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August 26, 2005
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Prepared Remarks of United States Treasurer Anna Escobedo Cabral before the California Hispanic Chambers of Commerce 26th Annual Conference Latina Recognition Luncheon

Good afternoon; it's great to be here. I would like to express my sincere thanks to the California Hispanic Chambers of Commerce and its entire membership. It is a distinct privilege to take part in your 26th Annual Convention here in Oakland – the largest regional gathering of Hispanic business organizations.

It is also an honor for me to appear before such a distinguished group of California business owners and community leaders. You inspire all those who strive to achieve what you've accomplished. You are the American Dream.

I, like all of you, am so grateful for the opportunities of this great country. Like many of you, I come from a background that taught me the value of hard work at a very young age.  I learned that a pioneering and entrepreneurial spirit holds promise for all of our societies and lays the groundwork for generations to come. Today I am working in government, for a great President, because I want to preserve and protect those opportunities.

My great grandparents risked life and limb to bring their family to the United States, children in tow, traveling thousands of miles from Mexico to settle in California's Santa Clara valley.  They served as pillars of strength that held our families together; they were strong and determined, and faced many hardships.  They built a life, watched their ten children and many grandchildren labor in the fields picking apricots, cherries, prunes, grapes, and oranges, and prayed over their sons who went off to war.

My father lived a good part of his life the same way my great grandmother lived hers, in a tent, with dirt for floors, no running water, and an open fire to cook the family meals.  Because neither of my parents had graduated high school, they had to work with their hands to make a life for their children.

Their dream was that their children all graduate from high school.  This dream was fulfilled, and then some. Thanks to a high school algebra teacher who took a personal interest in me, I applied and was accepted to college as well. This dear teacher convinced my father to let me go to the University of California, Santa Cruz, which made me the first in my very large and extended family to go to college.

After graduating college my husband and I moved our family to Boston, so that I could attend Harvard's John F. Kennedy School of Government.  Later, we traveled to Washington, DC, seized the opportunity to work in the marble halls of Congress to address policy issues of great importance to the Latino community and all Americans, and today, I have the honor of serving this great nation as Treasurer of the United States.

Many have said that I am the American Dream as well. If that is the case, then I know that today I am truly with my brothers and sisters – proud Latinos who have worked hard and done well, thanks to good parents and the boundless opportunities of freedom.

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I want to commend you, on behalf of President Bush and Treasury Secretary John Snow, for your collective efforts and for your continued commitment to the important mission of promoting industry, economic and jobs growth, and the development of Hispanic-owned businesses across the country. Organizations like yours have helped propel Hispanics, the largest and one of the fastest growing minority consumer groups in the country, into the economic and political spotlights. We are a force to be reckoned with.

Look around the room today and you'll see evidence, everywhere you turn, of the strength of the American economy. Right here in this room, we are looking at the people who make the economy tick, and who benefit every day from this country's incredible free markets.

The wonderful strength and resilience of the American economy is actually the first thing I want to talk about today. I appreciate the work you do to grow this great economy and create jobs, and I know how much the President appreciates it too. He also appreciates how the cost of energy and health care affect you, your family, and your business. He knows how those costs can make the difference, for a family, between feeling financially secure or financially stressed.

Reforming Social Security is also a critically important part of a healthy American economy for future generations. As we honor Latinas at this lunch today, I will tell you one thing that matters to me, as a Latina mom, more than anything: that my children are protected. And saving Social Security can help achieve that.

This month is Social Security's 70th anniversary, and I can't think of a better way to mark this milestone than by saving the program – one of the great successes of 20th century American government – for our children and grandchildren.  Es para nuestros hijos.

To give you an idea, just with a local snapshot, of Social Security's impact, I'll tell you this: in 2003, 21 percent of Oakland households received Social Security with an average income $13,215. This issue touches all of us, in every part of this great country, and the economic implications are wide and deep.

Overall, I'm very pleased to tell you, the American economy is really thriving. You should all take great pride in this fact because you've had a lot to do with the amazing economic times that we've seen in the last few years.

Well-timed tax cuts, combined with sound monetary policy set by the Federal Reserve Board, got our economy moving when we needed it most. They gave individuals more control over their own money, and businesses like yours the room you needed to grow, and you took over from there.

The President often says that his economic agenda is based on the fundamental trust that the American people make good decisions for themselves, for their families, and for their businesses. That's why his policies allow people to keep more of what they earn and have more control over their daily lives from health care to education to retirement. As the President puts it, it makes sense to trust people with their own money.

Policies that encourage open markets and trade have helped your businesses and our economy too.  The President recently signed CAFTA legislation, which was important because it opened up new markets, with 44 million new consumers for American products, which is terrific news for farmers and small-business owners.

Good policies have led to visible results. It's worthwhile to take a look at the numbers.  Today, GDP growth is very strong – a solid 3.4 percent in the second quarter of this year – and job creation is robust and steady, with 207,000 new jobs created last month and nearly four million jobs created since May of 2003.

The unemployment rate is 5 percent, which is below the average of the 1970s, 1980s and 1990s.  Americans have more money in their pockets, and they're buying the things their families need. The strong housing market continues with more people owning their own homes today than ever before.

The most important thing, economically, for anyone is to have a job, and we're seeing that happen.  An improving economy also leads to higher real wages and income.  More jobs lead to more people being covered by health insurance and retirement plans as well.

The rising cost of health care is a burden for individuals and families, and it has a huge impact on our economy. For Hispanics, and for all Americans, affordable health insurance is a top priority. 

In America, we have the best health care system in the world but, health care costs are rising.  Health care costs are a burden on the economy and on patients.   That's why the President signed into law a break-through new product called Health Savings Accounts, or HSAs, that helps make health insurance more affordable and puts patients back in control of their health care. 
 
The key to HSAs is what's called a high-deductible health care plan.  A high-deductible health care plan is offered at premiums that are dramatically lower than plans with lower-deductibles making them much more affordable. By using money in your tax-free Health Savings Account to help pay the higher deductible or any other health expenses, you reduce the cost of your health care. 

In addition, instead of sending more money off to insurance companies in the form of higher premiums, families can keep their savings in an account that belongs to them, not to their employer or to an insurance company.  In short, HSAs bring the cost of purchasing quality health insurance more within reach.  
 
An HSA plan puts consumers back in charge of their health care spending. One of the reasons health care prices are so high is that consumers with traditional "first dollar" health insurance don't have any idea what they are spending on health care because it seems like someone else is paying.  But, this comes at a price of higher premiums that everyone pays.  For those that have health insurance provided by their employers already, it may sound like a good deal.  But, the fact that consumers in these sorts of plans aren't making informed choices about how their health care dollars are spent causes prices to rise.  There are no market forces to encourage lower prices and better service.  The high prices that are created are passed along as higher premiums.  The result is a very bad deal for those who don't have health insurance already and higher health insurance costs for everyone.  

More than 30 percent of Hispanics do not have health insurance coverage.  It is vital that we work to bring affordable quality health care within reach.  Health Savings Accounts are a great way to get good health insurance at an affordable price.  

But, there is more we can do.  The President has proposed allowing small businesses to band together and purchase health insurance at lower costs through Association Health Plans.  We also must address the tremendous costs to us all of frivolous lawsuits that are driving up health insurance premiums and driving many good doctors out of the health care system.
 
To help Spanish-speakers better understand how HSAs work, today we are releasing a new Spanish-language brochure that will be available on the Treasury Web site (http://www.treasury.gov/offices/public-affairs/hsa/pdf/hsa_tri-fold_brochure_es.pdf). I've also brought copies with me today. Read it and share it with your friends and neighbors.  Encourage them to look into an HSA.  It really is a great deal that can help more people to get health insurance that they thought might have been out of reach.

The price of energy has also been frustrating to consumers and business owners; I know that the cost of gas impacts everything you do.  My boss, Treasury Secretary John Snow, always says that it acts almost like a tax on your business or your income.  The energy bill that the President signed earlier this month should help to reduce our dependence on foreign oil, as well as encourage energy innovation and conservation, and that will be good for our economy over the long term.

The President has made clear his commitment to strengthen our economy further, and the energy bill was part of that.  This commitment to continued economic strength also includes making his tax cuts permanent and reducing the budget deficit – as well as reforming Social Security and the tax system and reducing the burden of lawsuits and heavy-handed regulations on business.

The current strength of our economy puts us in a very strong position to achieve the long-term goals of making Social Security solvent and alleviating the many headaches that burden taxpayers.

Let's first look at reforming and strengthening Social Security. This is a top domestic priority for President Bush and I share his commitment to finding a permanent solution.

For the Latino population, the Social Security debate is of the utmost importance, as Hispanics rely on the system more than many other Americans.  Nearly 40 percent of Hispanic beneficiaries rely on Social Security for all of their income, and three out of four rely on it for at least half of their income. Almost half of all unmarried Hispanic retirees rely on Social Security as their only source of income. It grieves me that more than 20 percent of Hispanic seniors are currently left in poverty after a lifetime of paying into the system.  This is unacceptable. We can do better, and reform will make things better.

Progressive benefit growth for example, which would bring the program about 70 percent of the way to solvency, is an important element of the President's proposed changes.  It would mean that the lowest income seniors would have the fastest-growing benefits while benefits for those who are more well-off grow more slowly, with protection from inflation.

The opportunity to invest in our own futures, to save our own money in a retirement nest egg, is another key part of the President's plan, and something that I think will change our children's' retirement futures. And since the median age for Hispanics in this country is just under 26 years – which is 10 years younger than the median age for the United States as a whole – how the program impacts the younger generations is especially important to us.

Personal accounts are part of the President's dedication to decreasing poverty in the Latino community.  He wants workers to be able to grow a nest-egg which could be passed on to loved ones.  He wants us to keep control of our own money, knowing that we will do what's best with it.  You've probably heard him call it the "ownership society" and I believe this goal is wonderful for our community.

Many people think that the Social Security system is one where the government takes your money, holds it for you, and then gives it back when you retire.  Unfortunately, that's not the way it really works. Social Security is a pay-as-you-go system.  You work hard, you pay through payroll taxes, and the government spends your money on current retirees' benefits.  Whatever is leftover – what we call the "Social Security surplus" – ends up funding all kinds of government programs that have nothing to do with Social Security. The government spends your money and puts a paper IOU in a filing cabinet. That's really how it works.

With personal accounts, the money would stay in your possession.  Secretary Snow calls it the "ultimate lock box." It is through these voluntary personal accounts, coupled with continued access to financial education resources, that people will be better positioned to get a good rate of return on a conservative mix of bonds and stocks, or a portfolio of bonds only.  A conservative mix of bonds and stocks can yield an individual 4.6 percent.  You get about 1.8 percent on your money in the government - a lousy rate of return compared to what a conservative mix of bonds and stocks will get you.

Finally, unlike the current system, in the event that a worker dies prematurely, he or she will have an asset to leave to heirs.

Right now, we have a historic opportunity and obligation to save and strengthen the nation's retirement security system. The President's leadership, combined with our economic health, gives us this opportunity. The expense of waiting to act reminds us why this opportunity must be seized, and why we are obligated to do so.  Waiting to fix the problem is terribly expensive, and irresponsible, considering younger generations will be left paying the bill.

This is a fascinating time in government history. Enacting real retirement security reforms this year holds great promise for generations of American workers and retirees. And simplifying our tax code could bring enormous relief to every American who pays taxes.  No one knows that better than the people in this room. And the President knows how you feel about our terribly complicated tax code. Done right, tax reform will stimulate and strengthen our economy as well.

Thank you so much for having me here today; it's been wonderful to see so many friends and so many who I admire.

With the help of this community and a continuing dedication to good pro-growth economic policies in Washington, DC, this country has a bright future ahead of it. Thanks again for all you do to keep our economy vibrant and to look out for the future for our children.

Thank you.

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