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Remarks Prepared for Delivery
by U.S. Secretary of
Labor Elaine L. Chao
Retirement Security for the 21st Century
Cleveland,
Ohio
Monday, August 15, 2005
Thank you, Rick [Cassara]. And thank you and your restaurant
co-owner, Jim Kuczynski, for hosting us here today.
I want to also recognize Geoff Hetrick, President and CEO of the Ohio
Restaurant Association; Gary Lucarelli, President of the Cleveland Area
Restaurant Association. Thank you all for being here.
Today, I want to talk about a serious challenge facing our
country—and that is the need to reform Social Security. I was just with
the President in Crawford, Texas last week and I know how important this issue
is to him. He wants to ensure that Social Security remains strong for every
generation of Americans.
Seventy years ago yesterday, the Social Security Act of 1935 was signed
into law. And in January 1937, the first Social Security benefit [17
cents] was paid out right here in Cleveland. It was paid out to Motorman
Ernest Ackerman, who retired 70 years ago today. In the many years since,
Social Security has become a safety net—indeed, a lifeline—to
America's retirees. It is a promise made to America's workers that must be
kept.
That's why President Bush put Social Security reform at the top of his
second-term agenda. He wants to solve the financial problems of Social Security
permanently, and not just create a temporary Band-Aid solution.
First of all, let me assure you that Social Security is safe for
today's retirees and for those nearing retirement. For retirees currently
receiving Social Security benefits—and everyone born before
1950—nothing will change.
But the system needs to be modernized so that it's there when you
retire, when your children retire and when your grandchildren retire.
Right here in Ohio, you have almost 2 million people receiving Social
Security benefits. And that number will only increase as the baby-boomer
generation begins to retire in 2008. They will live longer, healthier lives.
And that's wonderful. But at the same time, there will be fewer workers paying
into Social Security than ever before—as you can see in this chart.
A lot of people don't realize that Social Security is a pay-as-you-go
system. In other words, the money you pay into Social Security is not put away
into an account with your name on it. Instead, your money actually goes to pay
the benefits current retirees receive.
As more people draw benefits, and fewer people pay into the system, it
is inevitable that there will be a cash flow problem—as you can see on
this chart.
In fact, in just 12 years, the Social Security system will pay out more
than it takes in in payroll taxes. And if nothing is done, today's 30-year-olds
will see a 26-percent cut in benefits when they retire—as pictured in this
chart.
To prevent this from happening, the President has laid out several
principles for Social Security reform:
First, there must be no changes in benefits for people at or near
retirement.
Second, there must be no increase in payroll taxes because we don't
want to dampen job creation.
And third, any changes should empower younger workers by giving them
the choice of voluntarily taking a small portion of their payroll taxes and
putting into a Voluntary Personal Retirement Account. They will own and control
the account. And they can pass it on 100 percent to their children.
For example, take a worker earning $35,000 annually over his or her
lifetime who invests 4 percent of payroll taxes in a conservative mix of bonds
and stocks. He or she would have a nest egg of $250,000 upon retirement. And it
could be passed on to their children.
The President's goal in reforming Social Security is to better protect
workers and retirees. He wants you to be confident that the secure retirement
you have worked for all your life will be there when you need it.
That's why our country needs to come together to solve this problem.
The President wants a bipartisan solution and will work with members of
Congress from both parties. But he has made it clear that our country must do
something, and we must do it now.
Social Security is a promise that the government has made to you. And
the President wants to be sure that it's kept.
Thank you.
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