[Weekly Compilation of Presidential Documents Volume 41, Number 2 (Monday, January 17, 2005)]
[Pages 39-45]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks in a Discussion on Social Security Reform

January 11, 2005

    The President. Thank you all. Please be seated. Listen, thanks for 
coming today. As you can see, I am joined by some fellow citizens here 
on the stage who have come to talk about one of the great causes of our 
generation, and that is how to strengthen and save Social Security for 
generations to come.
    I know this is an issue that some would rather not be talking about. 
It's an issue that is kind of--I think some think has got too much 
political danger attached to it, and so therefore let's just kind of, 
maybe, move it down to the next group of people coming to Washington, or 
maybe things will get better by ignoring it. That's not what I think. 
And today I want to talk about why we have an issue with Social 
Security, why I believe those of us who have been elected to office have 
an obligation to do something about it, and then I want--and give some 
ideas, some constructive ideas to Congress as to how to deal with the 
issue, and then I want others to share with me their ideas.
    And we've got some people who have come a long way--flown all the 
way to Washington, DC, to share some thoughts with the President. And I 
think you'll find their stories interesting. I certainly did when we had 
a little discussion a little bit ago.
    First, let me tell you how much, I understand, Social Security has 
meant for generations of Americans. I mean, Franklin Roosevelt, in 
thinking boldly, envisioned a Social Security system where Social 
Security would help seniors with their retirement. And the system worked 
for a lot of people. And it's been a--an incredible achievement, if you 
think about a piece of legislation being relevant for nearly 70 years.
    The problem is, is that times have changed since 1935. Then, most 
women did not work outside the house, and the average life expectancy 
was about 60 years old, which, for a guy 58 years old, must have been a 
little discouraging. [Laughter] Today, Americans, fortunately, are 
living longer and longer. I mean, we're living way beyond 60 years old, 
and most women are working outside the house. Things have shifted.
    The Social Security system is not a personal savings account. The 
Social Security system is not an account where money is earned. The 
Social Security system is an account where money comes out to pay for 
retirees and is put in the system by people who are working. And that's 
changed. More and more retirees have taken out money relative to the 
number of people putting money in. In the fifties, there were 16 workers 
for every beneficiary, so the system was in pretty good shape. Today, 
there's three workers for every beneficiary. Relatively quickly, there's 
going to be two workers for every beneficiary. And that's a problem. And 
that's a problem because in the year 2018, in order to take care of baby 
boomers like me and--[laughter]--some others I see out there--
[laughter]--the money going out is going to exceed the money coming in.
    That's not a good thing. It means that you're either going to have 
to raise the taxes of people or reduce the benefits. And the longer you 
wait, the more severe the pain is going to be to fulfill the promise for 
a younger generation of workers coming up.

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As a matter of fact, by the time today's workers who are in their mid-
twenties begin to retire, the system will be bankrupt. So if you're 20 
years old, in your mid-twenties, and you're beginning to work, I want 
you to think about a Social Security system that will be flat bust, 
bankrupt, unless the United States Congress has got the willingness to 
act now. And that's what we're here to talk about, a system that will be 
bankrupt.
    Now, I readily concede some would say, ``Well, it's not bankrupt 
yet. Why don't we wait until it's bankrupt?'' The problem with that 
notion is that the longer you wait, the more difficult it is to fix. You 
realize that this system of ours is going to be short the difference 
between obligations and money coming in by about $11 trillion, unless we 
act. And that's an issue. That's trillion with a ``T.'' That's a lot of 
money, even for this town.
    And so I'm looking forward to working with Congress to act. We've 
got an expert from the Social Security system that will talk about ``the 
problem.'' And I'm going to talk about ``the problem.'' You know, ``the 
problem'' is that some in Congress don't see it as ``the problem.'' They 
just kind of think that maybe things will be okay. But the structure of 
Social Security is such that you can't avoid the fact that there is a 
problem. And now is the time to get something done.
    Now, I've talked about this, and I want the people to clearly 
understand, if you're a senior receiving your Social Security check, 
nothing is going to change. Those days of politicizing Social Security, 
I hope, are in the past. A lot of people who ran for office and if they 
even mentioned the word Social Security, there would be TV ads and 
fliers and people knocking on doors saying, ``So-and-so is going to ruin 
Social Security for you.'' There is plenty of money in the system today 
to take care of those who have retired or near retirement. The issue 
really is for younger folks.
    That's why we've got some younger folks up here. Not all of us are 
younger folks, are we? [Laughter] Most of them are younger folks. I no 
longer qualify. [Laughter] But younger people are listening to this 
issue. You know, I've traveled a lot. I campaigned on this issue of 
Social Security and the need to strengthen it and reform it. I didn't 
shy away from it in 2000. I certainly didn't shy away from it in 2004. I 
laid it out there for the people to hear. I said, ``Vote for me, and I'm 
going to work with Congress, see if we can't get something done to solve 
the system.''
    This is part of what--this is part of fulfilling a campaign pledge. 
I wouldn't be sitting here if the people said, ``We don't want anybody 
to touch it. We think it's okay.'' Most younger people in America think 
they'll never see a dime. That's probably an exaggeration to a certain 
extent, but a lot of people who are young, who understand how Social 
Security works, really do wonder whether they'll see anything. My 
attitude is, once we assure the seniors who are--receive Social Security 
today that everything is fine, I think we've got a shot to get something 
done, because younger Americans really want to see some leadership.
    I said we're not going to run up the payroll taxes. I think running 
up payroll taxes will slow down economic growth. This economy is 
beginning to kick in. It's beginning to make sense. I think we can solve 
the problem without increasing payroll taxes.
    I also threw out another interesting idea--it's certainly not my 
idea, because others have talked about it--and that is to allow younger 
workers, on a voluntary basis, to take some of their own money and set 
it aside in the form of a personal savings account, a personal savings 
account which is their own, a personal savings account which would earn 
a better rate of return than the money--their money currently held 
within the Social Security trust, a personal savings account which will 
compound over time and grow over time, a personal savings account which 
can't be used to bet on the lottery or a dice game or the track. In 
other words, there will be guidelines. There will be certain--you won't 
be allowed just to take that money and dump it somewhere. In other 
words, there will be a safe way to invest, to be able to realize the 
compounding rate of interest.
    I've heard some say, ``Well, this is risky to allow people to invest 
their own money.'' It's risky to let people--say, ``You can take your 
money that's supposed to be for a retirement account and put it on the 
lottery.'' I

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realize that. But it's not risky. Federal employees--the Thrift Savings 
Plans invest under certain guidelines, and I don't hear them screaming, 
``It's risky.'' It makes sense to try to get a better rate of return on 
your money, if you expect there to be a Social Security system which is 
going broke. And that's what we're talking about.
    Owning your own personal savings account does two other things. One, 
it allows you to pass on your savings to whoever you choose. You can't 
do that in Social Security today. If you pass away earlier than 
expected, that money that you put in the system is gone. And at the same 
time that you manage your own account, you own your own account. I love 
promoting ownership in America. I like the idea of encouraging more 
people to say, ``I own my own home. I own my own business. I own and 
manage my health accounts, and now I own a significant part of my 
retirement account.'' Promoting ownership in America makes sense to me 
to make sure people continue to have a vital stake in the future of our 
country.
    And so I want to thank you all for coming today to give me a chance 
to address the Social Security issue. I plan on talking about it a lot. 
This isn't the first time I've talked about it since the campaign is 
over, and it's certainly not going to be the last, because I believe it 
is a vital issue. And I know that if we don't address the problem now, 
it will only get worse with time. And I believe there is a fundamental 
duty, for those of us who have been given the honor of serving the 
American people, to solve problems before they become acute and not to 
pass them on to future Presidents and future generations.
    Now, I want to talk to Andrew Biggs. He is the Associate 
Commissioner for Retirement Policy at the Social Security 
Administration. To me, that says expert. [Laughter] I don't know if 
that's fair to call you an expert or not.

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

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

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

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

[Mr. Ballard made further remarks.]

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    The President. That's kind of an interesting thought, isn't it--when 
you see on paper the value of something, you begin to actually pay 
attention to what causes values to go up, good policies that enhance 
growth. And what Scott just said is, he talked about the first change in 
retirement in America was the movement toward defined contribution 
plans, like 401(k)s, which really has promoted an ownership society, 
hasn't it? I mean, people wake up, and they look at their account and 
say, ``I'm so sure this person's policies are beneficial to my being 
able to earn a better rate of return.'' People pay attention because 
it's their own money. That's kind of one of the benefits of a personal 
account in Social Security.

[Mr. Ballard made further remarks.]

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

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

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

[Mr. McFadden made further remarks.]

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

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

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

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

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

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

[Sonya Stone made further remarks.]

    The President. Sure. I think it's important for people to understand 
compounding rate of interest. In other words, if you take a dollar, set 
it aside, and it grows at 3 percent over 30 years or 40 years and 
compare that to the same dollar that grows at 7 percent on an average 
basis over 30 years, there is a huge difference in money.
    So it matters how much money--how much interest or how much rate of 
return your money earns. We're kind of throwing around these words as if 
everybody understands compounding rate of interest and rate of return, 
but what people need to understand is that the money that's now--your 
money in the Government is earning much

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less than it's capable of generating under safe conditions. ``Safe 
conditions,'' I think that's what you're saying.

[Sonya Stone made further remarks.]

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

[Rhode Stone made brief remarks.]

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

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

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