Social Security Reform
March 11, 2005
Gosh, thanks for the warm welcome. It's great to
be here in Memphis, Tennessee. What a fabulous city you've got.
(Applause.) One of our panelists here was saying that he got up at
4:30 a.m. this morning, trying to prepare some remarks for today, some
interesting thoughts about Social Security. And I said, I'm glad it
wasn't you I heard at 4:30 a.m. -- evidently there's a basketball
tournament here? (Laughter.) Some of the victorious fans were pleased
with the results yesterday. (Applause.)
But I'm honored to be here. Memphis is a fabulous place. I wish
Laura were with me today. (Applause.) She's doing great, by the way.
She's obviously a patient woman, to be married to me. (Laughter.)
She's a wonderful mom, a fantastic wife and she's doing a whale of a
job as our country's First Lady and I'm really proud of her.
We're here to talk about Social Security. And I've got some other
things on my mind I want to share with you, but before we talk about
anything, I do want to thank Congressman Harold Ford for being here.
I'm honored you're here, Congressman. (Applause.) I appreciate your
service to this great city. Just about every time I see him, he says
to me, you need to get over to Memphis; we've got a great town full of
fantastic people. Congressman, I'm honored you're here.
Mayor A.C. Wharton, thank you for being here, I appreciate you
coming. (Applause.) Thank you, sir. Got a lot of friends -- I see
the sheriff, he's here. It's always important to say hello -- hi,
Sheriff. Bishop G.E. Patterson is here. I'm honored you're here,
Bishop Patterson. Thank you for coming. (Applause.)
I want to thank a lot of the other friends of mine in the clergy
who are here. You know, when we talk about the role of religion in
society, it's always important to emphasize that one of the things
makes us great is that we separate the church and the state, that
you're equally American if you choose to worship or not worship.
You're equally American if you're a Christian, Jew, Muslim or Sikh,
whatever you choose to do. But one of the things I think is important
is to include faith-based programs in the healing of hearts so that
America can be a hopeful place. I do not fear the influence of faith
in our society. I welcome faith. (Applause.)
And over the next four years, we'll continue to work with the
generals and colonels and sergeants and privates in the army of
compassion, to help change our country one heart and one soul at a
time. If you want to serve America, feed the hungry, find shelter for
the homeless. If you want to do something patriotic, mentor a child
and teach him or her how to read. If you want to make America a better
place, put your arm around somebody hurt - who hurts and says, I love
you, brother; or, I love you, sister, and I'm here to help you. No,
America's great strength is the hearts and soul of our citizens. And
we must continue to rally that great strength to make America a better
I do want to talk a little bit about foreign policy. For the
youngster here, I hope you pay attention to what you're saying. What
you're seeing is an amazing moment in the history of freedom.
(Applause.) Because we acted to defend ourselves, we liberated
Afghanistan from the Taliban. And millions of people voted --
(applause) -- voted in a presidential election. I met with one of the
ministers, a female minister from Afghanistan the other day. She came
into the Oval Office. She said she was looking forward to this moment
to see me and Laura so that she could share with me her great gratitude
about the fact that she could live in a free society. And I said to
her, I'm going to be traveling the country and I'm going to share your
thanks with the American people.
So on behalf of this minister, this woman serving in the cabinet,
this person who loves freedom, this person who has a chance to realize
her dreams, she says thanks -- thanks to the millions who now live in a
free society. (Applause.)
I believe there will be a Palestinian democracy living side by side
with Israel in peace. I believe that the actions taken by millions of
Iraqi citizens in the face of incredible terrorist threats sent a clear
signal to people around the world, that freedom is a beautiful thing.
(Applause.) The reason I bring this up is I want everybody to
understand that we'll defend our security; we'll utilize our great
military and our intelligence gathering capabilities to defend our
country. We're united in the United States -- with the United States
Congress in this objective. All of us in Washington understand that we
have a solemn duty to protect our country. But in the long run, the
way to defeat the ideologues of hate is to spread freedom and
democracy. Freedom is moving around the world. Deep in everybody's
soul is the great desire to live in freedom, and the United States of
America, working with friends and allies, must use our influence to
continue the march of freedom for the sake of peace for generati
Some good news in the economy last week. We added 262,000 new jobs
last month. There are more people working in America than ever before
in our nation's history. (Applause.)
But there's more work to do. I gave a speech in Columbus, Ohio, on
Wednesday. I said, you know, I reminded the folks that when I first
got into office I sent an energy plan to the United States Congress. I
was concerned then, like I am concerned now, about high gasoline
prices; about our dependency upon foreign sources of energy. Congress
has been debating this issue now for four years. It's time to stop the
rhetoric and stop the debate and get an energy plan to my desk that
will encourage conservation, that will encourage renewable sources of
energy, that will modernize the electricity grid, that will allow us to
explore for oil and gas in environmentally friendly ways in the United
States, that will make us less dependant on foreign sources of energy.
But the main reason I've asked you to come and asked our panelists
to appear with me is because I want to talk about Social Security.
First of all, let me tell you, I understand that for years Social
Security was the third rail of American politics. That meant if you
grabbed a hold of it, you weren't going to do well politically. In
other words, if you talked about it, people would then say, well,
really, what he's going to do, he's going to take away the checks of
our seniors. But you'll hear me describe the fact that I believe the
system needs to be reformed, and I'll tell you why. And I believe
political people, when they see a problem, have a duty to address that
problem and not to pass that problem on to future Presidents and future
Congress. I ran for office to solve problems. (Applause.)
Some in Congress say, I wish you hadn't have brought up the issue,
it may cause us to make a tough vote. Others in Congress have said,
well, we really don't have any problem. That's how democracy works.
There is difference of opinion. And I've got mine, and I'm going to
continue traveling our country until it becomes abundantly clear to the
American people we have a problem and it's abundantly clear to those
who will receive Social Security checks that nothing is going to
change. So I want to start by saying to the seniors here in Tennessee
and folks listening on your television set that for you -- for those of
you receiving a check today, and for those of you, like me, near
retirement, nothing is going to change for you. You will get your
check. I don't care what the TV ads say. I don't care what the
propaganda say. You're going to get your check. (Applause.)
It's important for people to understand that, because I fully
understand a lot of people depend solely on their Social Security check
for retirement. I know that. When I was the governor of Texas I knew
that. And I know that as the President of the United States. A lot of
people are depending upon the check, and the Social Security system is
working for them. There is a safety net. The problem is the safety
has got a hole in it for younger Americans. The safety net is secure
for older Americans. (Applause.) Franklin Roosevelt did a good thing
when he set up Social Security. It has worked. And so the discussion
today is not to get rid of Social Security; the discussion today is to
build on what Franklin Roosevelt put in place, to understand that
things have changed since his presidency.
You see, Social Security worked for years because there were a lot
of workers putting money into the system through their payroll taxes to
pay for a limited number of beneficiaries. Matter of fact, in 1950,
there were 16 workers per beneficiary. And the system works when it's
that way. For example, you'll see on that chart, for somebody who is
making $14,200 in benefits on an annual basis that means the worker
will pay $900 to help that one person. Today, there is only 3.3
workers putting into the system. In other words, we got fewer workers
paying per beneficiary. That obviously means costs are going up --
and, particularly given this fact, baby boomers like me are getting
ready to retire. Mine happens to be -- my retirement age comes up in
2008, which is quite convenient. (Laughter and applause.)
I'll be 62 years old in 2008. And there's a lot like me. And
there's more coming. And we're living longer than people during
Franklin Roosevelt's time and during the '50s. And we've been promised
greater benefits than the previous generations. So think about this:
fewer workers paying into the system -- 3.3 per beneficiary now, soon
to be 2 workers per beneficiary -- paying for a lot of baby boomers,
like me, who have been promised greater benefits and we're living
longer. And that's the math.
That's why I say there's a hole in the safety net. And that hole
exists for the people coming up, because that system can't sustain
itself. It you look at this chart over here, you'll see that in 2018,
more money is coming -- going out of the system than coming in. More
money in 2020, 2029, $200 billion a year will be going out of the
system than coming in. More money in '37 will be coming out of the
system, coming every year, it gets worse and worse and worse because
there are baby boomers like me, more of us than ever before, drawing
benefit -- larger benefits and living longer.
So we have a problem for a younger generation. Imagine somebody
who's looking at this chart. They're going to say, what are you going
to do about it, Mr. President? What are you going to do about it? And
so I stood up in front of the Congress and said, we have a problem.
And I think I was the first President ever to say, all options are on
the table. I said there's been some interesting ideas. Congressman
Tim Penny, when he was a Democrat Congressman from Minnesota, put some
interesting ideas on the table. President Clinton, my predecessor, put
some interesting ideas on the table. Democrat Senator Daniel Patrick
Moynihan from New York put some interesting ideas on the table.
I have an obligation to say to people from both parties, let's fix
this permanently. Let's don't slap a band-aid on the problem. Let us
fix it permanently and all ideas, bring them forward -- and I'm
interested in listening. There will be no political retribution when
you put an idea on the table. As a matter of fact, you will get
kudos. In Washington, D.C., there's still partisan talk. There is
still people saying, well, I'm not so sure I want to get involved. My
call to people from both political parties is now is the time to put
aside our political differences and focus on solving this problem for
generations of Americans to come. (Applause.)
I do want to talk about an interesting idea that I have discussed
with others. Now, I have an obligation to participate in the
dialogue. I don't get to write the legislation, by the way. Members
of the Senate and the House will write the legislation. But I have an
-- I've got some ideas that I'd like for people to consider, and one of
them is to allow younger workers to take some of their own money and
set it aside in a personal retirement account, a savings account.
And let me tell you why I like the idea. Here's why I like the
idea. First of all, we'll discuss -- and Congressman Penny will
discuss this -- about the notion of compounding rate of interest. That
means if you're able to get a reasonable rate of return on your money,
then over time, it grows exponentially. In other words, if you're able
to set aside some of your own money in a conservative mix of stocks and
bonds, you'll get a better rate of return on that money than you would
on the rate of return that the government gets for you. And it's that
difference that, over time, compounds.
So take, for example, a person making $35,000 a year over his or
her lifetime, and if he or she were allowed to set aside 4 percent of
the payroll tax in a personal savings account, by the time he or she
retired, there will be $250,000 as a part of the retirement system.
That's what compounding rate of interest does. (Applause.)
People say, well, I'm not so sure I know how to invest. You know,
there's kind of this notion that there is an investor class in
America. That sounds a little limited to me, that only a certain
number -- certain type of person can invest. I don't subscribe to that
notion. I believe everybody has got -- should have the opportunity to
invest, and I believe everybody can invest. (Applause.)
Now, when you say personal account, you can't take the money and
put it in the lottery. (Laughter.) You've got a lottery in
Tennessee? Right down the road. Well, you can't do that. Matter of
fact, there would be a prescribed set of types of stocks and bonds.
Obviously, we're not going to let people take their money and gamble it
out. And we've done this before. See, this isn't new ground. After
all, a lot of people invest their own money in 401(k)s. There's an
investor class growing way beyond the concepts of the investor class.
In other words, Defined Contributions Plans are spreading out all over
America. People are used to this concept. Federal employees get to do
this through the Federal Employee Thrift Savings Plan. In other words,
the federal government has said to employees, hey, you get to invest
some of your own money, if you choose, in a conservative mix of stocks
So this concept has been around. We're not -- this is an
interesting -- this isn't something brand new. This is an idea that
ought to happen for Social Security, as well as other retirement -- as
it happened in other retirement funds.
Thirdly, we want people owning something. I love the fact that
more people now own their home than ever before in our nation's
history. (Applause.) I like the fact when there are more
entrepreneurs from all walks of life; people saying, I own my own
business. That's the important part. How about letting people own a
stake of the future of the country by having the ownership in their own
retirement plan? And that's what we're talking about: ownership.
Finally, I like the idea of being -- somebody being able to
accumulate assets and pass it on to their heirs. Provides for
stability in society. Now, ownership ought not to be limited. It
ought to be spread around in our society.
And, finally, there's a macroeconomic benefit when more people
save, like they would be doing through their personal accounts. It
provides more capital for investment. And capital is necessary for the
expansion of small business. Capital helps fuel the entrepreneurial
spirit of America. The more savings, the more capital, the more jobs.
So this is an idea that I want Congress to take a look at, in the
spirit of all ideas ought to be put on the table. I'm looking forward
to the discussions with members of both political parties. I've got a
lot of work to do in the meantime. I'm going to Louisiana after this.
Next week, I'll be traveling down to Florida, checking on the brother.
(Laughter.) And then I'm going to be going out -- then I'll be going
out west. And I'm going to campaign for Social Security, because I
told you earlier, we have a duty in Congress to do something about this
before it becomes too late, before we saddle an entire generation with
a problem we cannot solve. (Applause.)
Ready to go? I want to thank Tim Penny for being here. Elected to
the United States from Minnesota. Knows the subject really well.
Congressman, thanks for coming. I'm proud you're here. Thanks for
joining us. (Applause.)
CONGRESSMAN PENNY: You bet. You bet. Mr. President, thank you,
first, for putting this issue on top of the agenda because it is an
urgent issue, and it's one that needs to be addressed sooner than
later. Doing nothing is not an option.
* * * * *
THE PRESIDENT: I want to thank Congressman Penny for sharing with
us. (Applause.) As I mentioned, he was -- he is a Democrat. But this
is the spirit of Republicans and Democrats coming together to solve
this problem that is needed. Nothing is going to happen unless people
from both political parties make the decision to join together and come
up with a serious solution. And I want people to understand that.
And I really want to thank Tim. He's been very active in this
issue for a long period of time. Occasionally he's able to make time
to join the presidential road show to take this issue to the people,
and he adds a lot of class to the road show I want you to know.
(Laughter.) He's going to down to Louisiana with me a little later on
today. So thanks for being here, Tim.
We're going to start with Mary Hines from -- where you live, Mary?
MS. HINES: I live in Hickory Withe, Tennessee.
THE PRESIDENT: Hickory Withe, that's interesting.
MS. HINES: A very small community. We're unincorporated.
THE PRESIDENT: Sounds like half the town came. (Laughter.) How
many people live there?
MS. HINES: About two or three thousand.
THE PRESIDENT: Yes, that's good, yes. Four times bigger than
Crawford. (Laughter.) Thanks for joining us.
MS. HINES: Thank you, I'm glad to be here.
THE PRESIDENT: Are you receiving any Social Security?
MS. HINES: Yes, I am. I've worked for 40 years as a secretary.
My husband worked 40 years for DuPont. And we're both drawing Social
THE PRESIDENT: And is it important to you?
MS. HINES: It is very important. It is part of our retirement
THE PRESIDENT: Good. Are you worried about the reforms taking it
away from you?
MS. HINES: No, in fact, we -- as we understand it, this is -- the
reforms will not affect us. However, my children -- like you -- are in
the baby boomer era when they retire. So this will affect them
somewhat. But, basically, it will affect my grandchildren and my great
grandchildren. So it's some --
THE PRESIDENT: No, I appreciate -- sorry to interrupt. Now that I
have, I better say something. (Laughter.) She has a vital point.
There are a lot of grandmothers who are justifiably concerned about
what Social Security means to their grandchildren. This is a
generation where Social Security has worked. She and her husband are
getting help from the Social Security system. After all, it's their
money coming back to them.
And I can't tell you how many times I've heard from people once we
have assured citizens that nothing changes for them, that, what are you
going to do about my grandchildren. This is a generational issue. It
is an issue that is very important for members of Congress to
understand that a lot of grandparents care deeply about not only their
own security, but once they're -- once they're assured, they care
deeply about the security of their grandchildren. And I want to thank
you for sharing that with us. (Applause.)
Anything else you want to --
MS. HINES: Well, I look at your chart over here, and I would like
to thank those workers who are helping pay my Social Security right
THE PRESIDENT: That's right. (Laughter.) That would be me and a
lot of other people. (Applause.) Good news is, they're going to keep
paying, and you'll keep getting your check.
Beverly Peterson is with us. She's got a very interesting story.
Ready to go? You look like you're ready to go. (Laughter.)
* * * * *
THE PRESIDENT: Yes, let me -- thank you for sharing that with us.
What Beverly is saying is, is that she was too young for the survivor
benefits and therefore the money that he put into the system -- "he" being the husband -- there was nothing there. And because she has
contributed to the Social Security system, when she retires, you'll get
the benefits because of your check, because of your contributions, not
because of your husband's contributions.
Personal accounts -- think about what personal accounts would have
done for Beverly: the husband works, puts money aside since 16 years
old. What age was he when he passed away?
MS. PETERSON: Forty-nine.
THE PRESIDENT: Forty-nine years old, so that's 33 years of
compounding rate of interest, 33 years of that money set aside would
grow. And when he passed away, there is an asset base for Beverly that
she gets, and she can live on it, it'll help her transition to her days
of retirement. In other words, that's one of the benefits of being
able to accumulate your own assets that, as Tim said, you call your
own. And when it's your own asset, you can pass it on to whomever you
The system is an important system today, but it has got holes in
the safety net. And one of the holes in the safety net is a widow like
Beverly did not have any assets when her husband passed away.
Thank you for sharing that story with us. Good job. (Applause.)
Pastor Andrew Jackson. Welcome, Pastor Jackson.
PASTOR JACKSON: Thank you, Mr. President. I'm delighted to be
here. Thanks for the invitation.
THE PRESIDENT: Well, we're glad you're here. You pastor what
PASTOR JACKSON: Faith Temple Ministries Church of God and Christ.
THE PRESIDENT: Great.
PASTOR JACKSON: My bishop is Bishop G.E. Patterson and --
THE PRESIDENT: Bishop Patterson, a fine man. (Applause.) Good.
How's the congregation doing?
PASTOR JACKSON: Doing quite well. It's kind of like the city bus
-- we have some getting on and some getting off. (Laughter and
THE PRESIDENT: The difference in your case is, the fare is free.
PASTOR JACKSON: Yes, that's true.
THE PRESIDENT: Tell me why you're here. Thanks for coming, I'm
honored. I want to hear your views on Social Security.
* * * * *
THE PRESIDENT: That's called political propaganda.
PASTOR JACKSON: Oh, political -- okay, political propaganda.
THE PRESIDENT: That's what they said when I ran for President in
2000. I actually brought the issue up. They said, if he gets elected,
he's going to take away your check. It didn't happen. Everybody got
their checks. That's why propaganda -- that's empty. That means --
PASTOR JACKSON: It's empty.
THE PRESIDENT: Yes, there's no truth to it. Go ahead.
* * * * *
THE PRESIDENT: See, here's what I like. I like the idea that the
Pastor is thinking about generations to come. And he said, I'm worried
about my grandchildren, my great-grandchildren, and I hope there's a
system that develops that encourages asset accumulation so
generation-to-generation assets can be passed on. That hasn't happened
for many in our history. No, that hasn't been the case throughout the
history of the United States. We haven't encouraged asset
formulation. There hasn't been wealth passed from one generation to
the next in certain parts of our society.
That's just the truth. And it seems like to me that it makes sense
for us to come together and encourage a plan that does just that, that
provides continuity from one generation to the next when it comes to
assets. We want people owning something. I don't care where they're
from, what political party they associate with, what neighborhood they
live in. The more people own something, the better off America is, and
the ability to pass assets from one generation to the next is an
important part of our legacy. (Applause.)
Let me tell you one other thing, and then we've got two other
panelists here. This system -- and I want to work with members of both
parties to make sure this system takes care of our poorer workers. In
other words, we can design the benefit structure for that which exists
in a way that recognizes some people work all their life and will have
to live below the poverty level upon retirement. And we don't want
that in America. There are ways to make sure this system provides a
solid safety net.
Tim understands that. Harold understands that. All of us can work
on this system. So I want to assure you, Pastor, that not only will
the system encourage asset accumulation, but we want to make sure that
whatever Social Security system exists, that when we permanently fix
it, that people are given a true safety net, that the whole is fixed in
the safety net, and that there is a safety net for retirees.
Harry Summer. Harry, thanks for coming.
MR. SUMMER: Thank you, Mr. President.
THE PRESIDENT: I understand you were a professor at one time.
MR. SUMMER: Yes, sir, I was a professor of marketing for 35 years
at the University of Memphis. (Applause.)
THE PRESIDENT: Oh, fantastic. Well, you're watching me market.
That's what I'm doing right now. (Laughter.)
MR. SUMMER: Well, I have a few students in the audience, as well,
I'm sure. But it occurred to me -- I'm worried about this young lady
here, not myself.
* * * * *
MR. SUMMER: This morning about 4:15 a.m., I woke up. I had --
talked about compound interest. And you can talk about it, but I
decided I would give a concrete example, so I went to my computer and
worked on it for about 30 minutes -- longer, I think, than that. But,
THE PRESIDENT: See, I accused him of being one of the revelers
outside my hotel room. (Laughter.) He assured me he was on his
MR. SUMMER: Well, it's a lot easer to do it on the computer, than
it is to do it by hand.
THE PRESIDENT: That's right.
* * * * *
THE PRESIDENT: Yes, see what -- and that's four times the amount.
In other words --
MR. SUMMER: That's four times.
THE PRESIDENT: -- the increase was four times the amount of what
the investment was because of the growth. Your money grows. And,
again, I repeat, people are going to say, well, they're going let them
put it in a risky adventures; it's risky to invest money. No, it's
not. It's a much better rate of return than the Social Security trust
today. And that's -- what's risky is to leave your money in there and
do nothing. That's what's risky, particularly for younger Americans.
MR. SUMMER: Yes.
THE PRESIDENT: Karen Siegfried. Thank you very much. Karen, here
you are, got a bunch of older folks here on the stage.
MS. SIEGFRIED: That's okay.
THE PRESIDENT: It's good. Give us your story.
MS. SIEGFRIED: Well, the reason he's so concerned about me is
because he's my grandfather, so that -- (applause.) He's got a little
* * * * *
THE PRESIDENT: You know, somebody told me one time -- they took a
poll amongst 20-year-olders, and 20-year-old people said they thought
it was more likely they'd see a UFO than get a Social Security check.
(Laughter.) Interesting dynamic, isn't it? A lot of people say
20-year-olders don't care about the issues. And part of my job is to
make sure that they understand the facts, because once people realize
-- once the seniors realize nothing is going to change, once Congress
realizes there are a lot of grandfathers wondering about their
granddaughters and their future, once 20-year-olders and 30-year-olders
start to say, wait a minute, now this is a problem, what are you going
to do about it? Those are the dynamics to get something done.
I presume you expect Congress to get something done now, before
it's too late.
MS. SIEGFRIED: Yes, I do.
THE PRESIDENT: Well, listen, I want to thank our panelists for
coming. I thought this was an interesting dialogue. Good job.
(Applause.) I want to thank you all for giving us a chance to come
report about this important issue. I'm looking forward to working with
Congress. I expect there to be a civil dialogue and honest debate.
All ideas should be on the table. The American people are going to
influence the outcome of this debate.
I want to thank the good people of Memphis for letting me come by
and visit with you about it. I want to assure you, I will continue
traveling our country, asking people to be involved, getting people to
write their congressmen and senators to say, get rid of the
partisanship, sit down at the table and modernize this system for
generations to come.
God bless, and thanks for coming. (Applause.)
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