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February 24, 2005
JS-2273 The Honorable John W. Snow
Prepared Remarks: The Tampa Chamber of
Commerce Board of Governors
Tampa, FL
February 24, 2005
Thank you; it's great to be in Tampa. Yours is a beautiful and vibrant city, and one that I always enjoy visiting.
A special group of folks with an historic task will be here in Tampa in less than two weeks. On March 8th the President's Advisory Panel on Federal Tax Reform will holding a meeting here on business and entrepreneurship - something that is clearly of interest to this group!
The Tax Reform Panel is made up of a group of great Americans; brilliant folks who are giving generously of their time and intellect to the historic undertaking of reforming our cumbersome tax code into something that is more fair, simple and pro-growth. I am deeply appreciative of their efforts, and I believe the American people, and the American economy, will benefit greatly from their work.
Speaking of important work, I want to commend the Tampa Chamber for its work to make this city a success, including the terrific contributions that your member companies make, individually and collectively, to the Tampa area economy. Being an entrepreneur and running a business, no matter how small, is what makes the American economy tick - both locally and nationally.
Businesses like yours create jobs. That's why the President's tax cuts were designed with small business in mind... and the results have been very good. The economy - again, made up of businesses like yours - has created over 2.7 million jobs since May of 2003. And while job growth can never be fast enough for those looking for work, the steady pace of job creation has been an unmistakable sign of an economy that has recovered from very tough times, and is now expanding.
Evidence of our economic health abounds: GDP growth for 2004 was 4.4 percent. The unemployment rate is down to 5.2 percent - lower than the average rate of the 1970s, 1980s and 1990s. Real after-tax income per person is up by over eleven percent since the end of 2000 and household wealth is at an all-time high. Inflation, interest rates, and mortgage rates remain at low levels. Homeownership rates are at record highs.
Our economy is dynamic and resilient - the envy of the world. But of course we still face economic challenges as a country. We need to keep taxes low and stay on this path of economic growth and job creation. We also need to continue looking down the field and make sure that our economy is not disrupted by things that we can avoid - things that we can fix, today.
Obviously I'm talking about Social Security. The system, as you know, is unsustainable. It's in trouble. The President has sounded the call for meaningful reform, and his leadership on the issue is both politically brave and inspiring. The American people and their representatives in government all know that Social Security needs to be fixed; but it took a brave leader to say, okay, this is the year we're going to do it.
Keep in mind that the system is working fine for now, and most of you in this room will never be personally impacted by Social Security's impending economic shortfalls. You will not be impacted by any change in or reform to the system, because the President has pledged that if you were born before 1950 - if you're 55 or older today - the system will not change for you; you will receive your full anticipated benefits, period.
No, those of us of a certain age aren't the ones who need to worry. It's our children and their children who will be left out by the current system. They are the ones President Bush is worried about. They are the ones for whom Congress needs to act, and soon.
Without reform, younger generations will face massive tax increases and/or benefit cuts. It's a simple matter of demographics and arithmetic. With Americans living longer and having fewer children, the system simply can't operate the way it was intended. In 1950 there were 16 workers to support every beneficiary of Social Security - a very comfortable ratio of those paying in versus those drawing benefits. But today there are only 3.3 workers supporting every beneficiary. By the time today's youngest workers turn 65, there will only be two workers supporting each retiree.
The numbers simply don't work. As a result, today's 30-year-old can expect a 27 percent benefit cut from the current system when he or she reaches retirement age.
The problem actually becomes more expensive with each passing year. And as it is, we are looking at $10.4 trillion in unfunded liabilities. If we do not act to fix the system, the only solutions available for younger generations will be dramatically higher taxes, massive new borrowing or sudden and severe cuts in benefits or other government programs.
Dramatically higher taxes are ruinous for an economy - even one as resilient and strong as ours. No one understands this concept better than the people here today. You know that lower taxes help your business, and higher taxes hurt it - and as I said before, you are the linchpin of our economy. The President knows that an increase in the payroll tax rate hurts businesses like yours, and all the jobs you create, and he won't do that.
He also won't leave this problem to future generations and future presidents.
What he'd like to see for future generations is an ability to save some of those payroll taxes, to build a nest egg that belongs to the worker, not to the government. A nest egg that would have a real return on investment, far better than the rapidly-weakening promise of Social Security benefits.
With voluntary personal accounts, younger workers would be able to learn about their financial choices, build a nest egg and benefit from sound long-term investment in the free market system without disrupting the system of benefits for their parents and other generations of retired beneficiaries.
Social Security reform that doesn't raise payroll tax rates, that protects benefits for today's seniors, and that improves the system dramatically for your children and grandchildren can be achieved. We can choose to leave a reformed, healthy system to our heirs rather than a looming financial crisis.
Many of you in this room may want to pass your business on to your children or grandchildren. I know you'll want your business to be in top shape, financially, when that time comes.
Let's make sure we do the same with Social Security. If we act now, we can make sure that Social Security, and our economy, are on sound financial footing for our children and grandchildren.
Thanks so much for having me here today.
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