    [Public Papers of the Presidents of the United States: George W. Bush (2005, Book I)]
    [April 18, 2005]
    [Pages 615-622]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks on Strengthening Social Security in Columbia, South Carolina
    April 18, 2005

        Thank you all very much. Mr. Speaker,
    thank you for that kind and short introduction. [Laughter] I appreciate
    Governor Sanford being here. I want to thank
    the Lieutenant Governor. I appreciate
    President Pro Tem McConnell, Majority
    Leader Leatherman, members of the
    South Carolina legislature.
        I appreciate my traveling party from Washington. Hope you appreciate
    them, too. That would be Senator Lindsey Graham, Senator DeMint, Members of the
    United States House of Representatives from the great State of South
    Carolina.
        I appreciate the justices of the South Carolina Supreme Court being
    here. I thank those of you who have taken time to come and listen. I
    appreciate your warm welcome.
        It is an honor to be speaking in this chamber. It is great to be
    back in the capital of South Carolina. The last time I came to this
    city, I gave the commencement speech at USC. I was proud to have
    received an honorary degree. When I told Laura
    about it, she said, ``I thought your first degree was honorary.''
    [Laughter] She sends her best, and she sends her love. She's, by the
    way, a fabulous First Lady. She is--[applause].
        I appreciate our escort committee. I told the Members that this is
    the first time I have spoken to a legislative body, State legislative
    body since I was the Governor of Texas. So thank you for having me.
    It's--there's some differences, of course. There are a lot of cowboy
    hats back in Austin. [Laughter] And I'll be honest with you, a lot of us
    didn't know anything about dancing the shag. [Laughter] And I imagine we
    could have a pretty good debate about which of our States has the best
    barbecue. [Laughter] Now is not the time. [Laughter]
        But one thing is, no matter whether you serve at the Federal level
    or the State level, we share serious responsibilities. See, our
    constituents have put us into office to solve problems now. That's what
    they've done. They said, ``We've elected you to go to your
    statehouse''--or in my case, Washington, DC--``to solve problems.'' The
    people expect us to confront problems without illusion. They expect us
    to lead with conviction and confidence, not by reading the latest poll
    or listening to the latest focus group, and above all, they expect us to
    deliver results.
        And here in South Carolina, you've delivered results. You've faced
    serious challenges, especially in your economy. Listen, we've had a
    stock market decline. We've had a recession. We've had corporate
    scandals. We had a terrorist attack on September the 11th, 2001. We've
    had the demands of war. And all these have tested our Nation's economy,
    and they hit particularly hard here in your State. South Carolina's
    economic growth slowed. Small businesses moved out or shut down. Workers
    lost their jobs, and State finances were headed toward a free fall.
        The people of South Carolina looked to you and they looked to your
    Governor for leadership. And you delivered. You set clear priorities for
    your budget, and you made hard decisions when it came to spending. To
    rein in the rising costs of health care, you became one of the first
    States in the Nation to offer health savings accounts to State
    employees. To reward hard-working

    [[Page 616]]

    families and job creators, you refused to raise taxes on the working
    people of South Carolina. You've focused bipartisan actions. You've
    lifted your State out of fiscal crisis. You've erased a $155 million
    deficit, and you've done it 2 years ahead of schedule. Today, South
    Carolina families are planning for the future with confidence.
        I found this to be an interesting statistic about your State: More
    than 76 percent of the people in your State own their own home, one of
    the highest rates in the United States. Small businesses are investing
    and expanding. Exports are on the rise. Thanks to your leadership,
    thanks to your hard work, thanks to your willingness to set aside
    partisan differences, jobs are coming back to the great State of South
    Carolina.
        In Washington, we're moving forward with an ambitious agenda to keep
    this country safe, prosperous, and free. The war on terror goes on.
    There are still ruthless enemies that would like to do harm to our
    people. We will continue to keep the pressure on these folks. We'll work
    with our friends and allies to be unrelenting in our search to bring
    them to justice. We will not rest until America is safe.
        We'll continue to work to improve security here at home, but in the
    long term, in the long run, the best way to protect America and to keep
    the peace is to change the conditions that give rise to hopelessness and
    extremism. And the best way to do that is to spread freedom around the
    world. I don't believe freedom is America's gift to the world. I believe
    freedom is the Almighty God's gift to each man and woman in this world.
        And that is why the United States of America will stand strongly
    with people in Afghanistan to Iraq to Lebanon to the Ukraine, because we
    understand that as freedom advances, the American people will be more
    secure, and we'll be able to achieve the peace that we all want.
        My administration will continue to pursue progrowth policies to
    ensure that America is the best place in the world to do business. To
    keep the economy growing and create jobs, we will keep the taxes low.
    We'll continue to confront the problems of junk lawsuits by pushing for
    meaningful asbestos and medical liability reform. We'll work with
    Congress to pass an energy bill that will make America less dependent on
    foreign sources of energy.
        I sent to Congress a disciplined Federal budget, and both the House
    and the Senate have passed budget resolutions. And now they need to work
    out their differences and send me a budget that meets America's
    priorities, that restrains Federal spending, and that keeps us on track
    to cut the deficit in half by 2009. In Washington and in Columbia, South
    Carolina, government needs to follow a straightforward principle: A
    taxpayer's dollar must be spent wisely or not spent at all.
        Strong leadership means rising to the challenges of the day. It also
    means looking down the road. There will always be problems that arise
    unexpectedly, yet problems--some problems are completely predictable.
    And as leaders, you and I have a responsibility to confront those
    problems today and not pass them on to future generations.
        Over the past few weeks, I've been traveling around the country
    talking about one of the most serious and most predictable challenges
    which face our Nation, and that is the long-term fiscal health of Social
    Security. Social Security has been a great success. Franklin Roosevelt
    did a really smart thing in setting up the Social Security system. It
    has provided an important safety net for millions of Americans.
        Seniors in South Carolina and seniors across this country depend on
    their monthly checks as an important part of their lives, as an
    important source of income for their retirement. And today I have a
    message for every senior in South Carolina and every senior across this
    country: Do not pay attention to the propaganda and scare ads. If you're
    receiving a Social Security

    [[Page 617]]

    check this month, you will continue receiving a Social Security next
    month and the month after that and every month for the rest of your
    life.
        There are other Americans who are now approaching retirement and
    have been paying into Social Security throughout their lives. These
    workers are counting on Social Security as part of their retirement
    plans, and there's money in the system for them. If you were born prior
    to 1950, America will honor the promise of Social Security for you. The
    problem is that the Government is making promises for younger Americans
    that it cannot pay for. In other words, there's a hole in the safety net
    for younger Americans.
        See, Social Security is a pay-as-you-go system. You pay, and we go
    ahead and spend here in Washington. [Laughter] We spend on--to provide
    benefits for current retirees, and with money left over, we have spent
    your payroll taxes on Government programs. Some people think there's a
    Social Security trust, where the Government is holding your money in an
    account with your name on it. It just doesn't work that way. That's not
    the way the system works. There is no vault holding your cash, waiting
    for you to retire. Instead, because we spend Social Security taxes on
    current retirees and other Government programs, all that is left over in
    the so-called security trust is a bunch of filing cabinets with IOUs in
    them.
        As a matter of fact, I went to West Virginia the other day to look
    at the filing cabinets, to make sure the IOUs were there--paper, and
    it's there. And it's frankly not a very encouraging sight. It's not
    encouraging especially when you consider that times are changing in
    America, that the math for Social Security is changing significantly. By
    ``the math'' I mean this: In 1950, there were about 16 workers paying
    taxes for every beneficiary--16 workers for beneficiary. And today,
    there's 3.3 workers for every beneficiary. By the time our children and
    grandchildren are ready to retire, there will only be 2 workers paying
    for every beneficiary in the system.
        That's only part of the problem. To compound the problem, the first
    baby boomers will soon start retiring. I happen to be one of them. As a
    matter of fact, I'm eligible to start collecting benefits in 2008, which
    happens to be a convenient year for me. [Laughter] The retirement of the
    baby boomer generation is going to have a huge impact on Social
    Security, because my generation is about 50 percent larger than my
    parents' generation. Today, there are about 40 million retirees
    receiving benefits. By the time all the baby boomers have retired, there
    will be more than 72 million retirees receiving benefits. And thanks to
    advances in modern medicine, these retirees will live longer and collect
    benefits over longer retirements than the previous generation.
        And to compound the problem even further, Congress has ensured that
    benefits to my generation will grow faster than our economy or the rate
    of inflation. In other words, people went around the country saying,
    ``Vote for me. I'll make sure your benefits are higher.'' And so this
    sets up an enormous fiscal challenge facing Social Security. With each
    passing year, there will be fewer workers paying ever-higher benefits to
    a larger number of retirees who are living longer.
        And so here's the result: 3 years from now, when the first baby
    boomers start collecting Social Security benefits, the system will start
    heading toward the red. Less than a decade later, in 2017, Social
    Security will go negative. And by that I mean it will be paying out more
    in benefits than it collects in payroll taxes, more money going out than
    coming in. And every year after that, the shortfall will get worse.
        In the year 2027, the Government will somehow have to come up with
    an extra $200 billion to fund the system--$200 billion more going out
    than coming in through payroll taxes. In 2034, the annual shortfall will
    be more than $300 billion a year. And by the year 2041, the entire
    system will

    [[Page 618]]

    be bankrupt. Now, think about that. If we don't do something to fix the
    system now, the students graduating this spring from the University of
    South Carolina or, in deference to the Speaker, Clemson--[laughter]--will spend their entire careers
    paying Social Security taxes only to see the system go bankrupt a few
    years before they retire.
        And I don't care if you're a Republican or Democrat, these are the
    facts. And the question is, do we have the will to do something about
    them? Now, in South Carolina, you know that once you're in the red, the
    options of getting out are never very appealing. If we allow Social
    Security to continue on its current path toward bankruptcy, we will
    leave our children and grandchildren with only a few drastic options to
    keep the system afloat. In other words, the longer you wait, the longer
    we don't do anything in Washington, the more drastic the solutions
    become.
        For example, some estimate if we don't do anything, the payroll tax
    will get up to 18 percent. Is that a legacy we want to leave on younger
    generations of Americans? I don't think so. Or we're going to have to
    dramatically slash benefits or cut other Federal programs. The Social
    Security trust reported this--they said, ``Every year we wait to fix the
    system will add an additional $600 billion to the cost of reform.''
        I understand why some in Washington don't want to take on this
    issue. I guess they calculate there's a political cost when dealing with
    a tough issue. I think there's a political cost for not dealing with the
    issue. And so I've been traveling this country of ours, making it
    absolutely clear what the problems are. See, my strategy is pretty
    simple: Take the message to the people and define the facts of the
    problem, and let the people draw their own conclusions. I've been to 22
    States to explain the facts. I've been to those States to explain the
    urgent need for the United States Congress to work with the
    administration to get something done now. And more and more Americans
    are beginning to hear the message.
        I'm just starting. I'm just warming up. As a matter of fact, I like
    getting out of Washington, DC. I like coming to places like South
    Carolina to put the facts on the table so the people can make their own
    mind about what's happening in Social Security.
        I don't know if you've ever heard of Dutch Fork High School in Irmo.
    I met a very innovative teacher who assigned her students this
    assignment: Why don't you write letters to the editor about their
    impressions of Social Security? Here's what one of her students wrote:
    ``By the time my generation gets to the age to draw Social Security,
    there will be no money left for us to draw on.'' This is a young high
    school student writing that. This isn't a professor in economics. This
    is a high school student. He said, ``I don't know about other people,
    but I don't like the sound of that.'' People are beginning to get the
    message that there is a problem in Social Security.
        Today I met an 80-year-old--80-year-old ``young'' woman from
    Silverstreet named Shirley. She said she's counting on Social Security.
    She gets a Social Security check every month, and she's confident she'll
    keep getting her checks. And there's no doubt in her mind she's going to
    get her checks, but there's a doubt in her mind as to whether or not her
    granddaughters are going to have comfort in their retirement, whether or
    not the safety net will be there for them. Here's what she said: She
    said, ``I don't know what I would do without it. It's my granddaughters
    that I'm worried about, and I want to do whatever is possible to fix the
    system for them.''
        Folks, we're talking about a generational issue here in America. The
    grandfolks are going to get their checks, and the fundamental question
    is, do we have the will in Washington, DC, to make sure the system works
    for the grandchildren of America? And that's what I'm here talking
    about.

    [[Page 619]]

        I believe I have a duty to ask people to bring ideas forward. I
    brought a few myself, and I appreciate the response of Senator Lindsey
    Graham. He's brought some ideas forward, as
    has Senator Jim DeMint, as has your
    Governor. These men have been leaders in the
    debate. They've stepped up and said, ``Here are some ideas I'd like you
    to consider.'' But they're not the only ones who have set up good ideas.
    Former Congressman Tim Penny, a Democrat
    from Minnesota, has suggested tying Social Security benefits to prices
    rather than wages. My predecessor, Bill Clinton, had time--had meetings all around the country on Social
    Security, and he spoke of increasing the retirement age at one time.
        I put together a Commission of Republicans and Democrats, headed by
    the late Senator Daniel Patrick Moynihan of New York, and they did fine
    work. They recommended changing the way benefits are calculated. In
    other words, people are putting ideas on the table. An interesting idea
    was put forward by a Democrat Social Security expert named Robert
    Pozen, who has proposed a progressive way of
    structuring benefits that will be more generous to low-income workers.
    And that's an important idea.
        In other words, all these ideas are on the table, but they have one
    thing in common. They all require us to act now. Saving Social Security
    is not a Republican goal. It is not a Democrat goal. It is a vital goal
    to all our country, and people of both political parties need to get the
    job done now.
        There are some basic principles that must guide our efforts to fix
    Social Security. We should not raise the payroll tax rate. That would
    hurt the economy and cost jobs. We must ensure that Social Security
    continues to provide dignity and peace of mind for Americans in
    retirement and include extra protections for those with low incomes. We
    must reject temporary measures that put off Social Security problems for
    another day.
        You need to be skeptical about any talk that talks about a 75-year
    fix. Back in 1983, Republicans and Democrats came together on what they
    thought was a 75-year fix. You know, I like the spirit of people of both
    parties coming together, and that was great. President Reagan and
    Speaker O'Neill said, ``We got a problem. Let's come together to fix
    it.'' But they thought it was a 75-year fix; here we are, 22 years
    later. It's time to come up with a permanent solution. When people bring
    forth their ideas in Congress, I will insist that we not have a bandaid
    approach to Social Security, that we have a permanent fix. And I'm
    optimistic about the chances for meaningful Social Security reform.
        You know, a few weeks ago the United States Senate voted on a
    resolution guaranteeing that any Social Security fix must be permanent.
    The vote has the agreement of the two Senators from South Carolina, the
    two Senators
    from Texas, the two Senators from Massachusetts. Any time that happens, you've got
    yourself a bipartisan agreement. [Laughter] In fact, the vote in
    Congress was unanimous. Think about that. Every single United States
    Senator is on the record supporting a permanent fix. Now those Senators
    need to keep their word and make Social Security solvent once and for
    all.
        Bringing permanent solvency to Social Security is an important
    start, but it's only part of our duty. Preserving Social Security should
    not mean preserving its problems. Today, we have an opportunity to offer
    younger Americans a better deal than the current system. Today, we can
    give every American the chance to tap into the power of compound
    interest, so they can get a higher rate of return on their money than
    the current system allows. You might notice I said ``their money.'' See,
    we're not spending the Government's money. The payroll taxes are the
    people's money. It's coming from hard-working people.

    [[Page 620]]

        We can build this opportunity into Social Security by giving younger
    workers the option to set aside some of their own money in a personal
    retirement account. The account would be a conservative mix of bonds and
    stocks that grows over time and can deliver a greater return than the
    Social Security system does. That would be a good deal for younger
    workers.
        Since 1983, since that reform took place, stock investments have
    returned about 9 percent more than inflation per year, while the real
    return on Social Security is about 2 percent a year. That means that a
    dollar invested in the market in 1983 would be worth $11 today--one
    dollar would grow to 11--while the same dollar would be worth about 3 if
    it had been put in Social Security. Every young American should have the
    opportunity to take advantage of the compounding rate of interest to
    earn a better return on his or her own money.
        Personal accounts would be completely voluntary. Younger workers
    could choose to join or choose not to join. That seems to make sense,
    for Government to provide opportunities of choice for individual
    Americans. Workers opting to open an account would be able to put about
    a third of their payroll taxes in investments instead of sending their
    money to Washington. For example, a younger worker earning an average of
    $35,000 a year over a career, because of the growth of money, would be
    able to retire with a nest egg of nearly a quarter-million dollars. That
    would be a nice addition to the other Social Security benefits.
        These voluntary accounts would come with strict guidelines to make
    sure they're secure. You couldn't take--put them in the lottery--sorry
    to say, Speaker. [Laughter] You could make
    sure the earnings aren't eaten up by hidden Wall Street fees. We'll make
    sure there are good options to protect investments from sudden market
    swings on the eve of retirement. You won't be able to withdraw all your
    money and take it to the racetrack. These accounts will offer
    straightforward investment choices that are easy to understand.
        By the way, this concept isn't new. After all, in South Carolina,
    all State employees can choose to put part of their retirement savings
    in a traditional retirement plan or in a conservative mix of bonds and
    stocks that can deliver a better rate of return. So when I talk about
    personal accounts available for younger workers, you know what I'm
    talking about right here in South Carolina. You've already made that
    decision for people who are serving the State.
        I don't know if you know this or not, but Federal employees have
    that same opportunity to watch their money grow, through a program
    called the Thrift Savings Plan. It's a plan that allows Members of the
    United States Congress and the United States Senate to set aside some of
    their own money, if they so choose to do so, in a conservative mix of
    bonds and stocks. It seems fair to me that if setting up a personal
    savings account is good enough for a Member of the United States
    Congress, it is good enough for workers all across America.
        By giving younger workers an option to set up a personal savings
    account, we have an opportunity to modernize and strengthen a great
    American program. We have a chance to bring the Social Security system
    into the 21st century.
        The reason I say that is, today, young people are comfortable
    investing in bonds and stocks. Millions of workers now choose to plan
    for retirement with their own savings accounts through programs like
    401(k)s. I don't remember growing up hearing the word ``401(k).'' I
    don't think you remember that. You're old enough to be around when they
    didn't have 401(k)s--[laughter]--or IRAs. We're not talking about a new
    culture. We're talking about a culture that's already taken hold in our
    society, where workers from all walks of life are watching their money
    grow and making decisions on behalf of their families with where they
    invest.

    [[Page 621]]

        See, telling younger workers they have to save money in a 1930s
    retirement system is like telling them that they have to use a cell
    phone with a rotary dial. [Laughter] If young people are confident they
    can improve their retirement by investing in a conservative mix of bonds
    and stocks, the Government should not stand in their way.
        Creating these accounts will also give our children and
    grandchildren a chance to replace a burden of uncertainty with a new
    opportunity. Instead of leaving their full retirement in the hands of
    future politicians, younger workers will be able to take part of their
    retirement into their own hands. Instead of sending all the payroll
    taxes to Washington, younger workers would be able to transfer part of
    their money directly into an account they own and that the Government
    can never take away. Instead of forfeiting years of Social Security
    contributions if they die before retirement, younger workers would have
    peace of mind that their personal accounts could be passed on to a loved
    one.
        Young people are learning more about the opportunity to own part of
    their retirement, and they're making their opinion pretty clear. I met
    Philip Meador today. He's a graduating
    senior from The Citadel. He told me he's going to be starting a new job
    in June. He knows he's going to start paying Social Security taxes. What
    he's not sure about is whether or not he'll ever be seeing a Social
    Security check. He certainly will be paying in; he's not so sure what's
    going to be coming out. He likes the idea of keeping part of his money
    in an account that he controls. He said, ``I like the options. You
    choose what to put in. You choose the investments. It depends on what
    you're looking for. I think every individual should be able to choose a
    plan that fits them.''
        A lot of young people are beginning to say that. A lot of young
    people want this United States Government to come together and make sure
    there's not a huge burden when they grow up. A lot of young people want
    the Government to give them the option of making choices with their own
    money.
        And I know you all feel the same way in this chamber. That's why you
    passed resolutions calling on the United States Congress to strengthen
    this important program, Social Security, and to give younger workers the
    option of voluntary personal retirement accounts. You recognize that a
    Social Security system that includes personal accounts will give all
    Americans, not just a few but all Americans, a stake in the greatest
    creator of wealth the world has ever known. You recognize that personal
    accounts will bring the security and independence of ownership to
    millions of our citizens. And you recognize that personal accounts are
    critical to building an ownership society, a more optimistic and more
    hopeful America in which more people own their own homes, more people
    own their own businesses, more people have ownership in a retirement
    account, more people have an asset base they call their own that they
    can pass on to whomever they choose.
        You see, owning assets ought not to be confined to a few people in
    our society. Owning an asset and being able to pass it on to your son or
    daughter ought not to be the purview of a few. In this great land, it
    ought to be spread--ownership ought to be spread to everybody who is
    lucky enough to be an American. You recognize that when people own
    something, they have a vital stake in the future of our country, and
    that personal accounts will help give every citizen the chance, the
    opportunity to realize the dreams of this land.
        The legislature of this great State of South Carolina has shown
    leadership on this important issue, and now the United States Congress
    needs to do the same. I understand that Social Security is a tough
    issue, but Congress has tackled tough issues before. We've seen in the
    past how leaders from both parties can rise above partisan politics to
    meet great responsibilities. And now is the time for them to do so
    again.

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        I am confident that Members of Congress will come together to reach
    a permanent solution. And when they do, our children and grandchildren
    will one day look back and be grateful that our generation made the
    difficult choices and the necessary choices to renew the great promise
    of the Social Security system for the 21st century.
        I want to thank you all for the invitation to come to your great
    State. I appreciate you giving me a chance to come and visit. It's an
    honor to talk about such an important topic with those who have been
    willing to serve. May God bless you in your efforts, and may God bless
    your families, and may God continue to bless the United States of
    America.

    Note: The President spoke at 12:17 p.m. at the South Carolina
    Statehouse. In his remarks, he referred to David H. Wilkins, speaker,
    South Carolina State House of Representatives; Gov. Mark Sanford and Lt.
    Gov. Andre Bauer of South Carolina; and Glenn F. McConnell, president
    pro tempore, and Hugh K. Leatherman, Sr., majority leader, South
    Carolina State Senate.