George W. Bush on Social Security

President of the United States, Former Republican Governor (TX)

FactCheck: System may pay less, but will not go bankrupt

The President painted a dire picture of Social Security's finances, saying "The system.is headed toward bankruptcy."

"Bankruptcy" is a scary term that Democrats have used too, when it suited them, but it could easily give the wrong idea. Nobody is predicting that Social Security will go out of business the way a bankrupt business does. It would continue to pay benefits -- just not as many.

The President projects that the system's trust fund will be depleted in 2042. After that, the system would have legal authority to pay only 73 percent of currently promised benefits -- and that figure would decline each year after, reaching 68 percent in the year 2075. The Congressional Budget Office doesn't project trust-fund depletion until a decade later, in 2052, and figures that the benefits cuts wouldn't be so severe, a reduction to 78% of promised benefits. But either way, even a "bankrupt" system would continue to provide most of what's promised currently.

Source: FactCheck on 2005 State of the Union Speech Feb 3, 2005

FactCheck: Private accounts are a good bet, not a sure thing

The President did not specify what he would do to fix the Social Security problem. He again urged creation of private Social Security accounts. But those would be of no help whatsoever in shoring up the system's finances. The President made those private accounts sound like a sure bet. History suggests that the President is correct -- the stock market has averaged a 6.8% "real" rate of return (adjusted for inflation) over the past two centuries. The administration says a conservative mix of stocks, corporate bonds and government bonds would return 4.6 percent, even after inflation and administrative costs. And the administration also figures that private accounts would need to generate only a 3 percent rate of return to beat what Social Security provides. But there's no guarantee that history will repeat itself. Markets are inherently unpredictable and volatile. At present, for example, all major stock-market indexes are still well below where they were five years ago. Source: FactCheck on 2005 State of the Union Speech Feb 3, 2005

FactCheck: Only SOME of your personal account is yours

The President glossed over some severely restrictive aspects of the accounts he is proposing, saying flatly "the money is yours." That's not exactly true. The owners of personal accounts wouldn't be able to touch the money while they are working, not even to borrow. The money would remain in the hands of the federal government, which would administer the personal accounts for a fee of about 30 cents per year for every $100 invested.

And even at retirement, the government would control what becomes of the money. First, the government would automatically take back a portion of the money at retirement and convert it to a guaranteed stream of payments for life-an annuity. Only after the combination of traditional Social Security benefits and the mandatory annuity payments from the private account equal the poverty level would any remaining portion in the account be "yours." The President didn't mention the mandatory nature of these restrictions, calling them only "guidelines."

Source: FactCheck on 2005 State of the Union Speech Feb 3, 2005

Social Security system is headed toward bankruptcy

One of America's most important institutions, a symbol of the trust between generations, is also in need of wise & effective reform. Social Security was a great moral success of the 20th century, and we must honor its great purposes in this new century. The system, however, on its current path, is headed toward bankruptcy, and so we must join together to strengthen & save Social Security.

Today, more than 45 million Americans receive Social Security benefits, and millions more are nearing retirement. And for them, the system is strong and fiscally sound. I have a message for every American who is 55 or older: Do not let anyone mislead you. For you, the Social Security system will not change in any way.

In 2018, Social Security will be paying out more than it takes in. And every year afterward will bring a new shortfall, bigger than the year before. By 2033, the annual shortfall would be more than $300 billion. By the year 2042, the entire system would be exhausted and bankrupt.

Source: 2005 State of the Union Speech Feb 2, 2005

Personal retirement accounts for younger workers

As we fix Social Security, we have the responsibility to make the system a better deal for younger workers, and the best way to reach that goal is through voluntary personal retirement accounts. Right now, a set portion of the money you earn is taken out of your paycheck to pay for the Social Security benefits of today's retirees. If you are a younger worker, I believe you should be able to set aside part of that money in your own retirement account, so you can build a nest egg for your own future.

Your money will grow, over time, at a greater rate than anything the current system can deliver, and your account will provide money for retirement over and above the check you will receive from Social Security. In addition, you'll be able to pass along the money that accumulates in your personal account, if you wish, to your children or grandchildren. And best of all, the money in the account is yours, and the government can never take it away.

Source: 2005 State of the Union Speech Feb 2, 2005

Let young people use personal retirement savings accounts

Q: Where do you get the $1 trillion over the next 10 years to continue paying benefits?

BUSH: There is a problem for our youngsters. We'll honor our commitment to our seniors. But for our children, we need to have a different strategy. I believe that younger workers ought to be allowed to take some of their own money and put it in a personal savings account, because I understand that they need to get better rates of return than the rates of return being given in the current Social Security trust.

KERRY: You just heard the president say that young people ought to be able to take money out of Social Security and put it in their own accounts. Now, my fellow Americans, that's an invitation to disaster. The CBO said very clearly that if you were to adopt the president's plan, there would be a $2 trillion hole in Social Security, because today's workers pay in to the system for today's retirees. We're going to protect Social Security. I will not privatize it. I will not cut the benefits.

Source: Third Bush-Kerry Debate, in Tempe Arizona Oct 13, 2004

Social Security privatization will keep the system solvent

Q: Where do you get the money to continue paying Social Security benefits? Are you going to have to increase the deficit?

A: Every senior will still get their checks. There is a problem for our youngsters, a real problem. If we don't act today, the problem will be valued in the trillions. We need to think differently. We'll honor our commitment to our seniors. But for our children and our grandchildren, we need to have a different strategy. Recognizing that, I called together a group of our fellow citizens to study the issue. They came up with a variety of ideas for people to look at. Younger workers ought to be allowed to take some of their own money and put it in a personal savings account, because I understand that they need to get better rates of return than the rates of return being given in the current Social Security trust. The compounding rate of interest effect will make it more likely that the Social Security system is solvent for our children and our grandchildren.

Source: Third Bush-Kerry debate, in Tempe AZ Oct 13, 2004

Allow younger workers to put taxes in a personal account

We will always keep the promise of Social Security for our older workers. With the huge Baby Boom generation approaching retirement, many of our children and grandchildren understandably worry whether Social Security will be there when they need it. We must strengthen Social Security by allowing younger workers to save some of their taxes in a personal account a nest egg you can call your own, and government can never take away. Source: 2004 Republican Convention Acceptance Speech Sep 2, 2004

Personal retirement accounts for young workers

Younger workers should have the opportunity to build a nest egg by saving part of their Social Security taxes in a personal retirement account. We should make the Social Security system a source of ownership for the American people. And we should limit the burden of government on this economy by acting as good stewards of taxpayers' dollars. Source: 2004 State of the Union address to joint session of Congress Jan 20, 2004

Privatize SS while maintaining govt system

The President's plan is to move Social Security from its safe, sleepy, government-run home to higher-yielding private accounts that individuals could help direct. In May 2000, candidate Bush had championed the idea of private accounts. Bush's bridge proposal would mean funding two retirement systems at once. Bush had suggested that workers under about age 50 could set up new accounts--but the benefits promised to older workers and current retirees would be protected. Source: The Price of Loyalty, by Ron Suskind, p.139 Jan 13, 2004

Strengthen & modernize Social Security

Bush believes that we need to explore new ways to ensure that Social Security remains strong and financially secure for America's children and grandchildren. He formed a bipartisan Commission to review Social Security and recommend reforms to put the system on sound financial ground. He has repeatedly stressed the need for modernization of the Social Security System. Bush has also proposed solutions to strengthen pension plans and enhance retirement security for all Americans. Source: Campaign website, www.georgewbush.com Aug 29, 2003

Create Individual Development Accounts with low-income match

Bush supports the creation of Individual Development Accounts, providing savings matches for low-income Americans to accounts that would grow tax-free. His Social Security framework would also give all wage earners the opportunity to invest in financial assets, an opportunity that only half of Americans can now afford. The tax relief legislation signed into law by the President in 2001 provided almost $50 billion dollars of tax relief over the next ten years to strengthen retirement security. Source: Campaign website, www.georgewbush.com Aug 29, 2003

Ensure freedom of choice in retirement planning

The President's proposal would ensure that workers who have participated in 401(k) plans for three years are given the freedom to choose where to invest their retirement savings. The President has also proposed that choice be a feature of Social Security itself, allowing individuals to voluntarily invest a portion of their Social Security taxes in personal retirement accounts. Source: Campaign website, www.georgewbush.com Aug 29, 2003

Minimize investment risk through diversification

The President's proposals would ensure that workers can sell company stock and diversify into other investment options, minimizing their risk. Source: Campaign website, www.georgewbush.com Aug 29, 2003

Strengthen women's retirement via catch up contributions

[Bush's plan] would allow for "catch up" contributions to retirement plans, helping millions of American women who took time out from the work force to care for dependent family members. Bush's Commission recommended improving the treatment of women through Social Security, via the creation of property rights in a personal account for every woman who experiences a divorce, expanded benefits for widows, and new "anti-poverty" benefit guarantees that would benefit women. Source: Campaign website, www.georgewbush.com Aug 29, 2003

Bush commission members all back privatization

Bush named a bipartisan commission today to study Social Security reform and develop a plan to let workers invest some of their payroll taxes in private accounts. The co-chairman will be former New York senator Daniel Patrick Moynihan, a prominent Democrat who has long urged partial privatization of the government retirement program. The other members of the new commission, all of whom also support privatization, include academics and former lawmakers.

Congressional Democrats immediately complained that the commission is made up only of those who already support Bush’s plan to allow taxpayers to put part of their 12.4% Social Security payroll tax into private retirement accounts. Supporters of the idea say it would allow workers to reap higher returns.

Reforms are needed because the program will go broke by 2037. Opponents call Bush’s plan too risky, especially in light of recent stock market turbulence.

Source: Mimi Hall, USA Today, p. 7A May 2, 2001

Forms presidential commission to reform Social Security

Seven years from now, the baby boom generation will begin to claim Social Security benefits. Social Security is not prepared to fully fund their retirement. Without reform, this country will one day awaken to a stark choice: either a drastic rise in payroll taxes, or a radical cut in retirement benefits. There’s a better way.

It must preserve the benefits of all current retirees and those nearing retirement.
It must return Social Security to sound financial footing.
And it must offer personal savings accounts to younger workers who want them.

Social Security now offers workers a return of less than 2% on the money they pay into the system. To save the system, we must increase that by allowing younger workers to make safe, sound investments that yield a higher rate of return. Source: Message to Congress (Budget outline) Feb 27, 2001

Don’t treat Social Security like it’s a federal program

You know what else has changed on this issue? There are thousands of younger workers who understand that if our government does not think differently, they either are going to have to pay huge payroll tax increases or have major reductions in benefits. It doesn’t have to be that way. We trust individual workers, and so our plan says we’re going to keep the promise to our seniors. But we’ll allow younger workers at their choice to invest some of their own money in the private markets to get a better rate of return so that the Social Security promise will be kept.

And this frightens some in Washington. Because they want the federal government controlling the Social Security like it’s some kind of federal program. We understand differently though. You see, it’s your money not the government’s money.

Source: Speech in St. Charles, MO Nov 2, 2000

Set aside $2.4T for seniors as well as younger workers

I’m going to set aside $2.4 trillion of Social Security surplus. That’s $2.4 trillion more in payroll taxes than we owe the seniors, which means there is a really interesting opportunity to make sure we not only fulfill the promises to the seniors but we have a social security system that is hopeful for younger workers. We must let younger workers take a portion of their payroll taxes and put it in the marketplace. The agents of the status quo have misread the people. Source: Speech in Florida Oct 26, 2000

Young workers want to invest some Social Security money

[We want] to give younger workers the option at their choice of being able to manage some of their own money in the private sectors to make sure there’s a Social Security system around tomorrow. There’s a lot of young workers at our rallies we go to, that when they hear that I’m going to trust them at their option to be able to manage, under certain guidelines, some of their own money to get a better rate of return so that they’ll have a retirement plan in the future, they begin to nod their heads. Source: Presidential debate, Boston MA Oct 3, 2000

Prohibit govt investment in the stock market, private OK

would “modernize” by allowing workers to put a share of the payroll tax into individual accounts
supports a bipartisan commission to create consensus on reform
would preserve the present disability and survivors’ benefit
supports maintaining the existing system for those at or near retirement
wants to prohibit government investment in the stock market
promises not to raise the payroll tax

Source: The Economist, “Issues 2000” Sep 30, 2000

Blueprint: Maintain retiree benefits; young get more options

Guarantee the current level of benefits for seniors. No change in benefits for those who are retired or nearing retirement.
Allow the choice of personal savings accounts.Allow younger workers to build real savings by voluntarily setting aside a portion of their payroll tax into a personal savings account.
“Lock-box” the Social Security surplus.
Rule out any Social Security tax increases.

Source: Blueprint for the Middle Class Sep 17, 2000

I will touch the third rail so I can fix it

Social Security has been called the “third rail of American politics” -- the one you’re not supposed to touch because it shocks you. But, if you don’t touch it, you can’t fix it. And I intend to fix it.

To seniors in this country: You earned your benefits, you made your plans, and President George W. Bush will keep the promise of Social Security. No changes, no reductions, no way.

For younger workers, we will give you the option -- your choice -- to put a part of your payroll taxes into sound, responsible investments. This will mean a higher return on your money, and, over 30 or 40 years, a nest egg to help your retirement, or pass along to your children.

When this money is in your name, in your account, it’s not just a program, it’s your property. Now is the time to give American workers security and independence that no politician can ever take away.

Source: Speech to Republican National Convention Aug 3, 2000

Open questions: transition costs & bad investors bailouts

Bush	Gore
Allow investing an unspecified amount of payroll taxes in the stock market. Does not preclude decreasing guaranteed benefits for future retirees.	Use the federal budget surplus to pay down the debt and use the interest saved to keep Social Security solvent. Subsidized retirement savings plan open to families earning up to $100,000 a year.
Unanswered questions
Will the government bail out people who make poor investment decisions? What about the costs of making the transition to & then maintaining the accounts? If some payroll taxes are diverted to private accounts, how will the government make up the difference for current retirees?	What if future administrations don’t display the kind of fiscal discipline Gore’s plan requires? What if the projections of budget surplus money to pay down the debt doesn’t come true?

Source: Associated Press in Boston Globe, p. A10 Jul 5, 2000

Maintain basics of government’s “most successful program”

Social security is the single most successful program in government history. [But] within two decades, there simply won’t be enough younger workers to pay the benefits earned by the old. For those on social security-or close to receiving it-nothing will change. In my economic plan, more than $2 trillion of the federal surplus is locked away for social security. For years, politicians have dipped into the trust fund to pay for more spending. And I will stop it. Source: Speech in Rancho Cucamonga, in “Renewing America’s Purpose” May 15, 2000

2% real return is not enough; sound investments get 6%

Reform should include personal retirement accounts for young people. Right now, the real return people get from what they put into social security is a dismal 2% a year. Over the long term, sound investments yield about a 6% return. American securities markets, over time, have been among the most reliable investments in the world. I trust Americans to manage their own money. Everyone should be a part-owner in the American dream. Source: Speech in Rancho Cucamonga, in “Renewing America’s Purpose” May 15, 2000

Support retirement via government-plus-private system

We must not change Social Security for those now retired, or nearing retirement.
All Social Security funds in the federal surplus must stay where they belong, dedicated to Social Security.
The payroll tax must not be raised. We cannot tax our way to reform.
Reform should include personal retirement accounts for young people. A young worker can take some portion of his or her payroll tax and put it in a fund that invests in stocks and bonds. We will establish basic standards of safety and soundness, so that investments are only in steady, reliable funds. Money in this account could only be used for retirement, or passed along as an inheritance.

Source: Speech in Rancho Cucamonga, in “Renewing America’s Purpose” May 15, 2000

Privatize Social Security to take advantage of stock market

Gore accused Bush today of devising a “secret plan” that could bankrupt the Social Security system. Gore asserted that Bush was quietly developing a “risky” plan to allow individual investment accounts in Social Security that would jeopardize millions of taxpayers’ savings. “How does the Bush plan propose to deal with the bankruptcy of Social Security that his privatization scheme would cause? He doesn’t even bother to provide an answer.”

Under Bush’s proposal, taxpayers would be allowed to invest a small part of their Social Security payroll taxes in the stock or bond markets. Bush’s aides argue that such a plan would help taxpayers take advantage of the stock market’s historic growth.

But Gore asserted today that the plan would make the system vulnerable to huge market fluctuations that could hurt millions of retirees. And as he has repeatedly done in recent days, he suggested that Mr. Bush was charting a course that was “reckless” and “irresponsible.”

Source: James Dao & Frank Bruni, Associated Press May 4, 2000

No government investment in private stocks or bonds

Pledged to fulfill the solemn commitment of Social Security; no reduction in benefits for retirees or near retirees
Called for dedicating all Social Security money to Social Security (lock box)
Opposes any tax increase for Social Security
Supports making personal retirement accounts part of Social Security reform
Opposes government investment in private stocks or bonds

Source: GeorgeWBush.com: ‘Issues: Policy Points Overview’ Apr 2, 2000

Consider raising retirement age

Bush said he would consider raising the retirement age for Social Security benefits as a way to help extend the life of the ailing program. Source: CNN.com, “GOP Arizona Debates” Nov 22, 1999

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