    [Public Papers of the Presidents of the United States: George W. Bush (2005, Book I)]
    [May 13, 2005]
    [Pages 786-794]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks to the National Association of Realtors
    May 13, 2005

        Thank you all. Thanks for the warm welcome. Sorry Laura is not here with me. [Laughter] As you know, we just
    got back from an overseas trip, and even President Putin had heard about Laura's new job as the comedienne in
    chief. [Laughter] I'm really proud of her. She's a great First Lady. And
    she said, ``Don't go over there and start looking for a house yet;
    you've

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    got 3\1/2\ more years.'' [Laughter] But I really want to thank you all
    for inviting me. I'm looking forward to sharing some thoughts with you.
        Before I do so, I want to thank my Secretary of the Department of
    Housing and Urban Development, Alphonso Jackson, my fellow Texan.
        I want to thank Al Mansell, the president of
    the National Association of Realtors, and the board of directors and all
    the members.
        We have got an important agenda here in Washington. It's an agenda
    to keep this country prosperous and safe and free. The war on terror
    continues. I have an obligation as your President to remind people about
    the realities of the world we live in. There are still people out there
    who would like to inflict harm on our people. We will be unrelenting in
    searching the--unrelenting in trying to find those who would harm our
    people and bring them to justice. And we will be unrelenting in our
    desire to spread freedom, because America understands that free
    societies are peaceful societies.
        It's such an honor to represent the United States of America around
    the world, and it was such an honor to represent our country last week
    in Europe. We must not forget the lessons of Europe. When we see
    tyranny, we must resist and free people from tyranny. And we must
    remember the lessons of Europe, and that is, democracies are able to
    live peacefully side by side; a part of the world that--where there was
    war after war, where thousands of American soldiers had died, not only
    in World War I and World War II, is now whole, free, and peaceful
    because of the spread of democracy. And it's that spread of democracy in
    the greater Middle East that will yield a more peaceful world for our
    children and our grandchildren.
        We're also putting policies in place to make this country more free
    and to enhance opportunity here at home. And our realtors play a crucial
    role in creating opportunity in America. After all, you help people
    attain an important part of the American experience and the American
    Dream, and that is owning a home. I believe the proper role of
    Government is to encourage ownership, is to promote an ownership
    society. An ownership--when you own a home, it brings stability to a
    neighborhood or security to a family. I love it when somebody--a first-
    time homeowner opens up the door to their house and says, ``Welcome to
    my piece of property. Welcome to my home.''
        And we're making progress. In this country, homeownership set a new
    record last year: 69 percent of American families own a home. Think
    about that. There are 74 million homeowners in America today, and that's
    the most ever in our Nation's history. I want to thank you for working
    hard to help people realize that dream.
        In 2002, I was working with Alphonso, and we set a goal of increasing the number of minority
    homeowners by 5\1/2\ million by the year 2010. Minority homeownership in
    America is at an alltime high. We just set a new quarterly record this
    year of 51.6 percent of minorities own their own home; 2.3 million
    minorities own a home. We're halfway toward our goal of over 5 million
    by 2010. Housing starts--we're at the highest level in over 25 years,
    reaching nearly 2 million homes. That's the best annual performance
    since 1978.
        There's more work to be done. A year and a half ago, I signed the
    American Dream Downpayment Act. My 2006 budget requests $200 million for
    that initiative. And it's an important initiative. You see, that money
    will help thousands of families with their downpayment and closing
    costs, which will help more people realize the great joy of owning their
    own home.
        To boost housing sales even more, Congress needs to pass my single-
    family homeownership tax credit. We estimate this credit would increase
    the supply of affordable single-family homes by as many as 50,000 each
    year. The idea is to increase

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    the supply of affordable homes by 7 million over the next 10 years.
        In other words, there is a proper role for Government, to provide
    incentives for entrepreneurs and small businesses to expand. One thing
    we've got to make certain is to understand that the mortgage interest
    deduction enables more Americans to be able to own their own home. It is
    an important part of our Tax Code.
        We not only want more people owning their own home; we want more
    people owning their own business. The entrepreneurial spirit in America
    is strong, and we need Government to put policies in place to keep it
    that way.
        Here are some ideas to help small businesses flourish and for the
    entrepreneurial spirit to be strong. We need to make it less costly for
    small businesses to provide health care for their employees. We continue
    to expand health savings accounts. We must allow small businesses to
    pool risk across jurisdictional boundaries so they can buy insurance at
    the same discounts big companies are able to do. And to make sure health
    care is available and affordable to people from all walks of life,
    Congress needs to pass medical liability reform.
        My administration will continue to press for legal reform here in
    Washington. Junk lawsuits make it awfully hard for small businesses to
    expand. I have submitted a no-nonsense budget to the United States
    Congress, and part of that budget is to keep taxes low on our
    entrepreneurs.
        To make sure this economy continues to grow and the entrepreneurial
    spirit is strong, our country needs to have access to affordable,
    reliable, and a secure supply of energy. Millions of small businesses
    and families are hurting because of higher gasoline prices. When
    gasoline prices go up, it's like taxing people--taxing our families.
    It's taxing small businesses. I understand, if you're trying to meet a
    payroll or trying to meet a family budget, small changes at the pump can
    have a big impact on your life. And that's why we have got to address
    the root causes that are driving up the price of gasoline.
        I told a soldier in Fort Hood when I was visiting with him the other
    day, I said, ``How's it going in the military?'' He said, ``Fine, but
    how come you don't do something about gas prices?'' [Laughter] And I
    said, ``If I could, I would. If I could just say, `Lower the price,' I'd
    say that.'' That's not the way it works. We need to address the root
    causes that are causing gasoline prices to go up. The root cause is that
    we're consuming energy faster than we're producing it, which means we're
    becoming more dependent on oil from overseas.
        To reduce that dependence, we've got to take four key steps. First,
    we must be better conservers of energy. And we can use technology in a
    wise way to encourage conservation. Secondly, we must find innovative
    and environmentally sensitive ways to make the most of our existing
    energy resources, including oil and natural gas and coal as well as
    safe, clean nuclear power. Third, we must develop promising new sources
    of energy such as hydrogen and ethanol and biodiesel. And fourth, we
    must help growing energy consumers overseas like China and India. We
    must help them apply new technologies so they can use energy more
    efficiently and reduce the global demand for oil.
        I applaud the House of Representatives for passing a good energy
    bill that meets the four criterion I outlined. And it is now time for
    the United States Senate to act. Congress needs to get a bill to my desk
    before the August recess.
        I want to spend some time today talking about another challenge
    which faces this country, and that is the challenge of Social Security.
    I have traveled the country a lot to talk to the people about Social
    Security. And one thing is for certain: The American people now
    understand that Social Security is headed for serious financial trouble.
    And they expect the folks here in Washington, DC, to do something about
    it. They expect

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    us to put aside partisan differences and focus on the good of the
    country.
        Franklin Roosevelt did a smart thing when he created Social
    Security. The system has meant a lot to a lot of people. Social Security
    has brought peace of mind to millions of Americans in their retirement.
    It's made a huge difference in people's lives. It is very important for
    our seniors to understand that when I talk about strengthening the
    Social Security system, nothing will change for you. If you're on Social
    Security today, you're going to get your check. The system is solvent
    enough to take care of anybody who was born prior to 1950.
        Now, I understand how this works in politics. I mean, you start
    talking about Social Security, and the first thing that happens, there's
    all kinds of fliers and propaganda that go out that try to frighten
    today's seniors. I'm going to continue to remind these people about the
    truth, and the truth is twofold. If you're getting a check, if you've
    retired, nothing changes for you. But if you're a younger American, our
    Government has made promises to you that it cannot keep.
        Social Security worked fine, but the problem is the math has
    changed. And the reason the math has changed is because people like me
    are getting ready to retire. [Laughter] And there's a lot of us. We are
    called the baby boomers. Do you realize today there are about 40 million
    retirees receiving benefits, 40 million folks counting on the Social
    Security check. By the time the baby boomers fully retire, there will be
    72 million people receiving a check. So you're beginning to get to see
    how the math is changing. More people will be getting checks.
        There's a second difference: We're living longer. People my age are
    going to live longer than the previous generation. The previous
    generation lived longer than the previous generation. That's what
    happens with good technology and medicine and wise choices. I strongly
    urge you to exercise on a regular basis. [Laughter]
        And thirdly, Congress promised greater benefits to my generation
    than the previous generation. In other words, people were running for
    Congress, and they'd say, ``Vote for me. I'll make sure the baby boomers
    get better benefits.'' So you've got people living longer--a lot of
    people living longer--getting better benefits, and there's fewer people
    paying into the system. That's the other half of the equation.
        In 1950, there were 16 workers paying for every beneficiary. In
    other words, people were able to share the load, the responsibility of
    taking care of a retiree. Today, there are 3.3 workers paying for every
    beneficiary; soon there will be two workers paying for every
    beneficiary. And so here's the problem: You've got fewer workers paying
    for more retirees who are living longer and have been promised greater
    benefits.
        And so I tell people that this math has created a significant
    problem for the solvency of Social Security. In other words, Social
    Security really is on the path to bankruptcy--because of the math,
    because of what's taking place in the demographics in America. When baby
    boomers start to retire 3 years from now, the Social Security will start
    heading into the red. See, we take your money, and we spend it.
    [Laughter] That means there will be more people--the benefits--the
    Social Security benefits will be greater than your payroll taxes,
    starting in 3 years. In 2017, the system will pay out more in benefits
    than it collects in payroll taxes. In other words, there will be more
    going out than coming in. I think I probably said that for the first 3
    years; it's not--it starts going in the red. It goes into the red in
    2017, and every year thereafter the situation gets worse.
        Let me just give you an example: In 2027, there will be $200 billion
    in that year alone going out to pay people who are living longer, like
    me, greater benefits, than are coming in through payroll taxes. So it's
    200 billion. And it gets worse and worse

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    and worse, until the system is broke in 2041. That's a problem.
        Now, some in Washington say, ``Well, it's not 2017; isn't that
    pretty far down the road?'' It's not very far down the road. If you're--
    if you got a 6-year-old kid, that means your kid is going to be driving
    when the system starts going into the red. If you're a young worker
    paying into the system, paying your payroll taxes, and all of a sudden
    you see the facts, and the system starts going into the red, that's not
    a problem down the road.
        The Social Security trust--trustees have made it clear that every
    year we wait to fix the problem costs the country at least $600 billion
    to save the system. In other words, there's a--it's time to get
    something done. If we wait, if we take the politically easy path, it's
    conceivable that young workers will have to pay an 18-percent payroll
    tax in order to pay for my generation, or the Government is going to
    have to slash benefits by about 30 percent or other Government programs.
    We're in a bind. And now is the time to come together and fix the
    problem.
        The job of the President--my job is to confront problems, not to
    pass them on to future Presidents and future generations. So we have a
    duty, I think; we have a duty to solve this problem once and for all.
        I say ``once and for all''; in 1983, you might remember when
    President Reagan and Tip O'Neill got together, and they put together
    what they said was a 75-year fix. First of all, I love the spirit of
    people coming together to fix the problem. They set the right example.
    The problem was the 75-year fix didn't last 75 years. Here we are, 22
    years later, talking about the problem again.
        And so we need to fix this permanently. We need to do our duty. And
    as we do so, we need to provide extra help to those most in need and
    make it--make the system a better deal for younger workers.
        Congress needs to be guided by three goals as they begin work on
    this legislation. First, future generations should receive benefits
    equal to or greater than the benefits today's seniors get. That's a
    reasonable goal.
        Second, a reformed system should protect those who depend on Social
    Security the most. More than one in five Americans rely on Social
    Security for nearly all their retirement income. Think about that. So I
    proposed a Social Security system in the future where benefits for
    workers with the lowest incomes will grow faster than the benefits for
    people who are better off. Economists call this idea progressive
    indexing. It means that in the future, all workers will get Social
    Security checks bigger than the ones they receive today, but that the
    benefits will rise at a rate we can better afford.
        This idea was suggested by a fellow named Robert Pozen, an investment expert and a Democrat who served on
    the Commission to Strengthen Social Security. Here's how it works:
    Today, all workers' benefits grow at the rate that reflects growth in
    wages. Under his plan, benefits for the poorest 30 percent of workers
    would continue to be tied to wages. For the highest earning one percent
    of Americans, benefits would be linked to inflation, which grows at a
    slower rate than wages. For all those in between, benefits would grow at
    a rate higher than inflation. By changing the system this way, this
    country will make this commitment, and I think it's an important
    commitment to make: If you work hard and pay into Social Security your
    entire life, you will not retire into poverty.
        I met two of our citizens today. January Igot--she's 26 years old. She works in Washington, DC. She earned
    $33,000 last year. When she retires, her annual benefit under the reform
    plan I just outlined would be $21,700 in today's dollars. That is $3,800
    more in real terms than a similar retiree receives today. I'm just
    trying to give you

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    a sense of what this would mean to the average citizen.
        Rick Brandt is with us, a 38-year-old
    guy. He's a realtor from Newport News, Virginia. He's got four
    daughters, and he's married. [Laughter] He's earned about $75,000 over
    the past 2 years. Under the reformed system, his annual benefit when he
    reaches retirement age would be $24,300 in today's dollars, 3,300 more
    in real terms than beneficiaries receive today.
        A reformed system will introduce greater fairness into Social
    Security. And as importantly, for those who are paying into the system
    in the future, it puts Social Security on the road to solvency. As a
    matter of fact, by reducing the growth in benefits for the wealthiest
    Americans, we would permanently solve most of the funding challenges
    facing Social Security today. In other words, the reform I just outlined
    would provide most of the reform necessary to say that we've permanently
    solved Social Security.
        Now, there are other ways to solve the rest of it, and I look
    forward to working with Congress to do so. But one thing we will not do
    is raise the payroll tax rate.
        I have an obligation as we go through the discussion of Social
    Security not to talk--only talk about the problem but to talk about
    commonsense ways to solve the problem. You just heard a commonsense way
    to put this system on a more solvent footing, forever. We have a duty to
    younger workers to do that. If you're getting your check, you don't have
    a thing to worry about. Nothing will change for people who are receiving
    their Social Security check today. As a matter of fact, those of us born
    in 1950, the system will be exactly the way it is. But younger workers
    need to listen to this debate, because if Congress will not do anything,
    the situation gets worse every year, and you'll be paying into a system
    that will be bankrupt in 2041. Those are the facts.
        Now, as we fix the system permanently, I think we should give our
    workers--younger workers the opportunity to have a better deal in Social
    Security as well. See, Social Security is a pay-as-you-go system. I
    alluded to it earlier: You pay; we go ahead and spend. [Laughter] You're
    paying your payroll taxes. Some people in this country believe as you
    pay your payroll taxes, the Government holds it, and then when you
    retire, we give it back to you. [Laughter] No, the Government takes your
    payroll taxes; we pay out to current retirees; and with any money left
    over, we fund the rest of Government. And that which--and then what ends
    up happening is, there is a filing cabinet in West Virginia that's got
    an IOU in it. [Laughter] I know firsthand. I saw the filing cabinet with
    the IOUs. [Laughter] That's the solvency of the system. The solvency of
    the system is paper.
        See, I think we ought to replace the empty promises of Government
    with real assets. In other words, give younger workers the opportunity,
    if they so choose, to put a portion of their payroll taxes in a
    voluntary personal savings account. They should be allowed--notice I
    said, ``voluntary.'' In other words, we're giving younger workers the
    option. Government is not going to say, ``You must do this.'' Government
    is going to say, ``You can do this if you so choose.'' In other words,
    we're trusting you to make the right decision. After all, it's your
    money.
        You should be allowed, if you so choose, to invest in a conservative
    mix of bonds and stocks, which would give you the benefits of the power
    of compound interest. In other words, if you hold your money and keep
    reinvesting it over a period of time, it grows and grows and grows.
    That's what compound interest means. The accounts would give you an
    opportunity to earn a better rate of return on your money than the
    current Social Security system does.
        Today, for example, Social Security provides an annual rate of less
    than 2 percent for younger workers in the workforce. That's not a very
    good deal. You're paying into a system which will be broke in 2041,

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    and not only that, you don't earn very much on your money. A mixed
    portfolio of conservative investments could be expected to pay you 4.6
    percent, minimum. In other words, you put money aside in a conservative
    mix of bonds and stocks, you should be able to get 4.6 quite easily.
    Many of you who are managing your own money know that over time, you get
    a lot better than that.
        And here's what a personal account earning 4.6 percent would mean
    for a 20-year-old mom earning $8 an hour over her career--in other
    words, the kind of person that we want to make sure doesn't retire into
    poverty. If she so chooses to invest $600 of her payroll taxes in a
    voluntary account each year, by the time she retired, she could expect
    to have a nest egg worth about $100,000 in today's dollars. In other
    words, that $600 contribution would grow over time, in a conservative
    mix of bonds and stocks.
        Take this as an example, just to give you a sense of how interest
    will cause your assets to grow: Say one of your children becomes a
    nurse, and she marries a policeman. And both enter the workforce in
    2011, and they work their entire careers. And they contribute a third of
    their payroll taxes, and they put it in a conservative mix that yields a
    4.6 percent investment. By the time they reach 65, they would have
    accounts worth $669,000 that they could call their own. That's 669,000
    in today's dollars, not the dollars when they're 65 years old.
        In other words, money grows. It doesn't grow very much at 2 percent;
    it grows a heck of a lot better at 4.6 percent or better. And I think
    Government ought to give people the chance, the option, of taking some
    of their own money and watching it grow at a better rate than the
    Government can get for them in the Social Security system.
        The money off of your own asset base, the money off your voluntary
    personal savings account, would be used to supplement the Social
    Security check you got. In other words, Government can afford to pay
    something--I just laid out a plan that will cause most of the problem to
    be permanently solved, and there's some other things we can do to solve
    it forever. And so you'll get a check. And so the personal account, the
    personal savings account will give you money to supplement your Social
    Security check, if that's what you choose to do. That's just an
    important concept. In other words, if there is--it's a combination of
    that which the Government can afford to pay you as well as what you
    earn, what you--as you watch your assets grow.
        The other thing that's important about this account--you see, when I
    said we're going to replace IOUs in a file cabinet with real assets,
    that means this is your money, see. This is your account. Government
    can't take it away. Government can't spend it on something else.
        Voluntary accounts would help with some of the unfairness in today's
    system. And the system is unfair for some folks. If your spouse dies
    before you're 62 years old, the Social Security system gives you a
    burial benefit. In other words, you--two families working--two people
    working in the family all their life, spouse dies prior to 62, what you
    get as your benefit is they bury your spouse for you. That's it. When
    you reach retirement age, the system says you can take your check or
    your spouse's check, which is ever higher, but not both.
        Now, think about that system. Been working all your life, you pay
    in. You die early, and the money you put in just goes away. That's not a
    fair system. We got people working all their lives at hard work,
    contributing by payroll taxes into a Social Security system. The good
    Lord takes one of the members of the family away, and all the money you
    put in, into the system, does not accrue to the benefit of your loved
    one. You get the benefit--you get the higher of the spouse's benefits or
    your benefits, which is ever higher, but not both. That's the way the
    system works.

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        If you're able to put aside some of your own money in an account you
    call your own and if you die early, you can leave that asset base to
    your spouse or your kids to help them along.
        I fully understand some citizens are not comfortable with the idea
    of managing their money in a voluntary personal savings account. That's
    natural. That concept makes some people nervous. That's why the accounts
    are voluntary. If you don't like the idea, you can stay in the current
    system, the system that will be reformed. You don't have to worry about
    it.
        The other thing is there will be plenty of options. For example, you
    can invest all in T-bills, Treasury bonds. But there will be other
    options that will be easy to understand. As a matter of fact, an amazing
    thing has happened since I was 20 years old, and that is the advent of
    401(k)s came along. And for those of you who were born about my time, if
    you look back, I don't remember sitting around talking about 401(k)s
    when I was 20, or IRAs--all different kinds of options to encourage
    people to manage their own money. But that's changed in our society
    today. There are a lot of people looking after their own assets now.
    People are used to investing. Thousands of young Americans are becoming
    accustomed to watching their own assets grow through 401(k)s and IRAs.
        As a matter of fact, this idea has caught on so much that Government
    is now adopting--giving people the ability to take some of their own
    money and putting it aside in a personal savings account as a part of
    the retirement system. I mean, the Federal Government developed what's
    called the Thrift Savings Plan. Here we are, debating Social Security;
    some people are saying, ``We can't have--give people the right to manage
    some of their own money,'' yet guess what's happening in Washington.
    They've decided that they're going to set aside some of their own money
    and get a better rate of return on their money because it grows over
    time.
        It seemed like a pretty good deal to those who write the laws, and
    so therefore, in the Federal Thrift Savings Plan, if you're a Member of
    the United States Congress and you so choose, you can set aside some of
    your own money and put it in a personal savings account. My message to
    the United States Congress is, if that idea is good enough for you, it
    is good enough for workers all across America.
        We have an obligation to confront problems head on here in
    Washington. Our children's retirement security is too important for
    politics as usual. If you're getting a check, you having nothing to
    worry about. If you're retired, the system is just fine for you. But if
    you're a grandma or granddad, you better be talking to the Members of
    the United States Congress about what they intend to do to fix the
    system for your grandchildren.
        We have a shared responsibility here in Washington to work together.
    We've got a great opportunity to permanently reform Social Security so
    that seniors will be kept out of poverty when they retire. We've got a
    chance to spread ownership. I talked about homeownership earlier; I
    talked about owning your own business. Another way to encourage
    ownership in America is to let more people manage their own money when
    it comes time for their retirement.
        I don't think investments ought to be confined just to the
    investment class. I understand the more that people own something, the
    more they watch their assets grow, the better off America is. I want
    people from all walks of life working hard and developing assets and
    savings that they can pass on to their children, if that's what they
    choose to do. The more ownership we have in America, the better off
    America is.
        It is time we take on this debate with courage and honesty, and I
    believe we'll succeed. And I ask you to contact the Members of the House
    of Representatives and Senate--Members of the Senate from your States
    and encourage them to work

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    in good faith to solve this problem. And when we do, Republicans and
    Democrats will be able to stand together and take credit for doing what
    is right for our children and our grandchildren.
        Thanks for letting me come by today, and may God bless you all.

    Note: The President spoke at 10:14 a.m. at the Marriott Wardman Park
    Hotel. In his remarks, he referred to President Vladimir Putin of
    Russia.