Speeches, Public Comments and Analyses

George W Bush, President
Press Conference
April 28, 2005

Note: Those portions on matters other than Social Security have been omitted

BUSH: Good evening. Tonight I will discuss two vital priorities for the American people, and then I'd be glad to answer some of your questions.

….

Congress also needs to address the challenges facing Social Security.

I've traveled the country to talk with the American people. They understand that Social Security is headed for serious financial trouble and they expect their leaders in Washington to address the problem.

Social Security worked fine during the last century, but the math has changed. A generation of baby boomers is getting ready to retire.

BUSH: I happen to be one of them.

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 drawing Social Security benefits.

Baby boomers will be living longer and collecting benefits over longer retirements than previous generations. And Congress has assured that their benefits will rise faster than the rate of inflation.

In other words, there's a lot of us getting ready to retire who will be living longer and receiving greater benefits than the previous generation.

And to compound the problem, there are fewer people paying into the system. In 1950, there were 16 workers for every beneficiary; today there are 3.3 workers for every beneficiary. Soon there will be two workers for every beneficiary.

These changes have put Social Security on the path to bankruptcy.

When the baby boomers start retiring in three years, Social Security will start heading toward the red.

BUSH: In 2017, the system will start paying out more in benefits than it collects in payroll taxes. Every year after that, the shortfall will get worse, and by 2041 Social Security will be bankrupt.

Franklin Roosevelt did a wonderful thing when he created Social Security. The system has meant a lot for a lot of people. Social Security has provided a safety net that has provided dignity and peace of mind for millions of Americans in their retirement.

Yet there's a hole in the safety net, because Congresses have made promises it cannot keep for a younger generation.

As we fix Social Security, some things won't change. Seniors and people with disabilities will get their checks. All Americans born before 1950 will receive the full benefits.

Our duty to save Social Security begins with making the system permanently solvent, but our duty does not end there.

BUSH: We also have a responsibility to improve Social Security by directing extra help to those most in need and by making it a better deal for younger workers.

Now as Congress begins work on legislation, we must be guided by three goals.

First, millions of Americans depend on Social Security checks as a primary source of retirement income, so we must keep this promise to future retirees as well. As a matter of fairness, I propose that future generations receive benefits equal to or greater than the benefits today's seniors get.

Secondly, I believe a reformed system should protect those who depend on Social Security the most. So I propose a Social Security system in the future where benefits for low-income workers will grow faster than benefits for people who are better off.

By providing more generous benefits for low-income retirees, we'll make this commitment: If you work hard and pay into Social Security your entire life, you will not retire into poverty.

BUSH: This reform would solve most of the funding challenges facing Social Security.

"This reform" which Bush doesn't describe, is a reference to a plan by Robert Pozen that introduces no changes to the current system for the lowest 30% of workers, but reduces the benefits (or lets them rise at a slower pace -- choose your own description) for the remaining 70% of workers. Those at the top, by 2061, would see benefits that were about half what they would be under the current system, if benefits were fully funded. Those in the middle would also see significant reductions -- in excess of those if the current system were maintained.

A variety of options are available to solve the rest of the problem, and I will work with Congress on any good-faith proposal that does not raise the payroll tax rate or harm our economy.

I know we can find a solution to the financial problems of Social Security that is sensible, permanent and fair.

Third, any reform of Social Security must replace the empty promises being made to younger workers with real assets, real money.

I believe the best way to achieve this goal is to give younger workers the option -- the opportunity -- if they so choose, of putting a portion of their payroll taxes into a voluntary personal retirement account.

Because this money is saved and invested, younger workers would have the opportunity to receive a higher rate of return on their money than the current Social Security system can provide.

BUSH: The money from a voluntary personal retirement account would supplement the check one receives from Social Security.

According to the Bush methodology for handling optional private accounts, the claim that they would "supplement" the check one receives from Social overlooks the fact that the check one receives from Social Security will be reduced to account for the money diverted. Under what Bush has explained of his "plan," the more honest description is that, with private accounts, the retiree will receive two checks instead of one and the total may be more or less than if one had elected to receive just one.

In a reformed Social System, voluntary personal retirement accounts would offer workers a number of investment options that are simple and easy to understand.

I know some Americans have reservations about investing in the stock market, so I propose that one investment option consist entirely of treasury bonds, which are backed by the full faith and credit of the United States government.

Here, the Treasury Bonds are "backed by the Full faith and credit of the United States Government," but when those same bonds are held in the Trust Funds, themselves, Bush contends they are "worthless IOU's"?

But there is second problem (although it may be worked out in any final plan). The money one diverts to a private account is charged interest at the rate the government pays on it's bonds. In theory, this should mean that anyone who opens a private account and buys only treasury bonds will come out precisely even. But the current plan doesn't allow for the transaction costs of purchasing those bonds for the private account -- so anyone who follows this strategy is guaranteed to lose -- even before calculating the costs of purchasing an annuity upon retirement (which will be mandatory for those whose Social Security check fails to keep one above poverty -- the very folks most likely to focus on the safest investment).

Options like this will make voluntary personal retirement accounts a safer investment that will allow an American to build a nest egg that he or she can pass on to whomever he or she chooses.

Again, a misstatement when it comes to many retirees, who will be legally compelled to purchase an annuity to compensate for reductions in the Social security check itself.

BUSH: Americans who would choose not to save in a personal account will still be able to count on a Social Security check equal to or higher than the benefits of today's seniors.

This one is so subject to misinterpretation it's worth a separate discourse. Simply, it depends on what one means by "higher than the benefits of today's seniors." It won't be higher when measured against contributions and it won't be higher when measured as a percentage of income prior to retirement. In effect, what is guaranteed to happen is that future retirees will not be able to rely as heavily on Social security to fund their retirements as do today's seniors. There is, simply, no way to accomplish that without raising taxes.

In the coming days and weeks I'll work with both the House and the Senate as they take the next steps in the legislative process. I'm willing to listen to any good idea from either party.

Too often the temptation in Washington is to look at a major issue only in terms of whether it gives one political party an advantage over the other. Social Security is too important for politics as usual.

We have a shared responsibility to fix Social Security and make the system better, to keep seniors out of poverty and expand ownership for people of every background.

BUSH: And when we do, Republicans and Democrats will be able to stand together and take credit for what is right for our children and our grandchildren.

And now I'll be glad to answer some questions.

QUESTION: Mr. President, a majority of Americans disapprove of your handling of Social Security, rising gas prices and the economy. Are you frustrated by that and by the fact that you are having trouble getting attraction on your agenda in a Republican-controlled Congress?

BUSH: We're asking people to do things that haven't been done for 20 years. We haven't addressed the Social Security problem since 1983. We haven't had an energy strategy in our country for decades. So I'm not surprised that some are balking at doing hard work.

But I have a duty as the president to define problems facing our nation and to call upon people to act.

BUSH: And we're just really getting started in the process.

You asked about Social Security. For the past 60 days I've traveled our country making it clear to people we have a problem. That's the first step of any legislative process is to explain to the people the nature of the problem. And the American people understand we have a problem.

I've also spent time assuring seniors they'll get their check. That's a very important part of making sure we end up with a Social Security reform. I think if seniors feel like they're not going to get their check, obviously nothing's going to happen. And we're making progress there, too, as well.

See, once the American people realize there's a problem, then they're going to start asking members of Congress from both parties, "Why aren't you doing something to fix it?"

And I am more than willing to sit down with people of both parties to listen to their ideas.

Today, I advanced some ideas. I'm moving the process along.

BUSH: The legislative process is just getting started, and I'm optimistic we'll get something done.

QUESTION: Polls (OFF-MIKE)

BUSH: Polls? You know, if a president tries to govern based on polls, you're kind of like a dog chasing your tail.

I don't think you can make good, sound decisions based upon polls. And I don't think the American people want a president who relies upon polls and focus groups to make decisions for the American people.

Social Security is a big issue, and it's an issue that we must address now.

You see, the longer we wait, the more expensive the solution's going to be for a younger generation of Americans. The Social Security trustees have estimated that every year we wait to solve the problem, to fix the hole in the safety net for younger Americans, costs about $600 billion.

So my message to Congress is: Let's do our duty. Let's come together to get this issue solved.

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QUESTION: Getting back to Social Security for a moment, sir, would you consider it a success if Congress were to pass a piece of legislation that dealt with the long-term solvency problem, but did not include personal accounts?

BUSH: I feel strongly that there needs to be voluntary personal savings accounts as a part of the Social Security system.

BUSH: I mean, it's got to be a part of the comprehensive package. And the reason I feel strongly about that is that we got a lot of debt out there, a lot of unfunded liabilities, and our workers need to be able to earn a better rate of return on their money to help deal with that debt.

Again, private accounts do nothing to help the debt. Actually, they increase it, because additional new funds must be borrowed to pay those retiring under the current system.

Secondly, I like the idea of giving someone ownership.

Why should ownership be confined only to rich people? Why should people, you know, not be allowed to own and manage their own assets, who aren't the so-called investor class?

Of course, those at the bottom don't have the assets to "own." And nothing proposed by this administration actually changes that. Those at the bottom get to borrow their own money (and pay interest on that borrowing). When they retire, they will be compelled to purchase an annuity with the money, because the remaining benefit will not assure they remain out of poverty. It may make sense, but it isn't "ownership."

I think everybody ought to be given that right.

Matter of fact, Congress felt so strongly that people ought to be able to own and manage their own accounts, they set one for themselves.

And, you know, you've heard me say -- I like to say this, if it's good enough for the Congress, it ought to be good enough for the workers to give them that option.

Congress critters are not compelled to purchase annuities.

The government's never saying, "You have to set up a personal account." We're saying, "You ought to have the right to set a personal savings account so you can earn a better rate of return on your own money than the government can."

BUSH: And it's that difference between the rate of return -- between what the government gets on your money and what a conservative mix of bonds and stocks can get on your money -- that will make an enormous difference in a person being able to build his or her own nest egg that the government cannot spend.

See earlier note, where the truly conservative investment -- in government bonds, actually yields less than if the private account did not exist in the first place.

Now, it's very important for our fellow citizens to understand there is not a bank account here in Washington, D.C., where we take your payroll taxes and hold it for you and then give it back to you when you retire.

Our system is called pay as you go. You pay into the system through your payroll taxes and the government spends it. It spends the money on the current retirees and with the money left over, it funds other government programs.

And all that's left behind is file cabinets full of IOUs.

The reason I believe that this ought to work is not only should a worker get a better rate of return, not only should we encourage ownership, but I want people to have real assets in the system.

BUSH: I want people to be able to say, "Here is my mix of bonds and stocks that I own, and I can leave it whomever I want."

Now, I hear complaints saying, "Well, you know, there's going to be high -- Wall Street fees are going to fleece the people."

Well, there's ways to have fee structures that are fair. As a matter of fact, all you got to do is go to some of these states where they've got personal accounts available for their workers, and you'll find that the fees will be fair.

People say, "Well, I don't want to have to take risk." Well, as I outlined in my opening statement, there are ways where you don't have to take risk.

People say, "I'm worried about the stock market going down right before I retire." You can manage your assets. You can go from bonds and stocks to only bonds as you get older.

In other words, we're giving people flexibility to own their own asset. And I think that's a vital part of making sure America is a hopeful place in the future.

So not only will these accounts make the system work better, but the accounts are a better deal. The accounts will mean something for a lot of works that might not have assets they call their own.

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QUESTION: Sir, you've talked all around the country about the poisonous, partisan atmosphere here in Washington.

QUESTION: I wonder, why do you think that is? And do you personally bear any responsibility in having contributed to this atmosphere?

BUSH: I'm sure there are some people that don't like me.

You know, and I don't know. I've long and hard about it.

I've been disappointed. I felt that people could work together in good faith.

It's just a lot of politics in the town. It's kind of a zero-sum attitude. We can't cooperate with so and so because it may make their party look good and vice versa.

Although, having said that, we did have some success in the education bill. We certainly came together as a country after September the 11th. I appreciate the strong bipartisan support for supporting our troops in harm's way.

There's been a lot of instances of bipartisanship. But when you bring a tough issue up like Social Security, it -- you know, sometimes people divide into camps.

And I'm proud of my party. Our party's been the party of ideas.

BUSH: We said, "Here's a problem, and here's some ideas as how to fix it."

And, as I've explained to some people, I don't want to politicize this issue. People will say, "You didn't need to bring this up, Mr. President; it may cost you politically."

I don't think so. I think the American people appreciate somebody bringing up tough issues, particularly when they understand the stakes.

The system goes broke in 2041. In 2027, for those listening, we'll be obligated to pay $200 billion more a year than we take in in order to make sure the baby boomers get the benefits they've been promised.

In other words, this is a serious problem. And the American people expect us to put our politics aside and get it done.

I can't answer your question as to why. I'll have to continue to do my best.

I've tried to make sure the dialogue is elevated.

I don't believe I've resorted to name calling here in Washington, DC I find that to not be productive.

But I also understand the mind of the American people.

BUSH: They're wondering what's going on. They're wondering why we can't come together and get an energy bill, for example. They're wondering why we can't get Social Security done.

And my pledge to the American people is, I'll continue to work hard with people of both parties and share credit and give people the benefit of the credit when we get something done.

QUESTION: Just to follow up on Ed's question, we like to remind you that you came to Washington hoping to change the tone, and yet here we are, three months into your second term, and you seem deadlocked with Democrats on issues like Bolton, DeLay, judges.

Is there any danger that the atmosphere is becoming so poisoned or that you're spending so much political capital that it could imperil your agenda items like Social Security, energy?

BUSH: I don't think so. I think when it's all said and done, we're going to get a lot done.

I mean, after all, one of the issues that people have been working for a long time is class action lawsuit reform.

BUSH: And I signed that bill.

An issue that people have been working for a long time is bankruptcy law reform. And I signed that bill.

And the House got an energy bill out recently. And I talked to Senator Domenici the other day, and he's upbeat about getting the bill out pretty quickly and get it to conference and get the issues resolved.

I'm pretty aware of what the issues might be that'll hang up a conference, and I think we can get those issues resolved. We're more than willing to help out.

So I do believe I'll get an energy bill by August.

There's a budget agreement, and I'm grateful for that.

In other words, we are making progress.

No question the Social Security issue is a big issue, but it's -- you know, as I said before, we haven't talked about this issue for 20 years. And they thought we had it fixed 22 years ago for 75 years, and here we are, 22 years later after the fix, talking about it again.

That's overstatement. The "fix" was supposed to keep SS solvent for 75 years. It is now projected to keep it solvent for 60 years (70, in one uses the CBO estimates). The implication that a 75 year fix lasted only 22 years grossly overstates the errors in what were estimates. (In fact, the current assumptions are questioned by some who believe they overstate the shortfall and that after more time has passed, we may find we do not have a problem. Remember, these are estimates, not certainties. The only thing of which we can be certain is that even the latest estimates will prove to be wrong, as well.

And it's serious business. If you're a grandmother or a grandfather listening, you're going to get your check. But your grandchildren are going to have a heck of a price to bear if we don't get something done now.

Those grandchildren are going to have a "heck of a price to bear" if the estimates are correct, regardless of whether we "fix" the problem or not. The real question is whether the complete plan is going to leave them with an even greater problem (more federal debt, even lower benefits) or not.

BUSH: You see, it's possible, if nothing gets done, that the payroll taxes will go up to some 18 percent. Imagine that for your children and grandchildren living in a society where payroll taxes are up at 18 percent.

Or there'll be dramatic benefit cuts as time goes on.

Now's the time to get it done.

And my pledge to the American people is that I'm going to stay on this issue, because I know it's important for you.

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QUESTION: I wanted to ask you about your ideas on dealing with Social Security solvency problems.

As I understand it -- and I know you'll tell me if I'm wrong -- benefits would be equal to what -- at least equal to what they are today, and then any increase in benefits would be indexed according to income, with lower-income people getting bigger increases.

Two things on that. Today's benefits probably won't mean much somewhere down the road. And how far are you going to go with this means-based program? Are you talking about...

BUSH: Yes, I appreciate that.

QUESTION: ... a system where a rich person, say Dick Cheney, wouldn't get much out of it?

BUSH: Now wait a minute, don't get personal here, that's international TV. That's a cheap shot.

First of all, in terms of the definition of whose benefits would rise faster and whose wouldn't, that's going to be part of the negotiation process with the United States Congress.

As a Democrat economist had a very -- he put forth this idea. And he had a level of -- I think 30 percent of the people would be considered to be on the lower income scale.

Richard Pozen is a registered Democrat, but he isn't an economist. He's a lawyer and investment fund manager, who in public testimony this past week criticized the administration for discussing the "dessert" of his plan (private accounts) and ignoring the vegetables (the tax increases and/or benefit cuts) that are also necessary.

But this is to be negotiated. This is a part of the negotiation process.

My job is to lay out an idea that I think will make this system more fair.

And the second question -- or the first question...

QUESTION: (OFF-MIKE) it's a means-based program, where the real wealthy people might not get very much out of it.

BUSH: That's right. I mean, obviously it is means-based when you're talking about lower income versus wealthier income. The lower- income people's benefits would rise faster.

And the whole goal would be to see to it that nobody retired in poverty. Somebody that's worked all their life and paid into the Social Security system would not retire into poverty.

BUSH: One other point on Social Security that people have got to understand is that the system of today is not fair for a person whose spouse has died early.

In other words, if you're a two-working family, like a lot of families are here in America, and two people working in your family, and the spouse dies early -- before 62, for example -- all of the money that the spouse has put into the system is held there, and then when the other spouse retires, he or she gets to choose the benefits from his or her own work or the other spouse's benefits, whichever is higher, but not both.

See what I'm saying? Somebody who's worked all their life, the money they put into the system just goes away. It seems unfair to me.

I've talked to too many people whose lives were turned upside down when their spouse died early, and all they got was a burial benefit.

BUSH: If you have a voluntary personal savings account and you die early, that's an asset you can leave to your spouse or to your children.

That's an important thing for our fellow citizens to understand. The system today is not fair, particularly if a spouse has died early. And this will help remedy that.

Listen, thank you all for your interest. God bless our country.

END