President Discusses Strengthening Social Security in North Carolina
BTI Center For The Performing Arts
Raleigh, North Carolina
11:12 A.M. EST
...So when you think about it, when you add up the equation, you've got more people living longer, receiving greater benefits, being supported by fewer people. And to me, that says, we got a problem. And as a matter of fact, the numbers say that. There is a chart over here that says "Cost of Inaction," because in 2018, the system goes red. That means there's more money going out of the system than coming into the system. The leading edge of baby boomers are retiring; they're living longer; benefit structures are bigger; fewer people paying in — the system goes negative.
Now, some of you probably think there is a kind of — a bank, a Social Security trust bank. But that's not what's happened over time. Every dollar that goes into Social Security has been paid out, either to retirees or government programs. It is a pay-as-you-go system; it is a flow-through system. There is no kind of — there are empty promises, but there's no pile of money that you thought was there when you retired. That's not the way the system works.
So…the 80’s Greenspan commission was an “empty promise”? The surplus paid into the system now doesn’t go to buy US Treasury bonds? Granted, bonds are promissory notes, but according to the Constitution (Am.XIV, Section 4), “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.” Josh Marshall, who deserves a medal of freedom from some other president for investigating this, has pointed out that Bush’s personal fortune is mostly comprised of bonds. The president is saying that the government is going to default on paying the bonds in the Social Security Trust. Is the government also going to default on the bonds that he holds?
To make matters worse, as more baby boomers retire, as people live longer, as more benefits kick in, the cash deficit increases. So, for example, in 2027, the government is going to have to come up [with] $200 billion more to meet the promises that we've made, above and beyond payroll taxes. Every year from 2018 to when the system goes broke in 2042, the cash deficits required to meet promises increase. That says to me we've got a problem.
1. “Promises” as in “Treasury bonds”?
2. Repeat after me: The system will not go broke. Ever. Unless everyone under 65 is wiped out in a cataclysm. Social Security cannot go broke. It can, however, run in the red. And in 2042 it probably will. The system will be short of funds by one third or less. But unless Bush is speaking a different English language than I do (and the campaign made me question that), running a deficit is a far cry from “broke.” If it’s not, then the US government has been broke for ages, except for a couple of Clinton-era years. That is why the national debt is so enormous.
Now, I know 13 years doesn't sound like a lot — 2018 — it may seem like a lot to people whose perspective is maybe two years. But as I told you, I think we've got to anticipate problems, particularly on this issue, because the longer we wait, the more difficult the solutions become. That's just a fact.
You mean, more difficult to trick the public into buying your snake oil? Because, mathematically speaking, your so-called solution of forming “private accounts” requires spending even more money—deepening the debt—than would be required to fix the problem.
And so step one of my strategy is to continue saying to the American people, we have got a serious problem. In other words, sometimes they say, is it serious, is it a crisis—look, whatever you want to call it, just look at the chart and you come up with the conclusions. It is serious because if Congress says no to the President, we're not going the move forward on this, imagine what the solutions will be when the $200 billion hits, or the $210 billion a year, or the $300 billion. I mean, you're looking at either major tax increases, major cuts in benefits, major cuts in other government programs or massive debt. And so now is the time to move. And that's what I'm saying to the Congress.
Yes, all the more reason to address the problem instead of jeopardizing it. As for the “massive debt” option, may I point out that we already have massive debt—and it’s making our creditors uneasy. It’s not a good thing when the rest of the world starts eyeing Euros as a more stable default currency. If you really cared about massive debt, you would’ve sent the Congress slimmer budgets for the past four years. Are you going to default on any of that debt?
The second—second goal of mine is to make sure our people who have retired, our senior citizens, and people who were born before 1950 know that nothing changes…. You might remember those campaigns around…. They said, old George W. gets in, you're not going to get your check. Fortunately, they got their check after I got in, so they kind of rung hollow in 2004.
Translation: Get off my back, AARP and the state of Florida.
…The system when we talk about insolvency, the insolvency issue doesn't relate to you. It relates to your grandchildren. And that's the issue we're confronted with: What do we do about the retirees' grandchildren? As I said in my State of the Union, we have an obligation to do what others have done for my generation and that's to leave a—leave a better world behind.
A more polluted, indebted world. He cares enough about your grandchildren to pass on to them massive debt to China, Japan, Germany, etc. He cares enough to make their retirement even less secure (Social Security doesn’t pay much).
And that's why I was willing to dedicate as many words as I did in the State of the Union to what used to be the third rail of American politics, Social Security.
Now, it's one thing to define the problem; it's another thing to be a part of the solution. And I have an obligation as the President not just to define the problem, but to encourage dialogue by putting out some ideas of my own.
Which someone else came up with long before he was president. It’s not like his dad didn’t assert that Social Security would be broke by the nineties. This funny business is nothing new.
I stood up in front of the Congress and said, in order to truly fix it, in order to have a permanent solution, all options are on the table, except for running up payroll taxes.
Because that might solve the problem (not that anyone would go for it). And remember: I don’t really want to solve the problem; I want to exacerbate it. Whatever you do, do not compare this to an earlier situation in which I asserted over and over again that a situation was dire, even when the best information available said that it wasn’t, just so I could do what my advisers had dreamed for years of doing, fantasizing about as they lay in bed, touching themselves at the thought of using that big, big, powerful military. Also, do not ask yourself why, if I really want a diplomatic solution to the Iran
And that means a lot of different things. Democrats…had some really constructive ideas as to how to address the root cause of a—of the problems with Social Security…. [The] ideas range from raising the retirement age, to delaying benefits, to calculating benefits not based upon wage increase, but price increase. A little esoteric here, but, in other words, there's some serious ideas on the table to how to permanently fix Social Security.
Yes, those are genuine proposals for solving the problem. Unlike yours, which is as insincere as nearly everything that comes out of your mouth. Incidentally, under no circumstances should we ask ourselves why Karl Rove, after his 3% victory, has been given even more titles and has relocated his office to mere steps from the Oval Office.
And that's why I said to the Congress, all ideas are on the table, and if you got a good idea, bring it forward. Now is the time for people from both sides of the aisle to address the problem. And I'm willing to listen to anybody's idea. And I'm looking forward to a good, constructive dialogue about how to seriously address the problem, making sure that those who've retired have nothing to worry about and, at the same time, making sure there's a Social Security system for younger people coming up.
So you’re willing to address the problem and ditch the idea of private accounts? I suspect that’s bullshit.
I put out some ideas and I want to talk about one of them that I hope you find interesting…. And that is as a way to allow younger workers to…come closer to the promises that have been made, but can't be fulfilled,
Because we’re going to default on the debt—an unconstitutional act.
we should allow younger workers to take some of their own money—their own payroll taxes—and set it aside as a personal retirement account. This is a novel idea for Social Security. But it's not…a novel idea for federal employees. There is such a thing that's called a thrift savings plan, which allows federal employees to take some of their own money and invest it in stocks and bonds, so as to increase their retirement benefits.
Well, er, yes and no. Yes, it’s true that there’s a thrift savings plan, and that federal employees can take some of their own money and invest it. But that’s in addition to Social Security. Bush™, however, has expressed no interest in add-on private accounts styled after 401Ks; instead, he wants to divert a healthy percentage of payroll taxes into private accounts. Add-on private accounts would be a no-brainer, and no problem. But they wouldn’t fix Social Security. For a Cato Institute analysis of state and local employees who opted out of Social Security in favor of private investment plans, go here.