[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

[[Page 787]]

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

[[Page 789]]

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.