[Weekly Compilation of Presidential Documents Volume 41, Number 7 (Monday, February 21, 2005)]
[Pages 234-235]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
The President's Radio Address

February 12, 2005

    Good morning. In my State of the Union Address, I discussed the need 
to act to strengthen and save Social Security. Since then, I have 
traveled to eight States and spoken with tens of thousands of you about 
my ideas. I have reminded you that Social Security was one of the great 
moral successes of the 20th century. And for those born before 1950, I 
have assured you that the Social Security system will not change in any 
way and you will receive your checks. I've also warned our younger 
workers that the Government has made promises it cannot pay for with the 
current pay-as-you-go system.
    Social Security was created decades ago for a very different era. In 
1950, about 16 workers paid into the system for every one person drawing 
benefits. Today, we have only about three workers for each beneficiary. 
And over the next few decades, baby boomers like me will retire, people 
will be living longer, and benefits are scheduled to increase 
dramatically. Eventually, there will be just two workers per 
beneficiary. With every passing year, fewer workers will be paying ever-
higher benefits to ever-larger numbers of retirees.
    So here is the result: 13 years from now, in 2018, Social Security 
will be paying out more than it collects in payroll taxes, and every 
year afterward will bring a new and larger shortfall. For example, in 
the year 2027, the Government will somehow have to come up with an extra 
$200 billion a year to keep the system afloat. By the year 2033, the 
annual shortfall would be more than $300 billion a year. And by the year 
2042, the entire system would be bankrupt. If we do not act now to avert 
that outcome, the only solutions would be dramatically higher taxes, 
massive new borrowing, or sudden and severe cuts in Social Security 
benefits or other Government programs.
    To keep the promise of Social Security alive for our children and 
grandchildren, we need to fix the system once and for all. Fixing Social 
Security permanently will require a candid review of the options. In 
recent years, many people have offered suggestions such as limiting 
benefits for wealthy retirees, indexing benefits to prices instead of 
wages, increasing the retirement age, or changing the benefit formulas, 
and creating disincentives for early collection of Social Security 
benefits. All these ideas are on the table.
    I will work with Members of Congress and listen to any good idea 
that does not include raising payroll taxes. But we cannot pretend that 
the problem does not exist. Social Security will go broke when some of 
our younger workers get ready to retire, and that is a fact. And if 
you're a younger person, you ought to be asking your elected officials, 
``What are you going to do about it?'' Because every year we wait, the 
problem becomes worse for our children.
    And as we fix Social Security permanently, we must make it a better 
deal for younger workers by allowing them to set aside part of their 
payroll taxes in personal retirement accounts. The accounts would be 
voluntary. The money would go into a conservative mix of bond and stock 
funds that would have the opportunity to earn a higher rate of return

[[Page 235]]

than anything the current system could provide. A young person who earns 
an average of $35,000 a year over his or her career would have nearly a 
quarter million dollars saved in his or her own retirement account. And 
that money would provide a nest egg to supplement that worker's 
traditional Social Security check or to pass on to his or her children. 
Best of all, it would replace the empty promises of the current system 
with real assets of ownership.
    Reforming Social Security will not be easy, but if we approach this 
debate with courage and honesty, I am confident we will succeed, because 
our children's retirement security is more important than partisan 
politics.
    Thank you for listening.

Note: The address was recorded at 7:32 a.m. on February 11 in the 
Cabinet Room at the White House for broadcast at 10:06 a.m. on February 
12. The transcript was made available by the Office of the Press 
Secretary on February 11 but was embargoed for release until the 
broadcast. The Office of the Press Secretary also released a Spanish 
language transcript of this address.