FROM THE OFFICE OF PUBLIC AFFAIRS

April 1, 2005
JS-2352

Remarks by Anna Escobedo Cabral, Treasurer of the
United States
before the MANA Annual Conference and Latina Style
Business Series

On behalf of the Treasury Department, I am thrilled to be here with you today.  It is truly a pleasure to join you for such a magnificent event. It is great to be in a room with so many intelligent, hard-working, and accomplished Latinas – women who have undoubtedly surpassed many hardships to get to where you find yourselves today. Congratulations to all of you.

We, as Hispanic women, have come a very long way in our achievements.  To illustrate that point, consider these statistics from the Center for Women's Business Research. For instance, did you know that as of 2004, there are an estimated 553,618 majority-owned, privately-held Hispanic women owned firms in the U.S. generating nearly $44.4 billion in sales? Between 1997 and 2004, the number of Hispanic women-owned firms has increased by 63.9 percent. Isn't that amazing? Another striking fact is that four in ten firms majority-owned by women of color are owned by Hispanics. And firms owned by Hispanic women now represent 8.3 percent of all privately-held, majority women-owned firms in the United States.  We have become a vital part of our economy as well as the future of our country. We have an undeniable ability to shape and change our nation today and for future generations.

A critical component to this success, one that I cannot stress enough, is the importance of an education. Education is what will ultimately advance our community as a whole. We need to get more of our kids into the ranks of the college-educated. I congratulate MANA for their programs and initiatives like AvanAmos and Hermanitas for encouraging our young people to further their education in order to better their careers and lives. These younger generations after all are the future of our country.  We need to work together in achieving this, because no one person can do it alone.

An educated community is also an economically prosperous community. Financial literacy is crucial to the Hispanic community.  One important challenge we share is helping Latino families to become fully integrated in our economic systems.  The Treasury Department, together with other agencies, has been working to coordinate financial literacy efforts across the federal government and to identify private-public partnership opportunities.  Let me share with you a few facts to put the challenge into perspective:

• When a group of Americans was given a 14-question test of their financial literacy, they answered less than half the questions correctly.
• 40 percent of the so-called "unbanked" are Hispanic – we are not 40 percent of the population.
• 75 percent of Hispanics have not accumulated enough savings for retirement.  They rely exclusively on Social Security for their retirement.

According to recent findings, Hispanic women's knowledge about savings and retirement is significantly less than other groups and their retirement confidence level is less than workers overall. They are most likely to rely on Social Security for retirement as well as support from their children and family. This is why Social Security is so important to the future of our community.

The President in his State of the Union Address called on Congress and the American people to work together to fix Social Security.  It's a system in desperate need of repair.  It was created in 1935 for a  world that is very different from today. In 1935, most women did not work outside the home – today, about 60 percent of us do. In 1935, the average American did not live long enough to collect retirement benefits. Today, average life expectancy is now 78 years. The system designed 70 years ago simply does not fit the needs of the 21^st Century. If it's not fixed now, we will end up saddling our children and grandchildren with an enormous financial burden.

Changing our Social Security system is a tremendous task that can only be done if we join together to make it happen. We all know that "en la union esta la fureza." One will not make a difference but many will.

It is important for each of you to know and understand this debate and what is at stake.  Strong, independent women like you today can change the course of this country and can make this happen by joining together to better the lives of your families and future generations.

As highly successful and influential women who hold a number of competing titles:  business owner, mother, daughter, wife, sister, friend, committed citizen and community leader, and the many others that follow, each of you lays the ground work for the generations to come.  We share a strong commitment to family and community, across generations.

I, like you, wear a number of those hats as well.  Among them, is my current position as Treasurer of the United States which affords me the opportunity to work to make the President's vision of an ownership society a reality.  I believe in that vision and the promise it holds for Latino families. 

The President has said that if you own something, you have a vital stake in the future of our country. He believes that the federal government should change to help meet the challenges of our times. And strengthening Social Security for future generations is one major contribution that he is committed to.

When he talks about an ownership society, I believe the President is speaking directly to the heart of Latinos.   We have enormous faith and commitment in the American dream – to work hard and produce a bounty to share with your family, to own a home, a business, to get our children through college, have access to quality healthcare, to see our parents retire with dignity, and know that our children will be able to do the same. 

Social Security provides a critical foundation of income for retired and disabled workers – people we know and care about.  Perhaps your mother and father, or an uncle or friend.  Indeed, for one third of Americans over age 65, Social Security benefits constitute 90 percent of their total income.  Hispanics, African-Americans, and unmarried elderly women are even more reliant on Social Security.   As I mentioned earlier, more than 40 percent of Latinos rely on Social Security as their sole source of revenue for retirement.

We know two things - Social Security is safe for today's seniors, but it is in serious danger for our children and grandchildren.

As you may know, Social Security is a pay-as-you-go system with today's workers paying to support today's retirees.  But each year, there are more retirees taking money out, and not enough additional workers to support them.  In the 1950s there were about 16 workers paying for every beneficiary.  Today, there are about 3. Eventually, when today's younger workers retire, there will only be two to support each person on Social Security.  Add to this the fact that the first members of the Baby Boom generation turn 60 next year, in 2006, and it becomes clear that this is not a distant problem.  It's just around the corner. 

By 2017, the government will begin to pay out more in Social Security benefits than it collects in payroll taxes, and shortfalls then grow larger with each passing year. If we don't act now, future generations will face a combination of significant increases in taxes and huge cuts in benefits in order to make up the shortages.   

One of the tests of leadership is to confront problems before they become a crisis.  President Bush came to Washington to solve problems, not pass them on to future Presidents and future generations.  He knows that the longer we wait to take action, the more difficult and the expensive the changes will be.  And doing nothing will cost the most in the long run.

Any fix will require bipartisanship.  There are a variety of good ideas that have been proposed in the past to fix Social Security.  The President will work with Congress to determine the best elements of the proposals that have been put forward.

This nation must always strive to leave behind a better America for our children and grandchildren.  If we invest now and work to fix the problem, we can leave them with a more secure retirement in the future.

There are several principles essential to the President as he works with Congress to find a solution.  He is committed to protecting current and near retirees.  For those born before January 1, 1950, there will be no changes. Let me be very clear about this: there are 45 million Americans receiving Social Security benefits now and millions more nearing retirement. For these Americans, Social Security benefits are secure and will not change in any way.

The President has also said that he will not raise payroll tax rates because higher taxes will slow economic growth. We all know too well the potential dampening effect of increased taxes. 

And the President believes that voluntary personal accounts must be a part of the solution because they give younger workers the option to build a nest egg they can call their own. 

Personal retirement accounts are a better deal for younger workers who would be able to choose from a conservative mix of bonds and stocks that would provide a greater opportunity to earn a higher rate of return than anything the current system could provide. A young person who earns an average of $35,000 a year over his or her working career that elects to participate in the personal account option, based on conservative projections, would have nearly $250,000 saved in the account at retirement.  That's the power of compound interest.  

That money would provide a nest egg for the owner of the account and would supplement their Social Security retirement income.  It is money that they can pass on to their loved ones. 

You know, my father worked hard all his life, and paid into the Social Security system.  He filed the paperwork necessary to begin receiving benefits, but died before receiving his first check.  He died the same month the checks were scheduled to start coming.  He died too young, of course.  We come from a very modest home.  He worked hard all his life, but could never really get ahead enough to save money.  Social Security was all he had to support himself in retirement.  But he died before receiving a single check.  He would have given anything to be able to pass those funds on to his children.  Instead, the government kept that money. 

I know I am constantly telling my kids to "save your money." "Stop spending money on things you don't need" because "el que guarda siempre encuentra." You never know when there will be a rainy day. And it's the same with the Social Security reform. Personal retirement accounts would ensure that Latino families have a chance to save and grow their hard earned money in an account that belongs to them, that they could pass on to their children.

Yes, we are all worried about change, but as we learned during the course of our lives and careers, "para nadar hay que tirarse al agua."  I know that you all have had to jump in the water a few times.  Here's your opportunity to jump in and make a real difference for your parents, yourselves, and your children.  I am very proud of being among so many young, bright, and committed Latinas, because I know that together, we can accomplish remarkable things.

The President has faith in you as well.  He is working hard to ensure that all Americans share in his vision of an ownership society and that vision holds great promise for our community.

Thank you to each and every one of you for the hard work you do. I encourage you to continue in your efforts to better the Latino community.