Presidential Conversation on Social Security
Little Rock, Arkansas
February 4, 2005
Please be seated. Thanks for coming. It's great
to be back in Little Rock. Thanks for inviting me. Thanks for
coming. I've got something on my mind, which is how to make sure this
country is safe for generations to come, and how to make sure this
country is financially secure for generations that are coming up.
So thanks for coming. As you can see, I'm joined on the stage here
by some fellow citizens who are willing to discuss the Social Security
issue. But before I get there I've got some other things on my mind I
want to share with you. First, I want to thank the Governor, Mike
Huckabee, for doing such a fine job as the Governor of the state of
Arkansas. (Applause.) I want to thank his Lt. Governor, Win
Rockefeller, for doing such a fine job. Thank you all for being here.
I know we got members of the Statehouse who are here, state Senate
and the state legislature. I appreciate you all serving. I appreciate
you all coming. I hope you find this dialogue as interesting as I
think you're going to. It's going to be an interesting discussion
about a big issue, and I believe those in the legislative branch
appreciate somebody from the executive branch who is willing to set a
big agenda. See, the job of the President and the job of a governor is
to confront problems, not pass them on to future generations, future
Congresses, or future Presidents. And that's what we're here to
discuss today. (Applause.)
I want to thank Mayor Pat Hays from North Little Rock, for joining
us. I appreciate you coming, Mayor. I want to thank all the local and
-- thanks for coming, Mayor. Fill the potholes and everything will be
fine. (Laughter.) Huckabee is probably saying, send me the money.
Anyway -- (laughter.) I really thank you for coming.
When I landed today, I met Katya Lyzhina -- where is Katya? There
she is. Thanks for coming. Katya -- let me tell you about this
story. I want to -- because it is, I think, representative of the true
spirit of America. Katya was adopted by Jan. Where's Jan? Thanks for
coming, Jan. Katya, you see was born and raised in Russia, and her
parents died. And Jan, out of deep compassion for a fellow human
being, adopted Katya, and here she is in America. She came as an
11-year-older. She's a teenager. I'm not going to tell you her real
age. Let me just say she's under 20. But guess what? She has raised
4,000 books to help build libraries for after-school programs. She
helps raise money for food banks in the Little Rock area. She started
Hopes Miracle to help raise money for other -- to pay for help for
families who are adopting a child.
This little child has come from a faraway land and is repaying the
love and compassion of her step-mom and her country by serving as a
volunteer in the army of compassion. She represents what many others
here and around our country represent, and that is the strength of
America. The strength of America is found in our hearts and souls. We
can and we will change America, one heart, one soul, one conscience at
a time, by surrounding those who hurt with love and willing to dedicate
our time to making our communities a better place.
Thank you, Katya, for the example you've set. (Applause.)
We'll talk about a couple of other things, and then we'll get to
Social Security. I enjoyed giving the State of the Union.
Interestingly enough, the day after the State of the Union, we had a
National Prayer Breakfast. And when asked to speak, I said, it seemed
like the State of the Union was a moment of prayer -- these members
were praying that I'd keep my speech short. (Laughter.) But I enjoyed
giving it. And I enjoyed reminding our nation we're still at war. And
for every -- every time one of our brave soldiers brings to justice
somebody who's trying to hurt America, we are safer. And that is why I
said with confidence that we will stay on the offense until we have won
this war. (Applause.)
And I reminded our Congress, so long as we've got soldiers in
harm's way, they deserve the best support. And I'm confident we'll get
that support out of the Congress. (Applause.)
And I want to thank the good folks from Arkansas whose sons and
daughters have gone overseas to defend our freedom. I know a lot of
people from guard units, reserve units, and on active duty from this
great state have served. And I'm proud of the service, and I know you
are, as well. (Applause.)
Every time a country goes from tyranny to freedom we are safer, as
well. On the one hand, we'll stay on the offense, working with our
friends and neighbors and allies to bring people to justice. On the
other hand, we'll continue to spread freedom. Think about what has
happened in a quick period of time. People in Afghanistan voted for
the President, the first time in 5,000 years. That's a long time.
(Applause.) And we're better off for it. The world is better off when
a society goes from tyranny to freedom. When a society is free, it has
to listen to the demands of its people. Moms and dads universally want
to raise their child in a peaceful environment. People just want the
best for their kids when they grow up. They want the world to be
peaceful. When governments listen to the demands of the people, it is
more likely that peace will prevail.
The Palestinians elected a new leader. He's showing signs that
it's necessary to fight terror so that we can achieve peace with
Israel. The Ukrainian people elected a new leader. Think how far that
society has come. And last Sunday, the Iraqi people, in the face of
incredible odds, went to the polls. (Applause.)
And it's important -- that's an important moment. (Applause.) It's
an important moment in history, because it showed that a few tyrants
and terrorists and killers cannot stop the will of men and women. See,
what we believe in America is that freedom is universal because freedom
is the Almighty God's gift to each man and woman in this world. That's
what we believe. (Applause.)
And it's very important. It is very important for people in
Arkansas and around the country to understand that a free Iraq is in
our national interests. If part of our duty is to leave behind a more
peaceful world for our children and grandchildren, a free Iraq, in the
heart of the Middle East, will set a powerful example for others who
long for freedom. We have a chance to continue this incredible march
of history toward free and democratic societies.
I thought the most important moment of the State of the Union, of
course, was when the mom from Pflugerville, Texas hugged the woman, the
human rights advocate from Baghdad. It said -- it was a powerful
moment for people to see -- the gratitude of the Iraqi people expressed
in a hug toward a mom who suffers as a result of her son sacrificing
his life, not only for our freedom, but for the freedom of people far
away. It spoke volumes to me. It said that people want to be free.
And I think the freest nation on the face of the Earth has a duty to
help those who desire and long for freedom to achieve that dream. And
in so doing, this world of ours will be more peaceful, and Iraq will
continue to stand with us.
They say to me, are you going to have a timetable? Timetables --
timetables are the wrong thing to put out. All the timetable says --
(applause) -- it says to the enemy, go ahead and wait. No, the
timetable is this: We will continue training the Iraqis as fast as
possible so they have the capacity to meet their will, which is to
defeat these terrorists. See, they voted in overwhelming numbers in
the face of terrorism. I'm convinced that when given the tools, they
will defeat the terrorists. And when the Iraqis are ready to defend
themselves, our troops are coming home with the honor they have
A couple of other things before we get to Social Security. I was
heartened to see today that we added 146,000 new jobs in the month of
January. The national unemployment rate went down to 5.2 percent.
We're making progress. I assure you, however, we will not rest on our
laurels. There's more things we can do to create an environment in
which jobs continue to expand. For example, be wise with your money.
Monday, I'm submitting a budget. It says that if the program doesn't
make sense, it doesn't meet priorities, it doesn't make results, we're
either going to cut it back or eliminate it. (Applause.)
I think we can get us -- I think we can get us an energy bill,
finally. We've been talking about it for a -- we've been wasting a lot
of energy talking about it. (Laughter.) Now we can get a common-sense
bill that says, let's conserve more, let's spend money on research to
be able to use coal in clean ways. Why don't we promote safe, clean
nuclear energy? We need to do things like advance research on ethanol
and biodiesel. Can you imagine, someday it will make sense for a
President to say, gosh, the crop report looks strong; it means we're
less dependent on foreign sources of energy. There's a lot of
common-sense things we can do -- and must do -- to keep this economy
growing and make us less dependent on foreign sources of crude.
I can just hear Laura now -- keep it short, let everybody else
talk. But she's not here. So anyway, I'm going to keep going.
(Laughter.) I know she wishes she were here. By the way, she is a
fabulous woman. I'm lucky she's my wife, and she's a great First
A couple other points I want to make on the domestic scene. If
you're a small business owner, I think you ought to be allowed to pool
risk across jurisdictional boundaries. That means if you're a
restauranteur in Little Rock, you ought to be teaming up with a
restauranteur in Austin to be able to buy insurance for your employees
so that you can better afford insurance. (Applause.) Congress needs
to let -- let small businesses do that so we can get insurance to our
people who work for small businesses.
I tell you something else we need to do -- and I feel very strongly
about this when it comes to health care -- I am deeply concerned about
the number of lawsuits that are running up the cost of medicine and
running good doctors our of practice. (Applause.) You may not think
that people in my position are able to get out and listen to people,
but we actually are able to do so. And one of the common complaints I
heard about our current legal system around the country was from
OB/GYNs and expectant moms. Because these lawsuits are running OB/GYNs
our of practice, too many expectant moms are nervous about whether or
not they're going to get good health for themselves and their babies.
We have a real problem in America with these junk lawsuits. It's
like a legal lottery, and it's costing our citizens, patients and
doctors a lot of money. And it's costing federal government a lot of
money. I believe medical liability is a national problem. I have
proposed a national solution, and I call upon Congress and members from
the United States Senate and the House of Representatives from Arkansas
to support doctors and patients with good liability reform.
I got the message -- get to the point. Social Security. First of
all, I think it should interest you that a President is traveling the
country talking about Social Security. And a -- see, I see a problem,
and I'm about to describe it to you. And I have a duty, therefore, to
make the problem as clear as I can to as many people as I can. I
started that the other night at the State of the Union and I'm
traveling to my fourth state. I'm going to Florida from here -- five
states, two days -- with this message: We have a problem. And I
intend to lead the Congress to fix it. But I understand problems
sometimes don't get fixed until the people of the country start saying,
we see the problem, and you go fix it. And that's what we're here to
talk about. (Applause.)
And so here's the problem. The problem is that the mathematics of
Social Security has changed significantly since the program was
designed. Franklin Roosevelt designed the program. It was a system
where the money came in and was supposedly going to accumulate, and
passed out when people retired. And there were a lot of workers for
every beneficiary. By 1950, there were 16 workers paying into the
system for every beneficiary. In other words, there was quite a few
people whose payroll taxes went into the system to meet the promises
the government had made to the retiree. And that's fine.
And by the way, during that era, the life expectancy was around 60
years old. Now, what has changed is this: First of all, we're living
longer. I mean, I hope to make it past 60 -- I got three more years to
go. The life expectancy is 77 years now. Mom and Dad are 79 and 80.
You know what I'm talking about? People are living longer. And
therefore, the whole formula -- part of the formula doesn't hold up.
The longer you live, the more benefits you receive. And when you
couple that with the fact that the baby boomers, like me, who are
fixing to retire -- not only are we living longer and, therefore,
receiving benefits longer than anticipated when the system was
designed, more of us will be living longer receiving more benefits.
Plus, the benefits are scheduled to rise dramatically. So you've got
more people living longer, receiving benefits longer at a greater level
of support. Plus, the number of payers into the system have declined
from 16 per beneficiary to 3.3 per beneficiary. And in relatively
short order, it's going to be two people paying per beneficiary. Now,
that's a problem because the system can't sustain itself.
And as this chart shows you, in the year 2018, the Social Security
system goes into the red. That means more money going out to baby
boomers who are living longer with greater benefits promised than
coming in, in payroll taxes. See, it starts to go negative. Up to now
it's been positive. Up to now we've been receiving more in payroll
taxes than have gone out to pay. But the dynamics shift dramatically
when the baby boomers start coming into the system.
And in 2027, that deficit will be $200 billion a year. It grows
every year: 2018 is small; by 2027, it's going to require $200 billion
extra to pay off the promises; 2033 -- these are just examples of how
it increases on -- the deficit increases on an annual basis -- 2032, I
believe it is, comes out to be about $300 billion. So you can see the
problem. We're short. In order to fulfill the promises for the number
of people paying in the system, we're going to have to come up with
$200 billion a year in 2027, and more the next year, and more the next
year, and more the next year -- unless we do something about it.
Now, I know there's some people saying, uh-oh, how does that affect
my check? I'm on Social Security now. You're fine. You don't have a
thing to worry about. The Social Security system is sound for those
who are -- have retired and those who are near retirement, people born
before 1950. It is in good shape. Nothing will change.
And part of the problem with dealing with this issue, part of the
problem is seeing -- seeing the problem and coming up with a solution
is, a lot of people in political life are afraid of talking about it
because they're afraid somebody in their state is going to say, well,
when you talk about Social Security, really what you're doing is taking
away my check. You know what I'm talking about? You've seen those
campaigns. Old so-and-so is going to take away my check. Well, that's
just not reality. Those are scare tactics. Senior citizens are just
It's the younger folks that ought to be saying, what you going to
do about it, Mr. President? My generation is now going to be saddled
with $200 billion in 2027, and more the next year, and more the next
year, until the system gets bankrupt in 2042. How about doing
something about it now before it is too late? (Applause.)
That's why I think -- you see, the dynamics have shifted. It used
to be, people were afraid to talk about Social Security. Now, I think
people should be afraid not to talk about Social Security and start
coming up with some solutions. It's one thing for the President to
say, we've got a problem. Now I believe I have a duty to help lead
Congress toward a solution. Let me just say right off the bat, I'm
open for any idea except raising payroll taxes to solve the problem.
If anybody -- (applause) -- anybody has got an idea, bring it forth. I
don't care if it's a Democrat idea, or a Republican idea, or an
independent idea, I'm interested in working with the people who end up
writing the law to come up with a good idea.
And so all options are on the table, as I said in the State of the
Union the other night. Bring them on, and we'll sit down and we'll
have a good discussion about how to get something done. I think it's
really important that the Congress understand that's how I feel. And
we're not going to play political "gotcha." Dealing with our -- dealing
with the security of our youngsters is vital. And now is not the time
to make this issue a highly partisan issue. I really mean that when I
Now, I've got some interesting ideas, and I think they're worth
listening to. And one of the most interesting ideas of all is whether
to allow a younger worker to be able to set aside some of her -- his or
her payroll taxes into a personal retirement account. I think younger
workers ought to be allowed to do that. (Applause.)
I'll tell you why. I'll tell you why I think they ought to be
allowed to do that; because I understand that with a conservative mix
of stocks and bonds, a person can earn a rate of return which is
significantly greater than the rate of return that person's money now
earns in the Social Security trust. And that's important because, over
time, when your money compounds, and the rate of interest compounds
your money, it means a younger worker will be able to accumulate a lot
more money per dollar in than he or she would if the money stayed in
the Social Security trust. In other words, it grows better. And
that's important. It's important for a younger worker to be able to
grow his or her money, particularly given the fact there's some
significant cash deficits headed our way.
Secondly, I like the idea of encouraging an ownership society. I
think people ought to be encouraged to own something in America.
(Applause.) You'll be owning a part of your retirement account. It's
actually your money to begin with. It's not the government's money.
You're paying it in. (Applause.) I think it makes sense for people to
be given a statement on a quarterly basis: here's your money and
here's how it's growing.
Now, there are some legitimate questions regarding this system.
One, can you take your money and put it in the lottery? No.
(Laughter.) The answer is not only, no, but, heck no. (Laughter.)
You can't take it and play dice with it; you can't take it to the
track; you can't gamble on, you know, fly-by-night stocks. You can
only put it in a conservative government-prescribed mix of stocks and
bonds, just like the federal employees get to do.
See, we have done this before -- it's called the federal thrift
plan. Federal employees are given five programs from which to choose.
The individual gets to choose what -- the mix of stocks and bonds. But
they're conservatively planned. And obviously, the more conservative a
mix of stocks and bonds, the less risk you'll have. But it doesn't
take much risk to get a better rate of return on your money than that
which is in the Social Security trust.
Secondly, can you take it all out when you retire? No, it's there
as part of your retirement. You're going to get some money out of the
Social Security trust. And that money coming out of your personal
account will be combined with the money out of the Social Security so
that you can have a good retirement.
Thirdly, can you leave it to who you want? You bet. And that's
what -- where all of a sudden the plan begins to differ. (Applause.)
Right now you can't. Right now you can't leave a dime of the money you
put in the Social Security system to anybody. And under this plan, you
And so this is something I'm asking Congress to consider. Now, I
understand it's hard. It's a new idea. It's a new way of thinking.
But it's a -- one good way to make sure this system is around for our
younger workers. And there's a lot of benefits to it. And I'm looking
forward to continue traveling our country talking about these ideas.
That's one of my duties as the President -- to confront problems --
say, we got a problem.
And as you know, I'm here in Little Rock. And I was in Omaha, and
Fargo, and in Montana, I'm heading down to Florida. And the idea is to
say, folks, we got a problem, now let's work together. And sometimes
in Congress, if they start to balk -- or in the Senate they balk, maybe
it helps to have the people say, I agree with the President. He says
we got a problem. He showed the chart. And now let's -- why don't we
all come together and get something done? And that's why I'm here --
besides being able to be with the good folks of Little Rock, Arkansas.
Okay. Andrew Biggs is with us. He is the Associate Commissioner
for Retirement Policy of the Social Security Administration,
Washington, D.C. In other words, he is an expert on the subject.
Andrew, step forth. Let the people of Arkansas -- no, sit forth --
let the people of Arkansas -- (applause.)
DR. BIGGS: Thanks very much.
THE PRESIDENT: Tell them whether or not we got a problem or not,
from your perspective.
DR. BIGGS: Put simply, we do, in fact, have a problem.
THE PRESIDENT: By the way, this guy -- PhD. See, I was a C
student. (Laughter.) He's a PhD, so he's probably got a little more
credibility. I do think it's interesting and should be heartening for
all C students out there, notice who's the President and who's the
advisor. (Laughter and applause.) All right, Andrew, get going.
(Applause.) Andrew's got a good sense of humor.
DR. BIGGS: Thank you very much. (Laughter.)
* * * * *
THE PRESIDENT: Erma Fingers Hendrix -- she introduced me one time
right here on the banks of the river -- isn't that right?
MS. HENDRIX: That's right.
THE PRESIDENT: Eloquent then, and still eloquent now. Thanks for
coming. Proud you're here. (Applause.)
Now. Thanks for coming.
* * * * *
THE PRESIDENT: Thank you, Erma. Let me -- it's very interesting
-- (applause) -- I think Irma's discussion here is important because
she basically said, I'm fine. And that's important for every senior to
understand. She gets it. In other words, the -- whatever the numbers
and the talk and everything, it is clear that you have analyzed the
situation and understand that nothing would change for Erma. And
There's a lot of -- this system is a great system. It's worked for
a lot of people. It is a very important part of our society. And
therefore, those folks who use their Social Security check to help
bring security in their retirement need to know that nothing is
The interesting dynamic is that she has asked her grandson, who is
30, what do you think? See, that discussion never happened when I was
30. (Laughter.) Think about that. I don't remember anybody calling
me and said, are you worried about Social Security, because it was
assumed everything was right -- until our society changed, till the
boomers began to retire, till the benefit promises were raised, until
the number of payers paying in declined. And that's why -- that's why
it's important to take the idea that Franklin Roosevelt came up with,
which is a -- which worked well for a lot of people -- and make it work
better for your grandson.
Thank you for coming, Erma.
Gloria Bennett. Where are you from, Gloria?
MS. BENNETT: I'm from De Queen, Arkansas.
THE PRESIDENT: That's right next to "De King." (Laughter and
applause.) All right, what do you do?
MS. BENNETT: I'm a part-time USDA food inspector. And as a
part-time inspector, I do not get benefits for retirement. And I'm
also a single parent.
THE PRESIDENT: Yes.
MS. BENNETT: And being 43 years old, I fall somewhat in between
where the Social Security will be there, but it will decline. So this
personal account will benefit me. And also if I pass away, it will
also benefit my children where it could go to them.
THE PRESIDENT: Yes.
MS. BENNETT: And it could go to their retirement, towards their
retirement, or they could get the money right then. So my fears of if
they will have retirement is just diminished right now because I know
there is a plan. And with a plan there, and we put it in action, I
don't think we will have any problem.
THE PRESIDENT: Yes, well, listen, it's a very interesting point
she says -- she brings up this point, and that is that if she were to
pass away and her children are over a certain age, the money she's put
-- or anybody put into Social Security just goes away. It goes on to
the beneficiary -- not your particular beneficiary, but a promised
Now, think about that system. So work -- somebody works hard,
doesn't live long enough to get the benefits, dies earlier than the
national average, and that money that they put in the system -- unless
you've got younger kids -- just is gone, goes to help somebody else.
But it doesn't pass on to anybody that you decide you get to pass it on
to. And that's what -- that's what Gloria wisely pointed out is a flaw
in the current system.
Now, you'll hear some people say, well, maybe some people don't
know how to manage their account. I just don't buy that. I think -- I
think we can help with financial literacy. But I'm going to tell you,
the guidelines are going to be strong enough that people will be able
to put their money in safe accounts. And that's important. I repeat,
we have done this before -- federal employees. Not you -- I imagine
you're kind of hot about that, aren't you?
MS. BENNETT: Yes. (Laughter.)
THE PRESIDENT: Federal employees get a thrift savings plan. They
get to choose to put some of their money -- and by the way, this is
voluntary, is the other thing that -- shouldn't we say to people, if it
makes sense, give people a chance to make the decision as to whether or
not they want this option so they can pass it on to relatives.
All right, Mark Darr, Benton, Arkansas.
MR. DARR: Yes, sir.
THE PRESIDENT: Welcome. What do you do?
MR. DARR: I'm an insurance agent here in Little Rock, Arkansas.
THE PRESIDENT: Good.
MR. DARR: And I deal with risk every day. And to me, it's a whole
lot riskier not to do anything on this plan, to let it go. These
numbers back here, it's red really quick. The only red we like to see
is Razorback red. (Applause.)
THE PRESIDENT: Yes, you're going to bring up the Texas-Arkansas
game a couple of years ago. But that's all right, you know?
(Laughter.) Go ahead.
MR. DARR: But for us to just sit back and see these numbers go in
decline is really stupid. And give us the chance to have a
retirement. By the year 2042, the fund is gone. And that's about the
time I'm going to retire. And I have two small kids, and if there's
nothing for me, or even if it's at a lower level, what it's going to be
for them when they get ready to retire? And that gets kind of scary.
THE PRESIDENT: Yes, that's an interesting -- again, I'll repeat
what I said earlier, I find it interesting then this -- I've traveled a
lot and talked to people, but there's a lot of 30-year-old people like
Mark who just say, why don't you listen to us all of a sudden when it
comes to Social Security because we don't think we're going to see
anything? In other words, a lot of people understand the numbers. And
it's not that hard, it's not -- it's not that big a leap of logic to
think about a system where more people living longer, getting greater
benefits are supported by fewer people, like Mark. And the system just
can't sustain itself. And a lot of young people know that in America.
That's what has shifted in the politics, by the way. That's what
members of the Congress and the Senate must understand, that senior
citizens are coming to the conclusion that nothing is going to change
for them, but there's a lot of younger citizens saying, what about me?
What about somebody listening to my point of view on Social Security?
Like Mark -- because he understands that these numbers spell disaster.
And it's not only having no retirement system; it is how are we
going to pay for people like George W. when he gets ready to retire?
That's as big a burden as having no system at all, see? And that's the
dilemma we're faced with.
Again, I repeat to you, these numbers are real, they're
justifiable. You can ask the experts; the Social Security
Administration has blessed them. These aren't created in some back
room. These are transparent, open numbers, that says, every year,
starting in 2018, we're going to have to come up with additional money
to meet the deficits, in order to meet the promises. And where that
money comes from is either going to be your wallet or somebody else's
wallet in the form of reduced benefits, or great debt.
So now is the time, as Mark said, to be dealing with the problem.
All options are on the table. I want Congress to come together, but I
also want them to understand, as they look at all options, one option
is to allow young workers like Mark to start putting aside some of his
own money in an account that gets a better rate of return in the
current trust so he is likely to be able to get as close to the
promised benefits as possible when it comes time for him to retire.
That's what we're here to talk about.
Got anything else you want to say? How many kids you got?
MR. DARR: I've got two kids.
THE PRESIDENT: Are they here?
MR. DARR: No, my wife is here, but we let the kids stay with
somebody else today.
THE PRESIDENT: That's good, probably. They get a little wiggly.
(Laughter.) Afraid the President would go on too long, like the State
of the Union. (Laughter.)
Listen, I've enjoyed this. I want to thank our panelists. All of
us who have been fortunate enough to serve our country have a duty to
confront problems, and to debate in an open and honest way, be
inclusive in our discussions, to welcome interesting ideas. This is a
-- this is a significant problem that we've got to deal with now. And
I intend to keep reminding Congress about our duty. I intend to keep
traveling our country, talking to the American people, reminding them
they have a chance to influence the debate. And I'll keep calling upon
the best spirit of those of us in public service to put our politics
aside and to leave our generations to come better off with a security
system that works.
We're headed toward peace in the world, more freedom at home. And
that makes a guy feel pretty darn good, who's lucky to be your
God bless you all. (Applause.)
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