Speeches, Public Comments and Analyses

George W Bush, President
Press Conference
January 11, 2004.

BUSH: Listen, thanks for coming today.

As you can see, I'm 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. You know, 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 it's got too much political danger attached to it. 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 to end with 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've come a long way, flown all the way to Washington, D.C., 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.

You know, 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, you know, 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.

Actually, an individual's life expectancy changes as the individual gets older, since those who have already died are no longer in the average. The life expectancy at birth was about 63 when Social Security was enacted, but for someone 58, the expectancy would have been something in the range of 15 years. The error is, however, not important to the President's point, which is correct -- life expectancies have grown longer at all ages.

(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.

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. I mean, more and more retirees are taking out money relative to the number of people putting money in. In the '50s 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 -- I don't -- and some others I see out there -- the money going out is going to exceed the money coming in.

This shift when benefits exceed revenues) was planned -- we built the trust fund reserves specifically for this eventuality (it's why they have grown so large. To expect the reserves to continue to grow indefinitely makes no sense.

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's going to be to fulfill the promise for a younger generation of workers coming up.

Actually, he missed the original intent -- we can draw down on the Trust Fund balances.

As a matter of fact, by the time today's workers who are in their mid-20s begin to retire, the system will be bankrupt. So if you're 20 years old, in your mid-20s, 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.

No, it won't. After the fund reserves drop to zero, It will be able to pay about 70% of the benefits it current pays. Interestingly, the Presidential Commission's Plan 2, considered the model for the plan the President will offer,, will be paying 70% of benefits it currently pays as well (including the risk-adjusted return on private accounts) by 2060 and that percentage drops even lower after that.

And that's what we're here to talk about, a system that will be bankrupt.

And I readily concede some would say, Well, it's not bankrupt yet why don't we wait till it's bankrupt? The problem with that notion is that the longer you wait, the more difficult it is to fix.

You realize that the system of ours is going to be short, the difference between obligations and money coming in, by about $11 trillion unless we act. That's an issue. That's trillion with a t. That's a lot of money even for this town.

(LAUGHTER)

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 a problem. They just, kind of, think that maybe things will be OK. But the structure of Social Security is such that you can't avoid the fact that there is a problem. And now's 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 ran for office and they even mentioned the word Social Security there'd be TV ads and flyers and people knocking on doors saying, You know, so-and-so's going to ruin Social Security for you.

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 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 OK.

Most younger people in America think they'll never see a dime. 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 will receive Social Security today that everything is fine, I think we got a shot to get something done, because younger Americans really want to see some leadership.

I've said we're not going to run up the payroll taxes. I think running up payroll taxes will slow down economic growth. This economy's beginning to kick in. It's beginning to make sense. I think we can solve the problem without increasing payroll taxes.

(APPLAUSE)

And also threw out another interesting idea -- certainly not my idea, 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, you know, a dice game or the track.

I've heard some say, Well, you know, it's risky to allow people to invest their own money. You know, 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 realize that.

But it's not risky. Federal employees, thrift savings plans, invest under certain guidelines and I don't hear them screaming it's risky.

I makes sense to try to get a better rate of return on your money if you expect there to be a Social Security 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 what with 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, for giving 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 since the campaign is over, and it's certainly not going to be the last, because I believe it is a vital issue.

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.

I don't know if that's fair to call you an expert or not.

BIGGS: Thank you very much.

A lot of people think that Social Security and Social Security reform is extremely complicated, and it is true there is numbers and things involved with it.

But the financing of our current Social Security system is actually fairly simple. It's what people call a pay-as-you-go system, which means that the money that goes in today from workers out of their payroll taxes, almost all of it immediately goes right out the door again to pay benefits for people.

Now, that works very, very well when you have a lot of workers paying in and not so many people collecting benefits. You mentioned back in the 1950s there was over 16 workers supporting each retiree collecting benefits. If you think about it, you know, if 16 people had to lift up and carry one person, that's very easy to do. Even today with around 3.3 workers per retiree, we can do that.

But as we go into the future, there's going to be less than two workers supporting each retiree. That means the burden on each individual worker is going to get much, much bigger than it was in the past; that the taxes they'll have to pay would get much, much higher.

This comes about basically because of two factors. The first is that people are having fewer babies. The birth rate has declined. So fewer new people paying into the system, that reduces the number of workers.

The second issue is increased life spans. You mentioned that people used to not live to 65. Now most people live to 65. They live longer after that. These increased life expectancies mean more people collecting benefits out of the system.

And as Andrew said, he said we better start now. That's why it's important that we have this dialogue. And that's why I'm going to continue dialoguing and talking to the leadership in Congress about, Let's solve it now, let's do our duty.

Let me talk to Scott Ballard (ph). He is from the great state of Washington. It's a long way away.

BALLARD (ph): That's right.

BUSH: Brought your lads with you, I noticed.

BALLARD (ph): Yes.

BUSH: Your sons. Yes, they had never been to Washington. I said, You ever been to Washington? They said, I live in Washington.

BALLARD (ph): Yes.

(LAUGHTER)

BUSH: Pretty good line, you know. I meant the District of Columbia, Washington.

So what do you do, Scott (ph)?

BALLARD (ph): 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.

BUSH: And why are you here, besides to bring your lads to the other Washington?

BALLARD (ph): Right. Well, first of all, you know, I'm in a fairly unique situation, in that probably two-thirds of our customers are on Social Security, yet the majority of my workforce are in their early 20s. Some of them are in their early 30s. So we have a lot of people that I work with currently who are on Social Security, and a lot of younger employees who will be impacted by these proposed changes. BUSH: So, like, if they were here, what would your younger employees say about Social Security? They ever talk about it? They ever think about it?

BALLARD (ph): Not really. They don't talk about it too much. But I think if some of the changes that you are proposing are implemented, I think they will talk about it a lot more, and I think they'll take a much greater interest in it.

We've seen that with our company 401(k) plan. Most of them, they don't talk about retirement at all, but once they start something on paper saying, Oh, that's mine, and it's been in there a few years, and they start to see it build, they become more interested in it, and they start doing whatever they can to manage it and make it grow so it's there when they retire.

And what Scott (ph) 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, hadn't it?

I mean, people wake up and they look at their account and say, I'm not (ph) so sure this person's policies are beneficial to my being able earn a better rate of return. You pay attention because it's their own money. That, kind of, one of the benefits of a personal account in Social Security.

BALLARD (ph): Personally, I hadn't thought about Social Security that much until about five years ago when I started reading in the media that by the time that I reach retirement age it may be insolvent; there may be more money going out than what's coming in.

And so I've given it more thought. And over the last five years or so, the one thing that has come to my mind is that it's out of my control. I don't have any control over what's going on, even though it's my money that I'm putting into the system, just like everybody, even though it is our money that we're putting into the system.

And if we are given the option to put a portion of our Social Security taxes into personal savings account, it's going to be mine. I don't have to worry about whether or not the system is going to be insolvent down the road because that money that I put in is there.

Now, for my wife, Maryann (ph), and I may not be as concerned about it for her and I because we've been planning for retirement for some time. Hopefully, you know, we'll be in fairly good shape. But I am probably even greater -- more concerned about it for our two sons, Christopher (ph) and Matthew (ph).

And when people talk about ownership -- I'd like to give you an example real quick, if I could, something that we've seen in our business where it really, I think, kind of, brings the point home about really having ownership in your own account.

Unfortunately, in an ambulance business, we see a lot of tragic things. And this is something that we've seen over the years and we've seen firsthand this year. There was a couple that we know that had worked very hard all of their lives. And they decided once they retired that they were going to travel across the country, see the country.

And they took off on their first trip, and they were tragically killed in a car accident.

And under -- if we had personal savings accounts, that is something that even if you had a tragic accident like that occur, we could pass that on to our children.

BUSH: Right. Good. I appreciate you sharing that.

(APPLAUSE)

Make sure you 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 Congress people. You can let them know you expect the members of the United States Congress to hear the fact that there is a problem and then to do something about it. That's what they can do.

We got with us Bob McFadden (ph).

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.

MCFADDEN (ph): Yes, sir.

BUSH: And why have you come from Medford, New Jersey, to share some thoughts?

MCFADDEN (ph): Well, Mr. President, first of all, it's a privilege to be here with you, because I think that this is a very serious problem and an issue for all Americans.

And my challenge is that, when I look at this particular problem it's very personal to me and my family. And I say that because I believe reform is going to impact not only families, I believe it's going to impact women, children and minorities in a very serious way. I want to speak to some specific examples within my own family that made me reconsider Social Security and really look at it eight years ago.

Suddenly, my father, who had worked for over 30 years in a school system as a principal, and was out at a meeting and fell down and had a massive heart attack on the spot. He had put into Social Security for 40 years, and when he passed, his Social Security passed with him.

And I had a brother at that time who was a sophomore in college, and because he was 18 years old he couldn't receive any of the benefits of my father's hard labor.

And I think that, from a standpoint of equity, I have been very challenged to understand why we have a system that could not accommodate a situation like that.

And that's why I believe personal accounts do provide an opportunity to create some type of inheritance for not only the wealthy, as some would suggest, but for the middle class and for the everyday folks that are just trying to make it, even like myself.

(APPLAUSE)

BUSH: I agree.

If you think I'm going to argue with that -- absolutely.

MCFADDEN (ph): But my concern is that with her not working and me being the primary breadwinner in the house, what if I leave here today or tomorrow, God forbid, I'm challenged to understand what opportunities do I have outside of the things that I've personally invested in.

If I have put money into the system for 30 years or 20 years, I would hope that I would be able to provide my wife with an opportunity to receive some of those resources.

And I believe, personally, that if it's in a personal account, I can invest my money better than the government.

BUSH: Yes.

(APPLAUSE)

MCFADDEN (ph): Now, to support that point, I looked and said, OK, let's look at the average rate of return. Let's take the stock market -- because I'm hearing everybody make these debates about the stock market.

If you look at the stock market from 1926 to now, the average rate of return on long-term investments has been over 7.5 percent.

What I'm suggesting is that I'd rather take my 7.5 percent than take that 1 or 2 percent that you can give me.

And so from my perspective...

BUSH: The 1 or 2 percent that the money inside the Social Security trust earns. Is that right -- is he right? Is he even as high as 1 percent?

BIGGS: No. Right now it is low because interest rates are low. Over the long-term, we're looking around 3 percent. So you still do have a...

BUSH: So it's more than double.

But right now it's like -- you know, never mind.

(LAUGHTER)

BIGGS: You caught me.

BUSH: Don't worry about it.

(LAUGHTER)

Still keep your job.

(LAUGHTER)

Go ahead.

(LAUGHTER)

7.5 percent since 1924. That's a great rate of return.

Imagine if you're 50 years old and you start -- if you hold that money for 50 years at that rate, it compounds and grows and it ends up being a lot of money.

BIGGS: Yes.

BUSH: What you're saying?

BIGGS: Yes, sir.

BUSH: Yes. OK.

Glad I invited you.

(LAUGHTER)

MCFADDEN (ph): The only other point I'd like to make, though, too, is that I've had an opportunity, because of some interactions I've had at my church, to be out in the community in a very low-income community in Camden, New Jersey, and fellowship with people, old people who live in nursing homes, as well as young people.

And I thought about the debate in terms of, Well, how will this impact the poor?

And I'm very challenged for people not to understand that I think people need to be educated on this issue, and understand that it's really not the scare tactics or methods that are going to be used to try to encourage people not to understand how to get a greater return and really provide an inheritance for their families, specifically with minorities. I think it's very important. And, again, I thank you for the opportunity.

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)

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)

BUSH: Right.

MCFADDEN: That's two years.

(LAUGHTER)

BUSH: Glad you came. Thanks. Welcome, girls. Glad you all came.

(APPLAUSE)

OK, I thought we would try to find somebody who represents the youth movement. I'm not saying you all are old, but we have found 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)

No, I'm not going there, Josh. I'm staying on Social Security. It may be a little easier to fix, anyway.

(LAUGHTER)

WRIGHT: But he said that they wouldn't be able to take Texas, and... BUSH: Wait a minute. You don't need to talk about private conversations.

(LAUGHTER)

OK, you're a dairy farmer?

WRIGHT: That's correct.

BUSH: Good. Milking those cows.

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.

BUSH: Kind of like Crawford.

WRIGHT: There's a lot more cows than there are people, so I spend a lot of time talking to animals.

(LAUGHTER)

BUSH: Are they talking back yet?

(LAUGHTER)

When they start talking back, give me a call.

(LAUGHTER)

WRIGHT: Not when I have a stick in my hand, they don't say a lot.

(LAUGHTER)

. . . . .

BUSH: Do you think he's listening? Have they got C-SPAN out there in Utah?

WRIGHT: I don't know.

(LAUGHTER)

BUSH: See that red dot? That's him, if he's listening.

WRIGHT: He's probably watching the horse channel. He loves that channel.

(LAUGHTER)

BUSH: I appreciate you coming.

WRIGHT: Thank you for letting me.

BUSH: 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-20s 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.

(APPLAUSE)

By the way, tell the old man, 1946 was a great year.

WRIGHT: It was a great year.

BUSH: 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. Rhoda 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?

S. STONE: Sure. I'm a chief financial officer for a firm here in Washington. But I'm really here as a mom. I happen to be a divorced mom, raising three children -- two wonderful boys, Jeff and Eric, that are here with me -- and I have a beautiful daughter, Emily, who is also here with me. She's nine years old. Emily has been severely disabled since birth, both mentally and physically, and she will be dependent on Social Security for her lifetime. And I would like to make sure that Social Security is going to be there for her as its been for my mother.

BUSH: Good. A CFO, like, you know something about numbers?

S. STONE: I know a little bit about numbers, and I...

BUSH: I presume you've looked at the numbers.

S. STONE: I have looked at the numbers. And I would very much like to see the current Social Security system improved with the establishment of personal accounts, so that families could harness the power of the capital markets to allow them to build a nest egg over the course of their lifetimes that could then be passed on to their families. And I know that if my father, who paid in for over 40 years, had had the opportunity to establish an account like that, that would then have grown and survived him, and been available to not only provide for my mom, but ultimately for his grandchildren and his granddaughter, who he never knew, I think that would have made him very happy.

BUSH: 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 three 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 less than it's capable of generating under safe conditions. Safe conditions -- I think that's what you're saying.

S. STONE: That's what I'm saying. And I would just add that, as a mom, I know what it's like to lay awake at night and worry about the future of your children. And I know one thing about moms, they know how to make tough choices; we make them every day, on everything from health care to education to which bill to pay next. And I think we understand that whenever you're faced with a difficult problem, the sooner you start and the more honest you are about the nature of the problem, the greater chance you have of success. So I'm very hopeful that we would get started.

BUSH: Good, thanks. Well done.

(APPLAUSE)

Now what about your -- introduce your mom.

S. STONE: I would like to introduce my mom. This is my mother, Rhoda Stone. And she is grandmother of three, and originally from Helsinki, Finland, and has been here over 40 years.

BUSH: Fantastic. Same age as my mother.

S. STONE: Just turned 80.

BUSH: Is she still giving you instructions?

S. STONE: Every day, and I do my best.

BUSH: It never stops, does it?

(LAUGHTER)

No. R. STONE: It shouldn't stop.

BUSH: That's right.

(LAUGHTER)

Let her rip.

. . . . .

BUSH: Thank you for saying that. Good job.

Yes, I think one of the interesting things that Rhoda 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, say, 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 -- 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.

S. STONE: I wish we would have had a chance to put...

BUSH: 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've -- 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 four more years, and I intend to work with people of both parties and solve problems. And there is a problem with Social Security.

(APPLAUSE)

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.

(APPLAUSE) 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, doesn'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 place holder. 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.

(APPLAUSE)