Social Security Reform
March 21, 2005
Thanks for coming. Thanks for the warm welcome.
Thanks for greeting me and Senator McCain. He's up here to claim some
water, he said. (Laughter.)
AUDIENCE: Ooooh --
THE PRESIDENT: Never mind. Just an inside joke that didn't work.
(Laughter.) But we appreciate you coming today. We're going to have a
serious dialogue on Social Security. It's an issue that requires a lot
of dialogue and a lot of discussion. And so I want to thank our
panelists for joining us. I want to thank you all for your interest in
Before I begin I do want to thank Governor Bill Owens and Frances
for joining us today. Good to see you all. (Applause.) Congressman
Bob Beauprez is with us. Good to see you, Congressman. Thank you,
sir. (Applause.) Congressman Joel Hefley, from down the road, is with
us. (Applause.) Lt. Governor Jane Norton is with us. Thanks for
coming. (Applause.) The Attorney General of the great state of
Colorado is with us. Thanks for coming, General Suthers. (Applause.)
Mark Hillman is with us; Joe Stengel is with us; a lot of people are
with us. (Applause.) We appreciate you being here.
I hope you've been as impressed by the spread of freedom as I've
been. We believe in America that freedom is not America's gift to the
world, but it's the Almighty's gift to every person in the world.
That's what we believe. (Applause.) And we shouldn't be surprised. I
know some of us were surprised, but we shouldn't be surprised when
people are willing to take risk for freedom. If you believe that
freedom is etched in every person's soul, then you understand why, in
Afghanistan, for example, millions of people, after having been freed
from the Taliban, were willing to go to the polls, were willing to say,
we're free and we want to exercise our right.
The same thing happened in Ukraine. The same thing happened in the
Palestinian Territories when they voted for President Abbas. I believe
he's committed to democracy. I believe the march of freedom will
extend to the Palestinian Territories so that our friend, Israel, will
have a partner in peace, a true democracy in the Palestinian country.
John recently went to Iraq. He was telling me what amazing place
Iraq now is. How many times you been there? Two or three times --
twice. Things have changed, and things changed not because,
necessarily, our decisions; things changed because of courageous Iraqis
that were willing to go to the polls in the face of incredible threat,
but they wouldn't be denied because people do want to be free.
And it's important for the youngsters here to understand that the
march of freedom will yield peace, the peace we want. Free societies
are peaceful societies; free societies are hopeful societies; free
societies are the best way to defeat the dark vision of the
terrorists. And so for the next four years, I look forward to working
with friends and allies to continue the march of freedom for the sake
of peace. (Applause.)
I appreciate the fact that the unemployment rate here in Colorado
is 4.9 percent. The environment -- entrepreneurial environment here is
strong, and that is good. We've got to keep policies in place to make
sure our economy grows. I am concerned, I know you're concerned, about
the price of gasoline. You're beginning to see the fact that we
haven't had an energy policy in the United States at the pump. I know
we need to encourage conservation. I know we need to find alternative
sources of energy. I hope someday we can use biodiesel to make us less
dependent on foreign sources of energy. I know we need to use our
technological capacities not only to protect the environment, but to
make us less dependent on foreign sources of energy. I know we need to
modernize our electricity grid.
In other words, Congress needs to stop debating the energy bill. I
know what we don't need -- with the price of energy the way it is, I
know we don't need tax breaks for oil companies. What we need is an
energy plan, in order to make sure this economy continues to grow.
Congress needs to pass the bill. (Applause.)
But today we're going to talk about Social Security. It's an issue
that some are saying, why would you want to talk about Social Security,
it's a tough political issue. I believe, John believes, people here
believe that now is the time to confront a problem, not to pass it on
to future Presidents and future Congresses. I mean, if you see a
problem, I believe it is incumbent upon a leader to confront that
And let me tell you what I think the problem is. The problem is
Social Security has changed since the day that Franklin Roosevelt first
thought of it. It has changed because a lot of baby boomers like me
are getting ready to retire, and we're living longer, and we've been
promised more benefits, but fewer people are paying into the system.
We're having less kids.
In 1950, 16 workers were paying for every beneficiary. Today, 3.3
workers are paying for every beneficiary. When younger people start
getting ready to retire, it's going to be two workers paying for every
beneficiary. Fewer people paying for more baby boomers like me, who
are living longer and have been promised greater benefits. What's
changed is the math. What hasn't changed is the importance of having a
good retirement system.
Franklin Roosevelt ought to be applauded for putting a safety net
in place for our seniors. This President and the Congress -- many in
the Congress understand that safety net has got a hole in it. And
we're here to talk about how to mend the hole. You see, when you see a
problem, I think it's necessary to confront the problem. Because
there's fewer workers paying into the system, the Social Security
system will go into the red in 2018. That means more money will be
going out than coming in.
Now, you probably think -- some of you may think there's what they
call a Social Security trust: the government collects the money for
you, we hold it for you, and when you retire, we pay it to you. But
that's not how it works. You pay your payroll tax; we pay for the
people who have retired, and if there's any money left over, we spend
it on government. That's how it works. And what's left is an empty
IOU, a piece of paper. Because it's a pay-as-you-go system, when more
retirees start retiring, who are living longer, getting paid more, more
money starts going out than coming in.
In 2027, that deficit will be $200 billion, and growing greater
every year. From 2018 to 2042, the deficit increase every year, the
amount of money going out relative to the money coming in. And that's
the problem. We're fine. I'm going to say it once, I'm going to say
it as many times as I can: Seniors here in this audience and listening
on TV must understand, nothing changes, you're going to get your
check. When you hear us talking about Social Security, you must
understand that nothing will change for you. For those of us born
prior to 1950, the system will not change. The fundamental question
is, how -- what are we going to do about the next generation coming
up? Are we going to saddle them with a huge deficit in Social
Now, that's why I went to the Congress during the State of the
Union and said, we've got a problem. I spent a lot of time describing
the problem, but I also said, I'm willing to listen to any solution.
I'm willing to say, you've got an idea, bring it -- bring it forward.
As a matter of fact, I think I might have been the best President --
first President ever to say, here are some ideas for you. (Applause.)
First President. (Laughter.) No, no, no, forget the "best" part.
(Laughter.) First President. (Applause.) Forget it. Just because
you've got a cowboy hat doesn't mean you can stand up and yell.
(Laughter.) Thank you.
I said, put all ideas on the table. It doesn't matter if it's a
Democrat idea, a Republican idea. I'm interested in solving the
problem. And I'm interested in solving it permanently. We don't need
a temporary fix. Earlier today in Arizona we were talking about the
fact that in 1983, President Reagan and Tip O'Neill and Bob Dole and
others stood up and said, there is a problem; let's come together. And
the spirit was an important spirit. But they said it was a 75-year fix
at the time. And because the math has changed, baby boomers like me
getting ready to retire, living longer, getting bigger benefits,
because that changed, we're now talking about the issue 22 years
later. It wasn't 75 years; it's essentially less than 75 years.
So you may hear some of them say, well, we've got a 75-year fix for
you. In my judgment, that's not good enough. Now is the time to come
together to fix this problem for generations to come, permanently.
I've got an idea that I think ought to be considered. You've heard
a lot about it. It's called personal savings accounts. (Applause.)
It wasn't my idea. As a matter of fact, this is an idea that's a part
of 401(k)s, for example. You get to set aside some of your own money,
you manage it in a conservative mix of bonds and stocks. It wasn't my
idea; as a matter of fact, the federal government thought of this a
long time before I did, and that is federal workers ought to be allowed
to take some of their own money and set it aside in a federal thrift
savings plan where you can invest it in a series of bonds and stocks.
And the reason why people thought that was a good idea is because
they understand that you can get a better rate of return on a
conservative mix of bonds and stocks than you can if your money is held
by the federal government. And that rate of return is important for
the individual worker, because over time that grows. It grows -- it
compounds. It's called the compounding effect of interest.
Now, let me give you an example. If you were to allow a worker
that made $35,000 over his or her lifetime to take a third of their
payroll taxes and put it in a personal savings account, and invest it
in a conservative mix of bonds and stocks, by the time that person
retired, that money would have grown to be a quarter of a million
dollars. In other words, that's how interest grows. That's how money
-- that's how money compounds over time.
Now, when it comes time to fixing the Social Security system, you
got to understand the government can't keep the promises it made to
young workers. And so one way to allow young workers to get a better
deal from a permanent fix in the Social Security system is to let them
take some of their own money and watch their own money grow, to be a
part of a retirement system. In other words, you're going to get a
check from the Social Security system. They can't tell you how much
yet. But you know you can get a check plus your own asset base if you
allow people to have a personal savings account.
Secondly, I think it's important for a society to encourage
ownership. I love the idea that more people are owning a home than
ever before in our society today. (Applause.) I like it when I hear
somebody say, I own my own business. The entrepreneurial spirit is
strong in Colorado. We got more people owning their own business. I
think it makes sense to encourage people to manage their own asset base
through the Social Security account. I like the idea of people opening
up their quarterly statement and saying, well, here's how -- here's my
-- here's what my worth is. Watching something grow. Certainly make
people more interested in the fiscal decisions of the federal
government when they watch their own assets.
I like the idea of saying that you can have your own asset and you
can pass it on to whomever you want. (Applause.) I don't think the
system is fair for a couple who are working all their lives and the
husband dies early, and the wife has got either survivor benefits or
her own Social Security benefits, whichever is higher, but not both.
Think about that kind of system. Both of them work their life -- we
met a woman today whose husband died at 55. He had worked 30 years of
his life, put money in the Social Security system. Upon his death, she
got no benefits because she wasn't 62. They did pay $255 of burial
benefits. He worked all his life; the wife gets $255 out of it. She
retires at 62, gets a bigger check than the survivor benefits. And so
the husband's contributions in the Social Security have just gone
That's not a fair system. A fair system said that this younger
worker, at the time, when he was younger, should be allowed, upon his
choice -- this is a voluntary program, by the way; the government is
not making you set aside money; you can do it if you want -- should be
allowed to set aside some of his money, in this case. It grows. Upon
death, the money goes to the wife. That's fair. It's an asset.
A couple of points I want to make, and then we're going to turn to
the panel. Laura told me, don't talk too much. (Laughter.) She
obviously failed. By the way, she's doing great. She's a fabulous
People say, what are these -- what does this mean, investing?
Well, you can't put it in the lottery. In other words, there's a
prescribed investment portfolio, just like the federal employees do.
There's a conservative mix that will get you a better rate of return
than what your money is getting at the -- in the federal government.
Secondly, when you retire, you can't pull all your money out. In
other words, it's there to help you retire. The capital stays in place
and you live off the interest, plus whatever the Social Security system
But thirdly, you can leave it to whomever you want, and your heir
can liquidate your personal account. That would help the widow, for
example, or a child getting ready to go to college if the mom or dad
dies. In other words, this is a way to not only encourage ownership,
but it's a way to encourage asset formation for the families of
America. We want more people -- more people, from all walks of life,
being able to say, this is my asset and I choose to leave it to my son
or daughter. (Applause.)
Lee Abdnor is with us. Every panel has got to have an expert. In
this case, we've got a lot of experts -- except for me and McCain --
(laughter) -- the best Senator. (Laughter and applause.) Lee, tell us
what you do.
MS. ABDNOR: Thank you, Mr. President. My name is Lee Abdnor, as
you said, and I'm from Boulder, Colorado.
THE PRESIDENT: I know some people from Boulder.
* * * * *
THE PRESIDENT: One of the interesting things, Lee -- (applause) --
I thought it was interesting to watch this commission work. Unlike
some parts of Washington, this commission actually said, we're not here
to promote a political party, we're here to help solve a major
problem. And it's that spirit -- Senator Moynihan did a fabulous job,
by the way, of leading this commission, God rest his soul. But he
said, look, we're not here to promote any individual person or
candidate or party, we're here to do our duty as Americans. It is the
spirit of this commission -- in other words, people can sit at the
table saying, I want to hear your idea, bring forth your idea, every
idea ought to be considered -- it's that spirit that now needs to take
hold in Congress. The American people don't want to see partisan
bickering on this -- on this issue. They want to see people come
together and solve it once and for all. And I want to thank you, Lee,
for being here. (Applause.)
Somebody who understands that -- somebody who understands the
spirit of working together is John McCain, the Senator from Arizona.
Thanks for coming, Senator.
SENATOR McCAIN: Thank you, Mr. President. Thank you all for
coming today. (Applause.) It's a pleasure to be here to visit our
water. And I thank you for the opportunity. (Laughter.) Remember, we
have so little water in Arizona, the trees chase the dogs, so please
send as much as you can. (Laughter.) I'm very happy to with all of
you today. Let me just if I could --
THE PRESIDENT: Trying to get back?
SENATOR McCAIN: Pretty good, huh? Not bad.
THE PRESIDENT: It's the tree and the dog thing that got us. We're
trying -- (laughter.)
SENATOR McCAIN: I have more. (Laughter.)
* * * * *
THE PRESIDENT: All right. Norm Mossoni -- glad you're here,
Norm. Where do you live?
MR. MOSSONI: I live in Louisville, Colorado. I was born in -- I
was born and raised there, and I'm still there.
THE PRESIDENT: Really? (Applause.) You were born in Louisville
how many years ago, if I might ask?
MR. MOSSONI: Well, not many, back in 1919, somewhere.
THE PRESIDENT: 1919. That's a long time ago. (Laughter.) Do you
get a Social Security check? You qualify. (Laughter.)
MR. MOSSONI: Absolutely. And actually, Mr. President, it is a
kind of a significant part of my retirement program, along with the
other things that I was fortunate enough to be aware of and prepare for
so that it is not a full pension -- it's a cushion. You've got to have
THE PRESIDENT: Right. But you're counting on it?
MR. MOSSONI: Absolutely.
THE PRESIDENT: There's a lot of people like Norm counting on their
check. And I understand that, and John understands that, members of
Congress understand that. Social Security is important for a lot of
people, and as this debate goes on, I want the people who depend upon
Social Security to understand you're going to get your check. Is that
-- I hope you understand that, Norm.
MR. MOSSONI: Oh, I absolutely understand it. (Laughter.)
THE PRESIDENT: Because if you didn't understand it, then I'm not
making myself clear. (Laughter.) And I'm going to keep making myself
clear until people -- the seniors of this country can relax about this
Keep going. You're on a roll. (Laughter.)
* * * * *
THE PRESIDENT: He's concerned about his grandchildren enough that
he invited his granddaughter, Joleen. This is a generational issue,
folks. The generation of Norm and my generation, you won't have
anything to worry about. But there's a lot of grandparents who, once
they understand that, start saying to the Congress and the President,
how are you going to protect my granddaughter? What are you going to
do about my children? What are you going to do about my
grandchildren. And that's what this issue -- this is a generational
issue. This is an issue that recognizes the importance of -- this
generation understands the importance of Social Security. But we also
understand we better do something about it for the generation coming
Joleen, thanks for coming. Twenty-one years old, sitting right
here with the President and the Senator, right on the stage.
(Applause.) You are a student, where?
MS. MOSSONI: I'm a student at the University of Colorado, a junior
studying political science.
THE PRESIDENT: Good. Yes, well, this is a little political
science exercise right now. This is called, taking the message to the
people. (Laughter.) Because I believe the people will influence the
outcome of this debate.
Here's your chance to influence the outcome of the debate.
* * * * *
THE PRESIDENT: Right. Well spoken. (Applause.) Somebody told me
about a survey once that said 20-year-old Americans believe they're
more likely to see a UFO than get a check. (Laughter.) It's an
interesting dynamic, isn't it? (Laughter.) Think about the political
dynamic there. Once seniors realize nothing is going to change for
them, 20-, 30-, 40-year-old Americans are going to have an enormous say
in this debate. You need to say loud and clear, we got a problem, are
you -- do you have the political will to fix it for me.
And I appreciate the idea. I tell you another interesting thing.
I know when McCain and I were coming up, we weren't talking about
personal accounts or investing our own money. But there is an
interesting culture in America. There's a 401(k) culture. There's a
group people who are now used to managing their own money. There's a
lot of personal involvement in the marketplace from people of all walks
We're not trying to invent something new. We're trying to take
what has become a reality and extend it to a government program. Seems
like to me that 401(k)s are working. A lot of people like them. A lot
of people are comfortable with them. Why don't we take that same
concept about giving workers the option of taking some of their own
money and investing in the market so, as John said, they can get a
better rate on their own money. It's not the government's money to
So thanks, I appreciate that very much. (Applause.)
Speaking about 401(k)s, or 403(b)s -- which is the 401(k)equivalent
for the nonprofits, isn't that right, Tricia?
Thanks for coming.
MS. MANLEY: Thank you.
THE PRESIDENT: Tell everybody what happened three weeks ago.
MS. MANLEY: My husband Chris and I just had our first daughter,
THE PRESIDENT: Very good, yes. (Applause.)
MS. MANLEY: She's three weeks today.
THE PRESIDENT: She's here.
MS. MANLEY: She is here, waiting to meet you.
THE PRESIDENT: Good, looking forward to seeing Morgan. Oh,
there's Morgan. Look at her. Oh, yeah. (Applause.) Tell Morgan not
to worry, reform is on the way. (Laughter.)
Go ahead, Tricia.
* * * * *
THE PRESIDENT: Yes, that's an interesting thought. People need to
listen -- people in Congress need to listen. I know a lot of young
Americans aren't supposed to be paying attention to politics they say,
but they are. They're beginning to understand that this is going to be
a problem for generations to come unless we do something.
Now, are you -- a 403(b), which is -- which you invest in, some are
probably worried about, do I have the capacity to invest. There's this
concept of investor class in America, which means only a certain person
is capable. Kind of an interesting point of view. I, frankly,
disagree with that. I totally reject that point of view. But in order
to assure people -- I mean, when you start looking at investment
options, did you find it to be rocket science or something difficult?
MS. MANLEY: No, not at all. And, you know, same thing as with
what you're talking about. We have choices. You can't just go out and
dump all your money in the hottest tech stock. You've got a certain
number of limited choices that it's not going to disappear tomorrow.
THE PRESIDENT: Yes. And you get quarterly statements?
MS. MANLEY: Absolutely.
THE PRESIDENT: See, I think it's -- I think it would be a
wonderful way to encourage people to pay attention to their government,
is to open your quarterly statement and say, look at this, look at my
assets. They don't seem to be going up so much; maybe we ought to
change Presidents or something, you know -- (laughter) -- or senators,
whatever the case may be. (Laughter.) Too late, in my case, but
You're on a roll. You're doing great.
MS. MANLEY: At the end of the day, one of the things that's
attractive about the personal accounts is that, even though we've been
paying into the system, and right now we may not see anything, under
those accounts, we would at least get something back from what we've
put in. And the other thing that I really like is that at the end of
the day, there would be something for us to leave to Morgan.
THE PRESIDENT: There you go. Thanks, great job. Thanks for
coming, Tricia. Congratulations. Looking forward to seeing Morgan.
(Applause.) This will be the first time a President has kissed her.
(Laughter.) Looking forward to it. I don't know if she is or not, but
I am. (Laughter.)
Our final panelist is Randy Reed, one of the baby boomers. Randy
and I -- I'm 58, you're 56.
MR. REED: Yes, Mr. President.
THE PRESIDENT: I'm on the leading edge of the baby boomers. As a
matter of fact, interestingly enough, my retirement age comes in 2008.
(Laughter.) Isn't that -- isn't that convenient? (Laughter.) Back to
the trees and the dogs, right? (Laughter.)
What do you do, Randy?
MR. REED: Mr. President, I have a custom picture frame store in
Greenwood Village, Colorado.
THE PRESIDENT: Your own business?
MR. REED: Yes, sir. I own my own business with my wife.
THE PRESIDENT: Classic. (Applause.) She's the boss and you're
MR. REED: I just follow instructions.
THE PRESIDENT: That's good. (Laughter.) Started your own
business, owning your own business -- classic American story, isn't
it. Making a living?
MR. REED: Yes, sir.
THE PRESIDENT: That's good. Why are you concerned, besides -- you
were born before 1950.
MR. REED: I was born -- yes, Mr. President, I was born before
THE PRESIDENT: You're in good shape. Don't worry about it.
* * * * *
THE PRESIDENT: You know, I hear from a lot of small businesses,
and they obviously take great comfort in knowing that at least we're
addressing the issue, trying to solve the problem. Can you imagine
being a small business like Randy's who puts a lot of money into the
payroll tax -- pays a lot of payroll tax, the company portion of
payroll taxes, thinking that, well, maybe there won't be a system for
the people that I'm contributing toward. And so one of the things that
will help the entrepreneurial spirit, at least help the small
businesses to know, that we've got the courage to come together to
reform the system so that your contributions will work. That's what
they'll -- they'll do what they're intended to do. And part of the
payroll tax -- the personal accounts coming out of the payroll tax will
obviously be a part of what he's contributing to a worker's -- half of
the worker's payroll tax.
And so this is a big issue for small businesses, folks. I mean,
this is a very important part of making sure that the small business
sector remains strong, that we've got to solve this problem now.
You got anything else to add? Any wisdom? You want to sell a
product or two? You got a chance here. (Laughter.)
MR. REED: Oh, yes. What I would like to say, though, Mr.
President, is that I'm not looking for a Band-Aid effect to this. I'd
like to see a permanent fix for the Social Security Administration.
THE PRESIDENT: Yes, I appreciate you saying that. I think coming
to the table -- when we get people to the table, we're talking
I think that's the spirit of the Congress, don't you, John?
SENATOR McCAIN: Yes, sir.
THE PRESIDENT: Yes. Listen, I hope you've enjoyed this as much as
I have. I want you tell -- I want to tell you something. You can
influence the outcome of this debate; people here in the audience and
people watching on TV can decide whether or not Congress hears the call
-- hears the call that Senator McCain issued, hears the call that I've
issued, hears the call that panelists have issued, which is, look,
we're concerned. We have a problem. Show us that you're capable of
coming together to solve the problem.
My strategy is simple. I'm going to continue to travel this
country, making it abundantly clear the nature of the problem, assuring
seniors that they have nothing to worry about, because I understand
once that sinks in, once people know we have a problem, and seniors
have nothing to worry about, the question from the people were [sic]
going to be, what are you going to do to fix it? And I'm more than
willing to come to the table and listen to ideas.
Today, we discussed some interesting ideas that will help make the
Social Security system work better for the individual, or as John said,
will help make the system connect to a young generation.
I hope -- I'm confident that eventually the will will be there to
get something done. I appreciate so much, Senator, your willingness to
join in this issue. I love the spirit of somebody saying, we're not
going to pass this on. Now is the time to confront the problem. Now
is the time to do our duty as elected officials.
Thank you for your interest in the subject. May God bless you all,
and may God continue to bless our country.
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