Speeches, Public Comments and Analyses

George W Bush, President
Radio Address
March 12, 2005

There are a number of oft-repeated exaggerations, distortions or misimpressions (pick your own favorite term) in this one:
     1. That social security is "going broke",
     2. That there is an extreme urgency in fixing the problem,
     3. That privatization has anything to do with being part of fixing the problem, and
     4. That the assets in privatized accounts are "on top of your social security check".

Good morning. Over the last few weeks, I have traveled across our nation and met with tens of thousands of you to discuss my plans for strengthening Social Security. I share a great responsibility with your representatives in Congress. We must fix the system permanently, so it will be there for our children and grandchildren.

I have been to 15 states, and I'm just getting started. On every visit, I am assuring those of you born before 1950 that Social Security will remain the same for you; no changes. No matter what the scare ads or politicians might tell you, you will get your checks. You grandparents also understand we have got to fix the holes in this vital safety net for future generations. I appreciate the wisdom of our seniors and I welcome your input on how to strengthen the system.

You younger workers know what is happening to Social Security. The present pay-as-you-go system is going broke. Huge numbers of baby boomers, like me, will be retiring soon, and we are living longer and our benefits are rising. At the same time, fewer workers will be paying into the system to support a growing number of retirees. Therefore, the government is making promises it cannot keep. Still, some folks are playing down the problem, and say we can fix it later. The fact is, we have got a serious problem and we need to fix it now. If you are in your 20s, or if you have children or grandchildren in their 20s, the idea of Social Security collapsing is no small matter, and it should not be a small matter to the Congress.

It's a myth that social security will "go broke" or collapse. According to the plan as explained during a briefing by an unnamed "senior official" just prior to the 2005 State of the Union message, the guaranteed benefits would be higher in the broken and collapsed system than they would be in the system proposed by the administration

In 1983, Congress enacted what they thought was a 75-year fix to save Social Security from bankruptcy. This bipartisan solution turned out to be temporary because it did not address the system's fundamental flaws. Two years later, Social Security was headed out of balance again. Now some in Washington are talking about another 75-year fix, which means we will be back to the starting line a few years from now. We do not need a band-aid solution for Social Security. We want to solve this issue now and forever.

Putting off real reform makes fixing the system harder and more expensive. As one Democrat leader observed recently, "Every year we delay adds at least $600 billion to the cost of saving the system." And the Social Security trustees agree. Postponing reform will leave our children with drastic and unpleasant choices: huge tax increases that will kill jobs, massive new borrowing or sudden, painful cuts in Social Security benefits or other programs. Our children deserve better and we can give them better. I have told Congress all ideas are on the table, except raising the payroll tax rate. Some of the options available include indexing benefits to prices, rather than wages; changing the benefit formulas; raising the retirement age -- ideas Democrats and Republicans have talked about before.

Each year we wait, it will mean the necessary solution must be a bit more severe, but that "bit" is actually rather small. As those who have followed the debate have seen, annual adjustments to the long term estimates within a single agency (not to mention the variances in the predictions between agencies) can vary by more than a year, without any anticipated changes in the plan, itself. But there is another falsity -- the implication that the alternative schedule for arriving at a fix are "now" or leaving it to our children to fix.

One should also note one other "misstatement" (not even "technically accurate"). Bush has not told Congress all ideas are on the table except raising the payroll tax. He has made it perfectly clear that a forgetting about privatization is not on the table, either.

(Added 3/15) Paul Krugman of the NY times identified "the Democrat" as Sen. Joseph Lieberman of Connectict (in fact, the claim was actually offered by the President himself in his Jan 15 radio address). Dr. Krugman also notes that the figure has nothing to do with "delaying the fix."

Whatever changes we make, we must provide a better and stronger system for younger workers. And that is why I have proposed allowing younger Americans to place some of your payroll taxes in voluntary personal retirement accounts. You would have a choice of conservative bond and stock funds, with the opportunity to earn a higher rate of return than is possible under the current system. If you earn an average of $35,000 over your career, you can build up nearly a quarter-million dollars in your account, on top of your Social Security check. This would be real savings you own, a nest egg you could pass on to your children.

While this is what the administration would refer to as "technically accurate" -- you would get a social security check and have the separate account -- the fact is that the check would be reduced so as to offset the amount you placed in the private account, plus 3% interest, compounded annually. That "nest egg"? You'll have to use it to make up the amount by which your check was reduced. (Additionally, if what's left in your check is below the amount needed to keep you out of poverty -- regardless of what other assets or revenue streams you may have -- you will be required to use a portion of that "nest egg" to purchase an annuity that will guarantee your monthly income brings you above the mandatory level (currently planned at 120% of poverty). There is nothing wrong with the requirement but the claim that you will have this nest egg in addition to the check is disingenuous, to say the least).

The American people did not place us in office to pass on problems to future generations and future Presidents and future Congresses. I will work with both parties to fix Social Security permanently. Social Security has been there for generations of Americans, and together we will strengthen it for generations to come.

Thank you for listening.