[Public Papers of the Presidents of the United States: George W. Bush (2005, Book I)]
[March 30, 2005]
[Pages 525-529]
[From the U.S. Government Publishing Office www.gpo.gov]



Interview With WHO Radio in Cedar Rapids, Iowa
March 30, 2005

Social Security Reform

    Jan Mickelson. The President probably 
wants to get in on this conversation. [Laughter] It's an honor seeing 
you again, sir.
    The President. How are you doing?
    Mr. Mickelson. I'm doing great. You 
realize what a risk you've done, latching on to this Social Security 
thing? You put our number one Senator at grave risk. [Laughter] He had 
to burn his AARP card. [Laughter] Do you realize what a cheap buzzard 
that guy is? [Laughter]
    The President. No, I remember the ads with the lawnmower. [Laughter]
    Mr. Mickelson. Well, see, he can't use his 
AARP discount anywhere anymore. He had to burn that card.
    The President. Well, you know, I appreciate the chairman. He's got some political courage, which is 
necessary to take on tough problems. It's pretty easy to ignore problems 
in politics. What's hard is to take on a tough problem. And both Senator 
Grassley and I have dedicated ourselves to taking on the tough problem 
of Social Security, and it is a problem.
    Mr. Mickelson. I was also warned by the 
Secret Service to keep the microphone away from you in a diner 
situation--[laughter]--because you have a karaoke gland that breaks out 
into Alan Jackson songs at the drop of a hat. Try to restrain yourself 
this morning, sir. [Laughter]
    The President. Thank you very much. If you've ever heard me sing, 
you know it's not an issue. [Laughter]
    Mr. Mickelson. I think it was the minority 
leader, Harry Reid, said, ``Social Security is a real crisis that exists 
only in one place, in the minds of Republicans.'' How would you respond 
to that?
    The President. Well, I would say that there's been a lot of people 
who aren't Republicans who've looked at this issue and have said the 
world has changed and is changing and that we have a problem for younger 
generations of Americans. The Social Security trust, for example--or the 
trustees came out with a report recently that said, ``In 2017, the 
Social Security trust goes into the negative. In 2041, it is flat 
broke.''
    And the reason why is because baby boomers, like me and you, are 
getting ready to retire, and there's a lot of us, and we're living 
longer.
    Mr. Mickelson. What have you heard? I 
mean, I wasn't planning on retiring. [Laughter]
    The President. Well, this isn't forced retirement. [Laughter] You 
get to be retirement age whether you want to or not.
    Mr. Mickelson. I'm still in denial about 
that.
    The President. Well, I'm afraid we're headed there. But there's a 
lot of us, and we've been promised greater benefits, and there's fewer 
workers. So you've got more people getting greater benefits, living 
longer, and fewer people paying into the system. And it's just not going 
to work. And so I think one of the things that's happened, in this 60-
day period that we set out to explain to the country we have a problem, 
is that people are now beginning to understand there is a problem.
    And the second thing that people are beginning to figure out is that 
if you're 55 and over, you don't have anything to worry about; the 
Government is going to pay the promised benefits. And that's an 
important thing for people to understand. There's a lot of people in 
Iowa counting on their Social Security check, and they just need to hear 
the truth, and the truth is----
    Mr. Mickelson. Five hundred and sixty-two 
thousand of us.

[[Page 526]]

    The President. That's a lot of you--not ``us.'' You're not one yet.
    Mr. Mickelson. Well, there's 562,000 
Iowans that receive some kind of Social Security benefit, and 2 out of 5 
Americans do.
    The President. That's right, and that's why it's an important 
program. That's why it's important to reassure those who receive a 
check, nothing changes. The people who need to worry about this issue 
are the younger Americans. They're the ones who are going to have to pay 
enormous taxes or get enormous benefit cuts if this Government is not 
willing to respond now. And so, to answer the question of the skeptics, 
we do have a serious problem.
    Mr. Mickelson. The red State division and 
blue State division affects this debate extremely importantly and 
efficiently. The Democrats are marketing their opposition to any kind of 
Social Security reform in the following way. I was up on their web site, 
and this is how they describe the nature of their opposition. And they 
have four different categories--they say women, blacks, Hispanics, and 
the disabled all receive a progressive return from Social Security. They 
get more than they pay in. In essence, they say, you'd be an idiot, 
therefore, to go along with any kind of reform, because they have it 
pretty good now, by comparison, paying a little in--or less in than 
other wage earners. So why should we vote for something that, in 
essence, we think might disenfranchise us?
    The President. Well, again, nothing changes if you're 55 years and 
older. I mean, the progressivity in the system stays in the system. 
Plus, you can make the system progressive for your younger workers. But 
a younger worker, whether they live in a blue State or a red State, 
ought to be wondering whether or not the Congress has got the will 
necessary to fix this problem, because if we don't, the system starts 
going into the red, negative, in 2017.
    Do you realize, in 2027, the cost just to make good on the promises 
is going to be over $200 billion a year? It gets worse every year from 
2017 to 2041. And so there's a huge hole that can only be filled by 
dramatic benefit reductions and/or payroll increases. It's estimated 
that in order to fix the problem if we wait, it will--payroll taxes will 
have to get up to 18 percent. And that's unsatisfactory, as far as I'm 
concerned. And younger workers, blue State, red State, need to worry 
about this problem.
    Now, older Americans do not. And I keep saying that, because I know 
there's some propaganda out there that says to older Americans, ``You 
know, old Grassley and Bush are going to take away your check.'' Well, 
I've heard this before, every time I've run for office. Nothing changes. 
The Government will keep its promise for those of us over 55 years old. 
It's younger people. This is a generational issue, Jan, because many grandparents are now beginning to realize 
they're going to get their check, and they're starting to ask the 
question, ``What about my grandchildren; what are you going to do about 
the grandchildren,'' because this is a serious problem.
    Mr. Mickelson. I really appreciate the 
phrase you use, the ``ownership society.''
    The President. Yes.
    Mr. Mickelson. That really works. Now, how 
do we get the people who view themselves as recipients to see themselves 
as potential owners, so they don't feel threatened by a transformation 
of the system that you have in mind?
    The President. Yes, well, first of all, you're referring to the 
personal savings account aspect of a solution. And the reason I believe 
it's important to encourage--or to allow younger workers, if they so 
choose, to set aside some of their own money in a personal savings 
account is threefold. One, they will get a better rate of return on 
their money than they're going to get if the Government holds it for 
them. In other words, in a conservative mix of bonds and stocks held 
over time, the rate of return on the money, the growth of the

[[Page 527]]

money, the fact that it's going to be growing in a compounded way is 
going to be greater.
    Mr. Mickelson. Even if they haven't paid in as much, initially, to 
push them into that progressive recipient category in which they now 
exist?
    The President. Well, you can do both. First of all, it's more 
progressive, by the way, if you get a greater rate of return on your 
money than if you don't. But you can also make sure the benefits that 
end up being determined by Congress--in other words, the benefits that 
the Government can afford--they're progressive in nature as well.
    But progressivity really depends upon how the benefit structure is 
decided by Congress. We've got some money for some benefits; we just 
don't have enough to pay the promises made to younger workers. And the 
best way to allow a younger worker to more approximate that which the 
Government has promised is to let them earn a better rate of return on 
their money.
    Secondly, I like the idea of somebody owning something. I mean, 
there is kind of this mindset that only a certain investor class can 
manage their own money. I think that's a preposterous assumption. I 
think everybody ought to be encouraged to manage their own money.
    And thirdly, we do this, Jan--this is a 
very important point--this isn't a novel idea. Federal workers get to do 
this in what's called--in the Federal employee program, retirement 
program. They get to take some of their own money and set it aside so 
they get a better rate of return than that which the Government can get 
for them. And Senator Grassley's employees get to do that; people 
working for the Agriculture Department get to do it. My attitude, if 
it's good enough for Federal employees, it ought to be good enough for 
younger workers.
    Mr. Mickelson. Federal Reserve Chairman 
Alan Greenspan keeps using another very powerful word describing much of 
our social safety net, ``unsustainable.''
    The President. Yes.
    Mr. Mickelson. We can't do it. 
Demographically, as you mentioned earlier, we aren't reproducing 
ourselves.
    The President. Right.

Medicare/Healthcare Savings Accounts

    Mr. Mickelson. The same logic that you 
applied aptly to Social Security also applies to our medical delivery 
system.
    The President. That's right.
    Mr. Mickelson. Can we also move to the 
ownership concept in that, in medical IRAs, and make those universal, 
maybe using medical IRA vouchers? And how about using the earned-income 
tax that lower income people get and empower a savings account, so they 
get an ownership concept using their money in that regard?
    The President. That's a very good point. As a matter of fact, the 
Senator and I worked on Medicare reform. We wanted the current system to 
work better for those people who are going to get--that are on Medicare. 
We wanted--for example, I think there's a lot of benefit to have a 
prescription drug plan available in Medicare because a lot of people 
will be able to avoid major surgery by taking prescription drugs. In 
other words, Medicare would pay for heart surgery but not a dime for the 
prescription drugs that might prevent the heart surgery from being 
needed in the first place. So we modernized Medicare and, by the way, 
took care of rural hospitals in Iowa as we did so.
    Secondly, though, in that bill is the notion of health savings 
accounts, which provides an IRA-type approach, as you mentioned, to 
encourage people to set aside money on a tax-free basis so they get to 
make the decisions for their own health care--in other words, own their 
own health care plan. And it's a great idea that is now beginning to 
take hold with a lot of small businesses and a lot of employees for 
small businesses.

[[Page 528]]

    Thirdly, I've consistently proposed, Jan, 
that we have tax credits for the working poor people so that they, 
themselves, can go in the marketplace and own their own account. And 
yes, so to answer your question, absolutely, we can extend ownership.
    Mr. Mickelson. So they earn--they keep the 
time value of their own money.
    The President. Precisely.
    Mr. Mickelson. That's the chief weakness 
of the current system.
    The President. On a tax-free basis, with the HSAs, by the way.

Social Security Reform

    Mr. Mickelson. The birth-dearth issue that 
you made reference to, that's the elephant in the room. We have to 
address that. Our culture is not--it's not the first time this has 
happened. I was reading--Teddy Roosevelt addressed this in the early 
part of the century, dealing with the birth dearth in the last century, 
and he saw that that generation of Americans were not reproducing 
themselves. And do you want to hear a really snotty quote from Teddy 
Roosevelt? He said----
    The President. I don't have much choice. [Laughter]
    Mr. Mickelson. Yes, you do. You have the Executive order. [Laughter]
    It says, ``If you do not believe in your own stock enough to wish to 
see the stock kept up, then you're not good Americans, and you're not 
patriots. I, for one, would not mourn your extinction, and in such 
event, I would welcome the advent of a new race that would take your 
place, because you will have shown that you are not even fit to cumber 
the ground.''
    So that's pretty--that's a bully pulpit.
    The President. He was a colorful person. [Laughter] That's what I've 
been doing, using the bully pulpit over the last weeks to remind people 
we have a problem. And it's easy in politics to ignore problems. It's 
just easy to say, ``Well, there's no problem.'' But this is a serious 
problem for younger generations of Americans, and I believe there is a 
duty as the President--and fortunately, Senator Grassley believes there's a duty as the chairman of the 
Finance Committee in the Senate--to take on problems and not pass them 
on. See, the easy route is to say, ``Well, we really don't have a 
problem.'' But what's going to end up happening is, in 2017, people are 
going to show up to work, and they're going to realize their payroll 
taxes have gone up significantly to pay for promises that the Government 
has made.
    And so I'm saying to people, now is the time to fix it. And I think 
there's a political price for not getting involved in the process. I 
think there's a political price for saying, ``It's not a problem. I'm 
going to stay away from the table.'' So in my State of the Union Address 
I called upon Members of Congress, both parties, to bring good ideas 
forward.
    Mr. Mickelson. Has the third rail moved?
    The President. I think it has. I think you'd made a mistake not 
addressing Social Security. I think the American people, when they 
figure out how significant this problem is--and they're beginning to 
figure it out--are then going to demand, from both Republicans and 
Democrats, leadership.
    And I am--I love this--I love taking on big issues, because I think 
that's my job. I think that's why the people of the country put me in 
office. They expect a President to lead, and they expect a chairman of 
the Finance Committee to lead as well. And fortunately, the good State 
of Iowa has got such a man in Charles Grassley. I'm looking forward to working with him on this issue.
    Mr. Mickelson. Can I expect that in an 
upcoming press conference that you're attending that you will get up and 
address the Nation and tell the population of the United States, ``Get 
out there and reproduce, or don't cumber the ground?'' [Laughter]
    The President. No, you can't expect that. [Laughter]

[[Page 529]]

    Mr. Mickelson. ``Get off the--have some 
more kids or get off the planet.'' [Laughter]
    The President. You can expect me to keep talking about Social 
Security. [Laughter] You can expect it because now is the time to solve 
this problem. And I repeat to the grandparents out there that if we do 
not act, your grandchildren are going to be saddled with a huge burden. 
This Government has made promises it cannot keep. It'll keep the 
promises to those of us over 55 years old, but it has made promises to a 
lot of younger Americans it cannot keep, and now is the time to solve 
the problem.
    And I'm going to keep working with Members of Congress from both 
political parties to do our duty. And I like traveling the country. I 
like coming to the great State of Iowa--been here quite a few times and 
may have to come back to keep pounding on the issue, but it is the right 
thing to do, which is to address problems.
    Mr. Mickelson. Mr. President, thank you 
for visiting Iowa.
    The President. Thanks for coming over.
    Mr. Mickelson. Thank you for visiting us. Senator Grassley, thank 
you for gracing us.
    Senator Grassley. Pleasure to be 
with you.
    Mr. Mickelson. Thank you for being here.

Note: The interview began at 11:18 a.m. at the Spring House Family 
Restaurant and was broadcast live on the ``Mickelson in the Morning'' 
program.