FROM THE OFFICE OF PUBLIC AFFAIRS
March 3, 2005
JS-2291
Treasury Secretary John W. Snow
Prepared Remarks:
Sam M. Walton College of Business
University of Arkansas
March 3, 2005
Thank you so much for having me here today. It's terrific to be in
A lot of you are around my son's age, and I'm reminded of a conversation I had with him a year or so ago. He was home from college and I asked him if he and his friends ever talked about Social Security. It's an awfully important issue, and I'd hoped that my son and his friends had talked about it.
He said they didn't. I asked whether they knew how important it was and he said "Dad, we don't talk about it because we know it won't be there for us."
And of course we know that this belief is fairly typical among your generation.
While I believe there is good reason for optimism on this day, I do want to give your generation credit for being informed, for appreciating how serious the demographic challenge is when it comes to the future of Social Security. You know that people are living longer and having fewer children and that a pay-as-you-go system won't work with those kinds of numbers.
Without reform, your generation, and generations that come after you, will face massive tax increases and/or benefit cuts because the system simply can't operate the way it was intended. In 1950 a ticket to an NFL playoff game was less than $2, and there were 16 workers to support every beneficiary of Social Security - a very comfortable ratio of those paying in versus those drawing benefits.
But we live in a very different world today. There are only 3.3 workers supporting every beneficiary. By the time today's youngest workers – that's some, if not many of you in this room today – 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.
These numbers don't impact people who are 55 or older – those already retired or near retirement. They impact you, and you are terribly aware of that fact.
However, as I said, there is also reason for great optimism on this day. The terrific news on Social Security is that the President's leadership on the issue is creating movement. Progress, real progress, is being made.
When the President took this issue to the country in his State of the Union address, he said his objective was to engender a broad national dialogue to get people talking about the subject.
He wanted Americans to talk about Social Security, and a national conversation has begun as a direct result.
Over lunch counters, over dinner tables, and breakfast tables all over
The American people respect leaders who call a spade a spade. The President touched the "third rail" without fear, and now we're moving forward. Neighbors and co-workers are talking about it; families are talking about it; Congress is talking about it.
We've seen a clear shift in the course of the last month or so from the question: "Is there a problem?" to the question: "How do we fix it?"
This broad national dialogue has enabled us to look closely and honestly at the Social Security system – both its problems and the reforms that could save it. We can now talk about the fact that the problem actually becomes more expensive with each passing year. And as it is, we are looking at $10.4 trillion in unfunded liabilities.
Every day, more and more people realize how important it is to act, that 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.
And I can tell you unequivocally that dramatically higher taxes are ruinous for an economy - even one as resilient and strong as ours. The President knows that an increase in the payroll tax rate hurts workers and job-creating small businesses, and he won't do that. He won't let your generation suffer because his generation was too afraid of the "third rail" to act.
What he'd like to see, instead, for you and for future generations is an ability to save some of your payroll taxes, to build a nest egg that belongs to you, 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.
Albert Einstein believed, and the President and I agree, that compound interest is one of the most powerful forces in the universe.
With voluntary personal accounts, you would have the chance to learn about your 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 your parents and other generations of retired beneficiaries.
For the life of me, I can't imagine why anybody would argue against you having the ability to invest and build a better retirement for your future. It costs the Social Security system nothing to do so, it will cost your parents and grandparents nothing, it gives you a better retirement, and it helps our country create a larger pool of savings. And as the president has said the retirement security of our young people is too important for partisan politics. Why wouldn't we do this? I have not heard one good reason not to and I can't figure out why anybody would oppose it.
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 generation can be achieved.
A reformed, healthy system can be in your future instead of the empty promises that my son spoke of. An opportunity to build a retirement nest egg of your very own can be achieved, and a looming financial crisis can be mitigated.
You are witnessing an exciting moment in American history, where a President's courageous leadership has inspired a national discussion and, I'm confident, will lead to historic good results. I encourage you to be involved, whether it's talking about the issue with your classmates over dinner or writing a letter to your Members of Congress.
Thank you so much for having me here today; I'd be happy to take your questions now.