President Bush Launches Social Security Campaign
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GWEN IFILL: President Bush, stepping up his effort to revamp the Social Security system, today made the political case for immediate action.
PRESIDENT GEORGE W. BUSH: You know, I know this is an issue that some would rather not be talking about. It’s an issue that is kind of … I think some think it’s got too much political danger attached to it. That’s not what I think.
And today I want to talk about why we have an issue with Social Security, why I believe those of us who have been elected to office have an obligation to do something about it. By the time today’s workers who are in their mid-20s begin to retire, the system will be bankrupt.
So if you’re 20 years old, in your mid-20s, and you’re beginning to work, I want you to think about a Social Security system that will be flat bust, bankrupt, unless the United States Congress has got the willingness to act now.
GWEN IFILL: Social Security’s actuaries estimate that by the year 2042, the system will only be able to pay beneficiaries about 72 percent of the benefits currently promised them.
That’s because the system will begin paying out more than it takes in by the year 2018. The president has argued that part of the solution is allowing younger workers to invest a portion of their benefits in private accounts.
PRESIDENT GEORGE W. BUSH: A personal savings account which would earn a better rate of return than their money currently held within the Social Security trust. A personal savings account which will compound over time and grow over time. A personal savings account which can’t be used to bet on the lottery or, you know, a dice game or the track, in other words, there will be guidelines.
GWEN IFILL: Powerful interest groups like the AARP have opposed that approach, arguing it would put the poor at risk. But today in Washington, in front of an audience of invited supporters, there was only agreement.
JOSH WRIGHT, Farmer: I’ve spent my whole life — my younger years, I guess — being taught to be independent, to be … to provide for myself and my wife now and my little 2- year-old son.
And this personal retirement plan would offer me a little bit more stability for myself and my family, whereas with the Social Security now I don’t know where it would be when I retire.
AD VOICEOVER: It took courage to create Social Security. It will take courage and leadership to protect it.
GWEN IFILL: An aggressive campaign is now under way to win support for the president’s approach. This ad, airing in select markets, was produced by Progress for America, a pro-Bush political group. Even callers to the Social Security administration headquarters hear this recorded message:
RECORDED MESSAGE: Did you know that the 76 million strong baby boom generation will begin to retire in about 10 years? When that happens, changes will need to be made to the Social Security system, changes to make sure there’s enough money to continue to pay full benefits. Most experts agree, the sooner those changes are made, the less they are going to cost.
GWEN IFILL: The cost for the changes the president proposes has been pegged at $2 trillion or more over 10 years, which some within the administration have suggested be paid for by cutting the rate of growth for future benefits.
In Congress, Democrats have resisted the president’s proposals, and the prospect of cutting benefits has unsettled some Republicans as well. President Bush is expected to release the details of his proposal to Congress by the end of next month.
GWEN IFILL: The debate over Social Security’s future is a one of long standing in Washington. So how urgent is the problem the president is now describing?
For that, we turn to David Certner, director of federal affairs for AARP, a membership organization that serves people age 50 and over, and Pat Toomey, president of the Club For Growth, a membership organization that backs economically conservative candidates.
David Certner, we just heard what the president said and it seems that there’s a basic disagreement at work here about exactly how big a crisis this is or how big a problem, to use the president’s chosen word, it is. What would you say?
DAVID CERTNER: I don’t think there’s really any disagreement over the fundamental numbers, we have the Social Security trustees and the Congressional Budget Office, the two score-keepers, actuaries who tell us what the system is really doing financially.
And those are the numbers we all work off. Now both of them say that Social Security has sufficient money to pay full benefits for about four more decades and three quarters of benefits after that time. We know we have a long term challenge with Social Security and it’s a good challenge, because people are living longer, but we’re certainly not in any crisis today.
Social Security is bringing in over $150 billion more this year than is necessary and that will continue for at least another decade. So we have a long term problem, and the sooner we deal with, of course, the easier it will be to deal with.
GWEN IFILL: Pat Toomey, a long term problem but not an urgent one?
PAT TOOMEY: Right now we’ve got a system that’s promising young workers often a negative rate of return or a very modest zero or one percent, and it’s a promise that we know the system cannot deliver on.
We know that within just 14 years, the revenue from the system will not be enough to pay promised benefits, and we know that if we look over the next 75 years, the difference between promised benefits and anticipated revenue is a short fall of $12 trillion — four times our national debt. I think that constitutes a crisis we need to act on now.
GWEN IFILL: Is it more of a crisis than the Medicare prescription drug plan which costs more money than that, or the tax cuts that the president has proposed?
PAT TOOMEY: Well, I mean, let’s look at the tax cuts. The tax cuts have helped us get to this really strong rebound in our economy. The economy has been performing extremely well.
Housing starts are strong, homeownership is tremendous, unemployment is down, job creation is up; productivity is growing. Thank goodness we got the tax cuts; that’s helping our economy to grow. Medicare is a big problem unto itself, and in fact one that has a real urgency to it as well.
But you know there’s a tremendous benefit that we haven’t talked about that much to Social Security reform and that is to give younger workers the opportunity for the first time in our country, low and modest income younger workers, the opportunity to accumulate wealth that they would own and control. I think there’s tremendous up side in this.
GWEN IFILL: David Certner, what about that, this idea, this chance to create wealth among younger less economically advantaged workers, the sort of thing the president is talking about, what’s wrong with that?
DAVID CERTNER: Well, there’s nothing wrong with having savings and investment for retirement, we strongly support large private retirement systems we’ve put in place today. We have trillions, trillions of dollars today in 401-K and IRA accounts; these are systems that we have supported expanding and getting people into.
We supported recently the adoption of a savers tax credit for moderate-income people so that they can save additional monies for retirement. We think these savings are a necessary and important for secure retirement. The problem is here some are proposing that we take away from Social Security in order to incur additional savings.
GWEN IFILL: How does this take away from Social Security?
DAVID CERTNER: Well, what we’re talking about here are taking payroll tax money away from Social Security and putting it into private savings. We think that’s a mistake, we think we already know that Social Security is running a long-term shortfall.
The last thing we want to do is start taking money away from Social Security. We’re going to need that money to pay current benefits. We need to encourage saving and investing on top of and in addition to Social Security so we can have a secure retirement.
Social Security is about security, and making sure you have a predictable source of income. That’s what that system is about. The higher private retirement system, IRA’s and 401-Ks, and other savings plans that’s designed to build wealth and have additional monies on top of Social Security.
GWEN IFILL: Mr. Toomey.
PAT TOOMEY: Well, if I could, the problem is that half of all Americans don’t make enough money and save enough to be able to have 401-K and retirement plans, and I wish they could, but the reality is we take so much in taxes that they have nothing left over after they’ve paid the bills.
As far as what we’re guaranteeing in Social Security, what we’re guaranteeing to younger workers is that they will get back less from the system than they put into it. Now, that’s just unconscionable. The average person works for about 40 years, sometimes 45 or longer.
And to suggest that a person ought to be made to pay into a system each and every year and then get back less than they put in, I think is just terribly unfair. It’s an opportunity –.
GWEN IFILL: Mr. Toomey, let me ask you about a political reality here. We’ve debated private accounts many times on this program, and will again, but I’m curious about the political reality at work here.
Even people who support your notion of private accounts have said that won’t be enough to fix the problem that the president has outlined and that benefit cuts, or at least restraint in the growth of benefits, are going to be necessary, and that’s where you begin to get people peeling off.
PAT TOOMEY: Well, this is to a significant degree, I think this is a red herring issue. Let’s be very clear about a couple of things. First of all, everybody agreed, everybody agrees that anyone who is at or near retirement gets the full benefit package as is with no changes, nothing contemplated.
This big debate about the rate of growth of future benefits, mind you, nobody is talking about cutting future benefits, it’s a question of whether they grow as fast. But we’re only referring to the government guaranteed portion.
The fact is, if young workers get a chance to make investments over the course of their working careers, they’re going to have much more in accumulated savings, really several hundreds of thousands of dollars for even a low income worker — that this is all a moot point. Those folks are going to have a much more generous retirement benefit than what Social Security currently promises and can’t deliver.
GWEN IFILL: Mr. Certner, is it a moot point? These two – it seems to me almost warring ideas, this idea of restraining future growth versus allowing people to invest on their own now?
DAVID CERTNER: Well, there’s a fatal flaw in the math here. If you take money out of Social Security and then at the same time promise you’re going to continue benefits for those at or near retirement, you have a hole because most of the money today that’s paid into Social Security goes to pay those current benefits.
If you take that money out, you’re going to have to make that money up. It’s an estimated $2 trillion of additional debt over the next ten years. That money has to come from some place. And right now there is no plan in place besides perhaps floating more debt to pay that.
So you’re not dealing with the Social Security issue at all. You’re actually making the Social Security solvency problem worse, while at the same time instead of having a good predictable secure Social Security benefit, you are in essence by changing the Social Security formula, slashing the future Social Security benefit by as much as in half, and hoping that people will be able to make that up in the stock market.
Now, many people may be able to make that up, but we think this is going to create a system of winners and losers, that’s not what the Social Security system is all about. We think that we can take on risk in the private markets for those who want to enter the private markets, but we shouldn’t be forcing low income people into the stock market to try to get returns to make up for a largely slashed Social Security benefits.
GWEN IFILL: Mr. Toomey what do you say to good Republicans like Kemp and Gingrich who also have problems with this proposal?
PAT TOOMEY: Well, let’s keep in mind that Newt Gingrich and Jack Kemp, their proposal that they’re advocating, there’s an awful lot they agree with me and many other Republicans.
The most important thing is to allow all workers who choose to, especially young workers, the opportunity to accumulate real savings and have significant personal savings accounts.
As I said, the other points I think are much less important, because, you know, some people I guess don’t seem to want to acknowledge this, but over long periods of time the American financial markets always generate positive returns, they always have, for over 200 years.
There’s no reason to think that’s going to change and giving young workers and lower income workers who are currently denied that opportunity the chance to cash in on that is the most important thing.
And, you know, there will be differences of opinion, if some of the mechanical elements to this and some of the formulas that get used. But the important thing that most of us agree on is give workers the opportunity to accumulate real savings.
GWEN IFILL: Mr. Certner, both you and Mr. Toomey spend a lot of time on Capitol Hill, talking to people about this, trying to get your point of view across.
Right now as you lay out the puzzle before you as you debate this issue in the next few months, what are the challenges and what are the things you need to head off or the alternatives that you need to propose?
DAVID CERTNER: What we see happening right now is where is the American public on this issue, because that largely will determine the outcome of this debate. We know that the Social Security system has a very long track record and is hugely supported by the American public of all ages.
What the problem is today is that younger people in particular do not have confidence that the Social Security system will be there. There’s been a lot of scare tactics to frighten people into thinking that Social Security is going broke and won’t be there. That’s not the case.
There’s a long term shortfall that we think we can deal with, with modest changes. We need to make sure that people understand what kind of shape Social Security really is in, what the changes that will need to take place to make sure the benefits will be there because the American public wants Social Security to be there for them.
No one is demanding change in the Social Security system; what they’re demanding is that the obligation that we have both to current generations and future generations are met and as long as we can make sure that that obligation is met, we don’t need to have any kind of radical changes like are being proposed today.
GWEN IFILL: Mr. Toomey, what do you think about that lack of confidence of Americans? I guess there was a new USA Today poll out today that supported that notion that people are a little, especially younger people are more prone to support the idea of investing their own money, older people are not. There’s a lot of ambivalence that these polls seem to show.
PAT TOOMEY: But there are clear majority of the American public that supports the idea of personal investment accounts. But, look, you know, a 30-year-old, it’s just a rationale decision.
If the system were able to honor the promise it’s making to him, it’s a promise that he’s going to get about a one or a zero percent rate of return on all of his money put in, and as David has acknowledged, the system will not be able to honor that commitment. So what are we going to do? Are we going to raise taxes on that person to make the return even worse or –
GWEN IFILL: That is my question, what are you going to do in the next few months as the debate rages to convince people of your point of view, especially with the political landscape as it is right now?
PAT TOOMEY: I think there’s probably a majority in the House today that would be willing to support the president’s proposal, they need to see the specifics and the president’s leadership is critical. It doesn’t happen without the president stepping up and providing this leadership, and he’s doing that.
As he communicates what this is all about, I think we’ll have the votes in the House, we will have a struggle in the Senate, but I think we can get it done there, and I’m very bullish on this, I think before the year is out we’ll see Social Security reform.
GWEN IFILL: Pat Toomey, David Certner, thank you both very much.