[Weekly Compilation of Presidential Documents Volume 41, Number 16 (Monday, April 25, 2005)]
[Pages 620-627]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks on Strengthening Social Security in Columbia, South Carolina

April 18, 2005

    Thank you all very much. Mr. Speaker, thank you for that kind and 
short introduction. [Laughter] I appreciate Governor Sanford being here. 
I want to thank the Lieutenant Governor. I appreciate President Pro Tem 
McConnell, Majority Leader Leatherman, members of the South Carolina 
legislature.
    I appreciate my traveling party from Washington. Hope you appreciate 
them, too. That would be Senator Lindsey Graham, Senator DeMint, Members 
of the United States House of Representatives from the great State of 
South Carolina.
    I appreciate the justices of the South Carolina Supreme Court being 
here. I thank those of you who have taken time to come and listen. I 
appreciate your warm welcome.
    It is an honor to be speaking in this chamber. It is great to be 
back in the capital of South Carolina. The last time I came to this 
city, I gave the commencement speech at USC. I was proud to have 
received an honorary degree. When I told Laura about it,

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she said, ``I thought your first degree was honorary.'' [Laughter] She 
sends her best, and she sends her love. She's, by the way, a fabulous 
First Lady. She is--[applause].
    I appreciate our escort committee. I told the Members that this is 
the first time I have spoken to a legislative body, State legislative 
body since I was the Governor of Texas. So thank you for having me. 
It's--there's some differences, of course. There are a lot of cowboy 
hats back in Austin. [Laughter] And I'll be honest with you, a lot of us 
didn't know anything about dancing the shag. [Laughter] And I imagine we 
could have a pretty good debate about which of our States has the best 
barbecue. [Laughter] Now is not the time. [Laughter]
    But one thing is, no matter whether you serve at the Federal level 
or the State level, we share serious responsibilities. See, our 
constituents have put us into office to solve problems now. That's what 
they've done. They said, ``We've elected you to go to your 
statehouse''--or in my case, Washington, DC--``to solve problems.'' The 
people expect us to confront problems without illusion. They expect us 
to lead with conviction and confidence, not by reading the latest poll 
or listening to the latest focus group, and above all, they expect us to 
deliver results.
    And here in South Carolina, you've delivered results. You've faced 
serious challenges, especially in your economy. Listen, we've had a 
stock market decline. We've had a recession. We've had corporate 
scandals. We had a terrorist attack on September the 11th, 2001. We've 
had the demands of war. And all these have tested our Nation's economy, 
and they hit particularly hard here in your State. South Carolina's 
economic growth slowed. Small businesses moved out or shut down. Workers 
lost their jobs, and State finances were headed toward a free fall.
    The people of South Carolina looked to you and they looked to your 
Governor for leadership. And you delivered. You set clear priorities for 
your budget, and you made hard decisions when it came to spending. To 
rein in the rising costs of health care, you became one of the first 
States in the Nation to offer health savings accounts to State 
employees. To reward hard-working families and job creators, you refused 
to raise taxes on the working people of South Carolina. You've focused 
bipartisan actions. You've lifted your State out of fiscal crisis. 
You've erased a $155 million deficit, and you've done it 2 years ahead 
of schedule. Today, South Carolina families are planning for the future 
with confidence.
    I found this to be an interesting statistic about your State: More 
than 76 percent of the people in your State own their own home, one of 
the highest rates in the United States. Small businesses are investing 
and expanding. Exports are on the rise. Thanks to your leadership, 
thanks to your hard work, thanks to your willingness to set aside 
partisan differences, jobs are coming back to the great State of South 
Carolina.
    In Washington, we're moving forward with an ambitious agenda to keep 
this country safe, prosperous, and free. The war on terror goes on. 
There are still ruthless enemies that would like to do harm to our 
people. We will continue to keep the pressure on these folks. We'll work 
with our friends and allies to be unrelenting in our search to bring 
them to justice. We will not rest until America is safe.
    We'll continue to work to improve security here at home, but in the 
long term, in the long run, the best way to protect America and to keep 
the peace is to change the conditions that give rise to hopelessness and 
extremism. And the best way to do that is to spread freedom around the 
world. I don't believe freedom is America's gift to the world. I believe 
freedom is the Almighty God's gift to each man and woman in this world.
    And that is why the United States of America will stand strongly 
with people in Afghanistan to Iraq to Lebanon to the Ukraine, because we 
understand that as freedom advances, the American people will be more 
secure, and we'll be able to achieve the peace that we all want.
    My administration will continue to pursue progrowth policies to 
ensure that America is the best place in the world to do business. To 
keep the economy growing and create jobs, we will keep the taxes low. 
We'll continue to confront the problems of junk lawsuits by pushing for 
meaningful asbestos and medical liability reform. We'll work with 
Congress to pass an energy bill that will make

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America less dependent on foreign sources of energy.
    I sent to Congress a disciplined Federal budget, and both the House 
and the Senate have passed budget resolutions. And now they need to work 
out their differences and send me a budget that meets America's 
priorities, that restrains Federal spending, and that keeps us on track 
to cut the deficit in half by 2009. In Washington and in Columbia, South 
Carolina, government needs to follow a straightforward principle: A 
taxpayer's dollar must be spent wisely or not spent at all.
    Strong leadership means rising to the challenges of the day. It also 
means looking down the road. There will always be problems that arise 
unexpectedly, yet problems--some problems are completely predictable. 
And as leaders, you and I have a responsibility to confront those 
problems today and not pass them on to future generations.
    Over the past few weeks, I've been traveling around the country 
talking about one of the most serious and most predictable challenges 
which face our Nation, and that is the long-term fiscal health of Social 
Security. Social Security has been a great success. Franklin Roosevelt 
did a really smart thing in setting up the Social Security system. It 
has provided an important safety net for millions of Americans.
    Seniors in South Carolina and seniors across this country depend on 
their monthly checks as an important part of their lives, as an 
important source of income for their retirement. And today I have a 
message for every senior in South Carolina and every senior across this 
country: Do not pay attention to the propaganda and scare ads. If you're 
receiving a Social Security check this month, you will continue 
receiving a Social Security next month and the month after that and 
every month for the rest of your life.
    There are other Americans who are now approaching retirement and 
have been paying into Social Security throughout their lives. These 
workers are counting on Social Security as part of their retirement 
plans, and there's money in the system for them. If you were born prior 
to 1950, America will honor the promise of Social Security for you. The 
problem is that the Government is making promises for younger Americans 
that it cannot pay for. In other words, there's a hole in the safety net 
for younger Americans.
    See, Social Security is a pay-as-you-go system. You pay, and we go 
ahead and spend here in Washington. [Laughter] We spend on--to provide 
benefits for current retirees, and with money left over, we have spent 
your payroll taxes on Government programs. Some people think there's a 
Social Security trust, where the Government is holding your money in an 
account with your name on it. It just doesn't work that way. That's not 
the way the system works. There is no vault holding your cash, waiting 
for you to retire. Instead, because we spend Social Security taxes on 
current retirees and other Government programs, all that is left over in 
the so-called security trust is a bunch of filing cabinets with IOUs in 
them.
    As a matter of fact, I went to West Virginia the other day to look 
at the filing cabinets, to make sure the IOUs were there--paper, and 
it's there. And it's frankly not a very encouraging sight. It's not 
encouraging especially when you consider that times are changing in 
America, that the math for Social Security is changing significantly. By 
``the math'' I mean this: In 1950, there were about 16 workers paying 
taxes for every beneficiary--16 workers for beneficiary. And today, 
there's 3.3 workers for every beneficiary. By the time our children and 
grandchildren are ready to retire, there will only be 2 workers paying 
for every beneficiary in the system.
    That's only part of the problem. To compound the problem, the first 
baby boomers will soon start retiring. I happen to be one of them. As a 
matter of fact, I'm eligible to start collecting benefits in 2008, which 
happens to be a convenient year for me. [Laughter] The retirement of the 
baby boomer generation is going to have a huge impact on Social 
Security, because my generation is about 50 percent larger than my 
parents' generation. Today, there are about 40 million retirees 
receiving benefits. By the time all the baby boomers have retired, there 
will be more than 72 million retirees receiving benefits. And thanks to 
advances in modern medicine, these retirees will live longer and collect

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benefits over longer retirements than the previous generation.
    And to compound the problem even further, Congress has ensured that 
benefits to my generation will grow faster than our economy or the rate 
of inflation. In other words, people went around the country saying, 
``Vote for me. I'll make sure your benefits are higher.'' And so this 
sets up an enormous fiscal challenge facing Social Security. With each 
passing year, there will be fewer workers paying ever-higher benefits to 
a larger number of retirees who are living longer.
    And so here's the result: 3 years from now, when the first baby 
boomers start collecting Social Security benefits, the system will start 
heading toward the red. Less than a decade later, in 2017, Social 
Security will go negative. And by that I mean it will be paying out more 
in benefits than it collects in payroll taxes, more money going out than 
coming in. And every year after that, the shortfall will get worse.
    In the year 2027, the Government will somehow have to come up with 
an extra $200 billion to fund the system--$200 billion more going out 
than coming in through payroll taxes. In 2034, the annual shortfall will 
be more than $300 billion a year. And by the year 2041, the entire 
system will be bankrupt. Now, think about that. If we don't do something 
to fix the system now, the students graduating this spring from the 
University of South Carolina or, in deference to the Speaker, Clemson--
[laughter]--will spend their entire careers paying Social Security taxes 
only to see the system go bankrupt a few years before they retire.
    And I don't care if you're a Republican or Democrat, these are the 
facts. And the question is, do we have the will to do something about 
them? Now, in South Carolina, you know that once you're in the red, the 
options of getting out are never very appealing. If we allow Social 
Security to continue on its current path toward bankruptcy, we will 
leave our children and grandchildren with only a few drastic options to 
keep the system afloat. In other words, the longer you wait, the longer 
we don't do anything in Washington, the more drastic the solutions 
become.
    For example, some estimate if we don't do anything, the payroll tax 
will get up to 18 percent. Is that a legacy we want to leave on younger 
generations of Americans? I don't think so. Or we're going to have to 
dramatically slash benefits or cut other Federal programs. The Social 
Security trust reported this--they said, ``Every year we wait to fix the 
system will add an additional $600 billion to the cost of reform.''
    I understand why some in Washington don't want to take on this 
issue. I guess they calculate there's a political cost when dealing with 
a tough issue. I think there's a political cost for not dealing with the 
issue. And so I've been traveling this country of ours, making it 
absolutely clear what the problems are. See, my strategy is pretty 
simple: Take the message to the people and define the facts of the 
problem, and let the people draw their own conclusions. I've been to 22 
States to explain the facts. I've been to those States to explain the 
urgent need for the United States Congress to work with the 
administration to get something done now. And more and more Americans 
are beginning to hear the message.
    I'm just starting. I'm just warming up. As a matter of fact, I like 
getting out of Washington, DC. I like coming to places like South 
Carolina to put the facts on the table so the people can make their own 
mind about what's happening in Social Security.
    I don't know if you've ever heard of Dutch Fork High School in Irmo. 
I met a very innovative teacher who assigned her students this 
assignment: Why don't you write letters to the editor about their 
impressions of Social Security? Here's what one of her students wrote: 
``By the time my generation gets to the age to draw Social Security, 
there will be no money left for us to draw on.'' This is a young high 
school student writing that. This isn't a professor in economics. This 
is a high school student. He said, ``I don't know about other people, 
but I don't like the sound of that.'' People are beginning to get the 
message that there is a problem in Social Security.
    Today I met an 80-year-old--80-year-old ``young'' woman from 
Silverstreet named Shirley. She said she's counting on Social Security. 
She gets a Social Security check every

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month, and she's confident she'll keep getting her checks. And there's 
no doubt in her mind she's going to get her checks, but there's a doubt 
in her mind as to whether or not her granddaughters are going to have 
comfort in their retirement, whether or not the safety net will be there 
for them. Here's what she said: She said, ``I don't know what I would do 
without it. It's my granddaughters that I'm worried about, and I want to 
do whatever is possible to fix the system for them.''
    Folks, we're talking about a generational issue here in America. The 
grandfolks are going to get their checks, and the fundamental question 
is, do we have the will in Washington, DC, to make sure the system works 
for the grandchildren of America? And that's what I'm here talking 
about.
    I believe I have a duty to ask people to bring ideas forward. I 
brought a few myself, and I appreciate the response of Senator Lindsey 
Graham. He's brought some ideas forward, as has Senator Jim DeMint, as 
has your Governor. These men have been leaders in the debate. They've 
stepped up and said, ``Here are some ideas I'd like you to consider.'' 
But they're not the only ones who have set up good ideas. Former 
Congressman Tim Penny, a Democrat from Minnesota, has suggested tying 
Social Security benefits to prices rather than wages. My predecessor, 
Bill Clinton, had time--had meetings all around the country on Social 
Security, and he spoke of increasing the retirement age at one time.
    I put together a Commission of Republicans and Democrats, headed by 
the late Senator Daniel Patrick Moynihan of New York, and they did fine 
work. They recommended changing the way benefits are calculated. In 
other words, people are putting ideas on the table. An interesting idea 
was put forward by a Democrat Social Security expert named Robert Pozen, 
who has proposed a progressive way of structuring benefits that will be 
more generous to low-income workers. And that's an important idea.
    In other words, all these ideas are on the table, but they have one 
thing in common. They all require us to act now. Saving Social Security 
is not a Republican goal. It is not a Democrat goal. It is a vital goal 
to all our country, and people of both political parties need to get the 
job done now.
    There are some basic principles that must guide our efforts to fix 
Social Security. We should not raise the payroll tax rate. That would 
hurt the economy and cost jobs. We must ensure that Social Security 
continues to provide dignity and peace of mind for Americans in 
retirement and include extra protections for those with low incomes. We 
must reject temporary measures that put off Social Security problems for 
another day.
    You need to be skeptical about any talk that talks about a 75-year 
fix. Back in 1983, Republicans and Democrats came together on what they 
thought was a 75-year fix. You know, I like the spirit of people of both 
parties coming together, and that was great. President Reagan and 
Speaker O'Neill said, ``We got a problem. Let's come together to fix 
it.'' But they thought it was a 75-year fix; here we are, 22 years 
later. It's time to come up with a permanent solution. When people bring 
forth their ideas in Congress, I will insist that we not have a bandaid 
approach to Social Security, that we have a permanent fix. And I'm 
optimistic about the chances for meaningful Social Security reform.
    You know, a few weeks ago the United States Senate voted on a 
resolution guaranteeing that any Social Security fix must be permanent. 
The vote has the agreement of the two Senators from South Carolina, the 
two Senators from Texas, the two Senators from Massachusetts. Any time 
that happens, you've got yourself a bipartisan agreement. [Laughter] In 
fact, the vote in Congress was unanimous. Think about that. Every single 
United States Senator is on the record supporting a permanent fix. Now 
those Senators need to keep their word and make Social Security solvent 
once and for all.
    Bringing permanent solvency to Social Security is an important 
start, but it's only part of our duty. Preserving Social Security should 
not mean preserving its problems. Today, we have an opportunity to offer 
younger Americans a better deal than the current system. Today, we can 
give every American the chance to tap into the power of compound 
interest, so they can get a higher rate of return on their money than 
the current system

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allows. You might notice I said ``their money.'' See, we're not spending 
the Government's money. The payroll taxes are the people's money. It's 
coming from hard-working people.
    We can build this opportunity into Social Security by giving younger 
workers the option to set aside some of their own money in a personal 
retirement account. The account would be a conservative mix of bonds and 
stocks that grows over time and can deliver a greater return than the 
Social Security system does. That would be a good deal for younger 
workers.
    Since 1983, since that reform took place, stock investments have 
returned about 9 percent more than inflation per year, while the real 
return on Social Security is about 2 percent a year. That means that a 
dollar invested in the market in 1983 would be worth $11 today--one 
dollar would grow to 11--while the same dollar would be worth about 3 if 
it had been put in Social Security. Every young American should have the 
opportunity to take advantage of the compounding rate of interest to 
earn a better return on his or her own money.
    Personal accounts would be completely voluntary. Younger workers 
could choose to join or choose not to join. That seems to make sense, 
for Government to provide opportunities of choice for individual 
Americans. Workers opting to open an account would be able to put about 
a third of their payroll taxes in investments instead of sending their 
money to Washington. For example, a younger worker earning an average of 
$35,000 a year over a career, because of the growth of money, would be 
able to retire with a nest egg of nearly a quarter-million dollars. That 
would be a nice addition to the other Social Security benefits.
    These voluntary accounts would come with strict guidelines to make 
sure they're secure. You couldn't take--put them in the lottery--sorry 
to say, Speaker. [Laughter] You could make sure the earnings aren't 
eaten up by hidden Wall Street fees. We'll make sure there are good 
options to protect investments from sudden market swings on the eve of 
retirement. You won't be able to withdraw all your money and take it to 
the racetrack. These accounts will offer straightforward investment 
choices that are easy to understand.
    By the way, this concept isn't new. After all, in South Carolina, 
all State employees can choose to put part of their retirement savings 
in a traditional retirement plan or in a conservative mix of bonds and 
stocks that can deliver a better rate of return. So when I talk about 
personal accounts available for younger workers, you know what I'm 
talking about right here in South Carolina. You've already made that 
decision for people who are serving the State.
    I don't know if you know this or not, but Federal employees have 
that same opportunity to watch their money grow, through a program 
called the Thrift Savings Plan. It's a plan that allows Members of the 
United States Congress and the United States Senate to set aside some of 
their own money, if they so choose to do so, in a conservative mix of 
bonds and stocks. It seems fair to me that if setting up a personal 
savings account is good enough for a Member of the United States 
Congress, it is good enough for workers all across America.
    By giving younger workers an option to set up a personal savings 
account, we have an opportunity to modernize and strengthen a great 
American program. We have a chance to bring the Social Security system 
into the 21st century.
    The reason I say that is, today, young people are comfortable 
investing in bonds and stocks. Millions of workers now choose to plan 
for retirement with their own savings accounts through programs like 
401(k)s. I don't remember growing up hearing the word ``401(k).'' I 
don't think you remember that. You're old enough to be around when they 
didn't have 401(k)s--[laughter]--or IRAs. We're not talking about a new 
culture. We're talking about a culture that's already taken hold in our 
society, where workers from all walks of life are watching their money 
grow and making decisions on behalf of their families with where they 
invest.
    See, telling younger workers they have to save money in a 1930s 
retirement system is like telling them that they have to use a cell 
phone with a rotary dial. [Laughter] If young people are confident they 
can improve their retirement by investing in a conservative mix

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of bonds and stocks, the Government should not stand in their way.
    Creating these accounts will also give our children and 
grandchildren a chance to replace a burden of uncertainty with a new 
opportunity. Instead of leaving their full retirement in the hands of 
future politicians, younger workers will be able to take part of their 
retirement into their own hands. Instead of sending all the payroll 
taxes to Washington, younger workers would be able to transfer part of 
their money directly into an account they own and that the Government 
can never take away. Instead of forfeiting years of Social Security 
contributions if they die before retirement, younger workers would have 
peace of mind that their personal accounts could be passed on to a loved 
one.
    Young people are learning more about the opportunity to own part of 
their retirement, and they're making their opinion pretty clear. I met 
Philip Meador today. He's a graduating senior from The Citadel. He told 
me he's going to be starting a new job in June. He knows he's going to 
start paying Social Security taxes. What he's not sure about is whether 
or not he'll ever be seeing a Social Security check. He certainly will 
be paying in; he's not so sure what's going to be coming out. He likes 
the idea of keeping part of his money in an account that he controls. He 
said, ``I like the options. You choose what to put in. You choose the 
investments. It depends on what you're looking for. I think every 
individual should be able to choose a plan that fits them.''
    A lot of young people are beginning to say that. A lot of young 
people want this United States Government to come together and make sure 
there's not a huge burden when they grow up. A lot of young people want 
the Government to give them the option of making choices with their own 
money.
    And I know you all feel the same way in this chamber. That's why you 
passed resolutions calling on the United States Congress to strengthen 
this important program, Social Security, and to give younger workers the 
option of voluntary personal retirement accounts. You recognize that a 
Social Security system that includes personal accounts will give all 
Americans, not just a few but all Americans, a stake in the greatest 
creator of wealth the world has ever known. You recognize that personal 
accounts will bring the security and independence of ownership to 
millions of our citizens. And you recognize that personal accounts are 
critical to building an ownership society, a more optimistic and more 
hopeful America in which more people own their own homes, more people 
own their own businesses, more people have ownership in a retirement 
account, more people have an asset base they call their own that they 
can pass on to whomever they choose.
    You see, owning assets ought not to be confined to a few people in 
our society. Owning an asset and being able to pass it on to your son or 
daughter ought not to be the purview of a few. In this great land, it 
ought to be spread--ownership ought to be spread to everybody who is 
lucky enough to be an American. You recognize that when people own 
something, they have a vital stake in the future of our country, and 
that personal accounts will help give every citizen the chance, the 
opportunity to realize the dreams of this land.
    The legislature of this great State of South Carolina has shown 
leadership on this important issue, and now the United States Congress 
needs to do the same. I understand that Social Security is a tough 
issue, but Congress has tackled tough issues before. We've seen in the 
past how leaders from both parties can rise above partisan politics to 
meet great responsibilities. And now is the time for them to do so 
again.
    I am confident that Members of Congress will come together to reach 
a permanent solution. And when they do, our children and grandchildren 
will one day look back and be grateful that our generation made the 
difficult choices and the necessary choices to renew the great promise 
of the Social Security system for the 21st century.
    I want to thank you all for the invitation to come to your great 
State. I appreciate you giving me a chance to come and visit. It's an 
honor to talk about such an important topic with those who have been 
willing to serve. May God bless you in your efforts, and may God bless 
your families, and may God continue to bless the United States of 
America.

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Note: The President spoke at 12:17 p.m. at the South Carolina 
Statehouse. In his remarks, he referred to David H. Wilkins, speaker, 
South Carolina house of representatives; Gov. Mark Sanford and Lt. Gov. 
Andre Bauer of South Carolina; and Glenn F. McConnell, president pro 
tempore, and Hugh K. Leatherman, Sr., majority leader, South Carolina 
senate.