money--their money currently held
    within the Social Security trust, a personal savings account which will
    compound over time and grow over time, a personal savings account which
    can't be used to bet on the lottery or a dice game or the track. In
    other words, there will be guidelines. There will be certain--you won't
    be allowed just to take that money and dump it somewhere. In other
    words, there will be a safe way to invest, to be able to realize the
    compounding rate of interest.
        I've heard some say, ``Well, this is risky to allow people to invest
    their own money.'' It's risky to let people--say, ``You can take your
    money that's supposed to be for a retirement account and put it on the
    lottery.'' I realize that. But it's not risky. Federal employees--the
    Thrift Savings Plans invest under certain guidelines, and I don't hear
    them screaming, ``It's risky.'' It makes sense to try to get a better
    rate of return on your money, if you expect there to be a Social
    Security system which is going broke. And that's what we're talking
    about.
        Owning your own personal savings account does two other things. One,
    it allows you to pass on your savings to whoever you choose. You can't
    do that in Social Security today. If you pass away earlier than
    expected, that money that you put in the system is gone. And at the same
    time that you manage your own account, you own your own account. I love
    promoting ownership in America. I like the idea of encouraging more
    people to say, ``I own my own home. I own my own business.

    [[Page 37]]

    I own and manage my health accounts, and now I own a significant part of
    my retirement account.'' Promoting ownership in America makes sense to
    me to make sure people continue to have a vital stake in the future of
    our country.
        And so I want to thank you all for coming today to give me a chance
    to address the Social Security issue. I plan on talking about it a lot.
    This isn't the first time I've talked about it since the campaign is
    over, and it's certainly not going to be the last, because I believe it
    is a vital issue. And I know that if we don't address the problem now,
    it will only get worse with time. And I believe there is a fundamental
    duty, for those of us who have been given the honor of serving the
    American people, to solve problems before they become acute and not to
    pass them on to future Presidents and future generations.
        Now, I want to talk to Andrew Biggs. He
    is the Associate Commissioner for Retirement Policy at the Social
    Security Administration. To me, that says expert. [Laughter] I don't
    know if that's fair to call you an expert or not.

    [At this point, Andrew Biggs made brief remarks.]

        The President. Yes, that's good. How old are you?
        Mr. Biggs. I'm 37.
        The President. Man, I wish I was 37--[laughter]--37, talking to the
    President. That's great. [Laughter] You ought to be concerned. I mean,
    you're one of these people--yes, good. Well, I appreciate you helping.
        You see, what he just said is, ``There
    is a problem.'' I happen to believe people who have been elected to
    office who ignore problems will face the price at the ballot box. See, I
    think more and more people recognize we have a problem. We've got a 37-
    year-old person here describing a problem. More and more people
    understand we have a problem. And the more people see it, the more it's
    expected we do something about it. And as Andrew said, he said, ``We
    better start now.'' That's why it's important that we have this dialog.
    And that's why I'm going to continue dialoging and talking to the
    leadership in Congress about, ``Let's solve it now. Let's do our duty.''
        Let me talk to Scott Ballard. He is from
    the great State of Washington. That's a long way away.
        Scott Ballard. That's right.
        The President. Brought your
    lads with you, I noticed.
        Mr. Ballard. Yes.
        The President. Your sons. Yes, they had never been to Washington. I said, ``Have
    you ever been to Washington?'' The guy said, ``I live in Washington.''
    [Laughter]
        Mr. Ballard. Yes. [Laughter]
        The President. Pretty good line, you know? I meant the District of
    Columbia, Washington. So what do you do, Scott?
        Mr. Ballard. Well, my brother and I own
    and operate a private ambulance service. It was started by our parents
    in 1967. And my brother and I purchased it from them in 1986.
        The President. And why are you here, besides to bring your lads to
    the other Washington?

    [Mr. Ballard, co-owner, Ballard Ambulance, Wenatchee, WA, made brief
    remarks.]

        The President. So, like, if they were here, what would your younger
    employees say about Social Security? Do they ever talk about it? Do they
    ever think about it? Do they ever----

    [Mr. Ballard made further remarks.]

        The President. That's kind of an interesting thought, isn't it--when
    you see on paper the value of something, you begin to actually pay
    attention to what causes values to go up, good policies that enhance
    growth. And what Scott just said is, he talked
    about the first change in retirement in America was the movement toward
    defined contribution plans, like 401(k)s, which

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    really has promoted an ownership society, hasn't it? I mean, people wake
    up, and they look at their account and say, ``I'm so sure this person's
    policies are beneficial to my being able to earn a better rate of
    return.'' People pay attention because it's their own money. That's kind
    of one of the benefits of a personal account in Social Security.

    [Mr. Ballard made further remarks.]

        The President. Right. Good. I appreciate you sharing that. Yes, make
    sure you tell your customers--tell your customers nothing changes with
    Social Security for them. And tell your younger workers they can do
    something about it. They can write their Senators; they can write their
    Congresspeople. You can let them know you expect the Members of the
    United States Congress to hear the fact that there's a problem and then
    to do something about it. That's what they can do.
        We've got with us Bob McFadden. Looking
    sharp. [Laughter] I didn't come close, I know. [Laughter] Thanks for
    coming. I appreciate you taking time to be here. You are from Medford,
    New Jersey.
        Robert McFadden. Yes, sir.
        The President. And why have you come from Medford, New Jersey, to
    share some thoughts?

    [Mr. McFadden, solutions executive, IMS Health, Medford, NJ, made brief
    remarks.]

        The President. The 1 or 2 percent that the money inside the Social
    Security trust now earns--is that right? Is he right at 1--is it even as
    high as 1 percent?
        Mr. Biggs. No, it's--right now it is low
    because interest rates are low. Over the long term, we're looking at
    around 3 percent. So you still do have a----
        The President. So it's more than double. But right now, it's like--
    --
        Mr. Biggs. Oh boy.
        The President. Yes, never mind. [Laughter]
        Mr. Biggs. You caught me. [Laughter]
        The President. Don't worry about it. [Laughter] You can still keep
    your job. [Laughter] Go ahead. Seven and a half percent since 1924--
    that's a great rate of return. Imagine if you're 50 years old and you
    start--if you start--if you hold that money for 50 years at that rate,
    it compounds and grows and ends up being a lot of money, is what you're
    saying.
        Mr. McFadden. Yes, sir.
        The President. Yes, okay. I'm glad I invited you. [Laughter]

    [Mr. McFadden made further remarks.]

        The President. Let me say this. You brought up a very interesting
    point. There's kind of an assumption that only a certain group of people
    at a certain income can manage an account. It's as if you've got to have
    a net worth of X before savings becomes a real part of your life. I
    reject that. Bob rejects that.
        Secondly, the interesting--there's a--African American males die
    sooner than other males do, which means the system is inherently unfair
    to a certain group of people. And that needs to be fixed. It's not a--
    [applause].
        Mr. McFadden. I agree, Mr. President,
    because from the minimal research that I've done, the average African
    American male right now is--the life expectancy is 69, and I may be off
    a little bit. But if you're telling me that it's 69 and the age is going
    to go to 67, you do the math. [Laughter]
        The President. Right.
        Mr. McFadden. I mean, that's 2 years,
    so--[laughter].
        The President. Glad you came. Thanks. Welcome, girls. Glad you all
    came.
        Okay, I thought we would try to find somebody who represents the
    youth movement. I'm not saying you all are old, but we did find us a
    dairy farmer from the great State of Utah, Josh Wright. Welcome, Josh. Thanks for coming. He asked me if I could
    fix the BCS. [Laughter] I said no, I'm not going there, Josh. I'm
    staying on

    [[Page 39]]

    Social Security. It may be a little easier to fix, anyway. [Laughter]
        Josh Wright. But he said that they wouldn't
    be able to take Texas, and----
        The President. Wait a minute. You don't need to talk about private
    conversations. [Laughter] Okay, you're a dairy farmer?
        Mr. Wright. That's correct.
        The President. Good. Milking those cows.
        Mr. Wright. Yes. Not today, obviously. I
    made my dad stay home and do it. But we have a dairy farm in central
    Utah, and you can fit the whole town in this building here.
        The President. Kind of like Crawford.
        Mr. Wright. There's a lot more cows than
    there are people at my place, so I spend a lot of time talking to
    animals. [Laughter] And I hear----
        The President. Are they talking back yet? [Laughter] When they start
    talking back, give me a call. [Laughter]
        Mr. Wright. Not when I have a stick in my
    hand, they don't say a lot. [Laughter]
        The President. That's right.

    [Mr. Wright, dairy farmer, Millard County, UT, made brief remarks,
    concluding with a mention of his grandfather.]

        The President. Do you think he's listening? Have they got C-SPAN out
    there in Utah?
        Mr. Wright. I don't know. [Laughter]
        The President. See that red dot?
        Mr. Wright. Yes, I see it now.
        The President. That's him, if he's listening.
        Mr. Wright. He's probably watching the horse
    channel. He loves that channel. [Laughter]
        The President. I appreciate you coming.
        Mr. Wright. Thank you for letting me.
        The President. If nothing happens, at your age it will be bust by
    the time it comes time for you to retire. That's why we have a person in
    the mid-twenties here, besides the fact the guy's got a pretty good sense of humor. [Laughter] If nothing
    takes place, if Congress says, ``Oh, don't worry. We'll just push it
    down the road. Why do we need to deal with it. There's no crisis''--if
    nothing happens and we don't start moving on it now, by the time Josh
    gets to retirement age, the system will be flat broke.
        And that's not right, it doesn't seem like to me. It seems like
    people who have been elected to office must say, ``We want it to be
    wholesome and healthy, like it has been for other generations.'' Oh, I
    know there's a lot of politics here in Washington, and people are--some
    are afraid to touch it. Some don't want to touch it. Some provide
    excuses not to touch it. I know, I've heard it before. But I believe
    that the President has a responsibility for setting the agenda, and I
    believe people who have been elected to the House of Representatives and
    the United States Senate has an obligation to confront problems head on.
        By the way, tell the old man 1946 was a great year.
        Mr. Wright. It was a great year.
        The President. Yes, you wouldn't be sitting here if it wasn't, you
    know. Anyway. [Laughter]
        We've got a mom and her daughter with us.
    I'm so glad you both came. Thanks for being here. Sonya is the daughter. Rhode is the mom. And I want the Stone
    women to talk about their lives and how it relates to Social Security.
    If you don't mind, Sonya, why don't you start? What do you do?

    [Sonya Stone, CFO partner, Tatum Partners, Vienna, VA, made brief
    remarks.]

        The President. Good. A CFO, like, you know something about numbers?
        Sonya Stone. I know a little bit about
    numbers, and I----
        The President. I presume you've looked at the numbers.

    [Sonya Stone made further remarks.]

        The President. Sure. I think it's important for people to understand
    compounding rate of interest. In other words, if you take a

    [[Page 40]]

    dollar, set it aside, and it grows at 3 percent over 30 years or 40
    years and compare that to the same dollar that grows at 7 percent on an
    average basis over 30 years, there is a huge difference in money.
        So it matters how much money--how much interest or how much rate of
    return your money earns. We're kind of throwing around these words as if
    everybody understands compounding rate of interest and rate of return,
    but what people need to understand is that the money that's now--your
    money in the Government is earning much less than it's capable of
    generating under safe conditions. ``Safe conditions,'' I think that's
    what you're saying.

    [Sonya Stone made further remarks.]

        The President. Good, thanks. Well done. Now what about your--
    introduce your mom.
        Sonya Stone. I would like to introduce my
    mom. This is my mother, Rhode Stone. And she is grandmother of three and
    originally from Helsinki, Finland, and has been here over 40 years.
        The President. Fantastic. Same age as my mother.
        Sonya Stone. Just turned 80.
        The President. Is she still giving you
    instructions?
        Sonya Stone. Every day, and I do my best.
        The President. It never stops, does it? [Laughter] No.
        Rhode Stone. It shouldn't stop.
        The President. That's right. [Laughter] Let her rip.

    [Rhode Stone made brief remarks.]

        The President. Thank you for saying that. Good job.
        Yes, I think one of the interesting things that Rhode talked about is the need for people to understand that
    Social Security is a part of retirement income. That's why it was
    created, and therefore, the idea of developing the habits early--
    necessary to make sure you've got that which is necessary to live on,
    such as saving money, is important. I happen to believe that once
    personal savings accounts are part of the Social Security system, that
    it will encourage other savings to take place as well. People will be
    able to see the benefits of savings, understand how important it is as a
    dad to save for two beautiful little girls, to start setting aside money
    for college education is a way to save, not necessarily for retirement
    in this case, but to be a good dad and do your duty as a father.
        And so I appreciate that point. In other words, it's a point that
    says that people have got to understand you have a responsibility to set
    aside money so that you can live comfortably. And it worked in your
    case. Thankfully you had a wise husband.
        Rhode Stone. I wish we would have had a
    chance to put----
        The President. As additional--as addition to the savings you set
    aside out of the personal savings accounts. I agree.
        And that's--so it's a--this is a--I hope you have come away with a
    better understanding of the importance of this issue. I mean, we've got
    people of all generations here, people who say, ``Look, this is an
    issue.'' And the fundamental question confronting the people elected to
    the United States Congress is, will they act? I will assure you, I'm
    going to ask them to act. I think that one of the reasons I'm sitting
    here is because I said to the people of the country, ``We have an issue
    with Social Security. We have a problem. I think it's important to be a
    problem-solver. Give me 4 more years, and I intend to work with people
    of both parties and solve problems, and there is a problem with Social
    Security.''
        I see a problem. I also see a solution. And I realize that it's
    going to require bipartisan cooperation. And I look forward to working
    with members of both political parties in both Houses to come together
    and do our duty. I realize it's not going to be easy. This isn't easy.
    If it were easy, it would have already been done. It kind

    [[Page 41]]

    of makes it fun, though, isn't it--take on the tough jobs.
        Members who will work--constructively work with us will be able to
    look back and say, ``I did my duty. I came to Washington to be more than
    just a placeholder. I came to Washington to analyze a problem, to deal
    with a problem, and to leave a legacy behind of fixing the problem.''
    And so I'm looking forward to working with the Members of Congress.
        I want to thank our panelists who are here. I want to thank our
    audience for coming. May God bless you all.

    Note: The President spoke at 10:50 a.m. at the Andrew W. Mellon
    Auditorium. The Office of the Press Secretary also released a Spanish
    language transcript of these remarks.