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Bush Unveils Social Security PlanAired May 15, 2000 - 1:18 p.m. ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
NATALIE ALLEN, CNN ANCHOR: We to take you now live to Rancho Cucamungo, California, where presidential candidate George W. Bush is talking about his ideas for Social Security reform.
Let's listen in, then we will talk about it.
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GOV. GEORGE W. BUSH (R-TX), PRESIDENTIAL CANDIDATE: ... and Senator John McCain, a Republican, recently had a press conference to discuss common principles of reform. They proposed an innovative framework for members of Congress to work together on this issue -- a framework that includes a bipartisan commission.
I support a bipartisan commission, because it will help pave the way to a consensus on reform. We can already see the emerging outlines of a consensus -- led by people like Senators Breaux, Gregg, Grassley, and Gramm, Congressmen Kasich, Archer, Shaw, Kolbe and Stenholm. As president, I will build on that momentum, with some clear principles.
First, we must not change Social Security for those now retired, or nearing retirement. Let me put this plainly. For those on Social Security -- or close to receiving it -- nothing will change. Government has made a commitment, and you have made your plans. These promises will be honored. Yet, without reform, younger workers face a great risk -- a lifetime of paying taxes for benefits they may never receive. The reforms I have in mind will actually increase their retirement income.
Second, all Social Security funds in the federal surplus must stay where they belong -- dedicated to Social Security. In my economic plan, more than $2 trillion of the federal surplus is locked away for Social Security. For years, politicians in both parties have dipped into the trust fund to pay for more spending. And I will stop it.
Third, the payroll tax must not be raised. We cannot tax our way to reform.
Fourth, reform should include personal retirement accounts for young people -- an element of all the major bipartisan plans. The idea works very simply. A young worker can take some portion of his or her payroll tax and put it in a fund that invests in stocks and bonds. We will establish basic standards of safety and soundness, so that investments are only in steady, reliable funds. There will be no fly-by-night speculators or day trading. And money in this account could only be used for retirement, or passed along as an inheritance.
Right now, the real return people get from what they put into Social Security is a dismal two percent a year. Over the long term, sound investments yield about a six percent return. Investing that four percent difference, over a lifetime, can show dramatic results. A worker who invests even a limited portion of his or her paycheck could, over a career, end up with hundreds of thousands of dollars for retirement.
The American securities markets, over time, have been among the most reliable investments in the world. Through the Great Depression, a World War, and 11 recessions, the overall stock market has never lost money over any 20-year period. It is the best, safest way to build personal wealth. That's why teacher pension plans and private business retirement plans all across America invest in such funds.
Some in Washington call this idea risky. But here are some simple questions you should ask them: Do they own stock themselves? Is that part of their own retirement plan? Does it make them feel more secure, or less, to own investments? Clearly, they don't think this is risky for themselves. People in Washington see it as an opportunity. Yet it is an opportunity they would deny to others.
Every federal worker is offered a personal account to help improve their retirement -- 1.3 million have these accounts. Al Gore, who calls these bipartisan proposals risky, has a substantial amount of his money invested in the stock market. If he is building his own retirement security in the market, why does he object to young Americans doing the same?
Consider this simple fact: Even if a worker chose only the safest investment in the world -- an inflation-adjusted U.S. government bond -- he or she would receive twice the rate of return of Social Security.
There is a fundamental difference between my opponent and me. He trusts only government to manage our retirement. I trust individual Americans. I trust Americans to make their own decisions and manage their own money.
Let me be clear. Personal accounts are not a substitute for Social Security. They involve only a limited percentage of the payroll tax so the safety net remains strong. Let me say this again: For those who are retired or near retirement, there will be no changes at all to your Social Security. But we can and must give younger workers the option of new opportunities.
Personal accounts build on the promise of Social Security -- they strengthen it, making it more valuable for young workers. Senator Moynihan, Democrat, says that personal accounts take the system to its "logical completion." They give people the security of ownership. They allow even low-income workers to build wealth, which they will use for their own retirement and pass on to their children. Some plans would match the contributions of low-income workers to their personal accounts. That is also an idea we should consider.
Senator Kerrey, also a Democrat, recently said: "It's very important, especially for those of us who have already accumulated wealth, to write laws to enable other people to accumulate it, and arrive where we are." Ownership in our society should not be an exclusive club. Independence should not be a gated community. Everyone should be a part-owner in the American Dream.
Within the framework of these principles, we can keep Social Security strong and stable. We can keep our commitments. We can avoid tax increases. And millions of Americans will have an asset to call their own. This is the best thing about personal accounts. They are not just a program, they are your property. And no politician can take them away.
ALLEN: That was Republican presidential candidate Governor George W. Bush talking about Social Security in Rancho Cucamungo, California. We will continue to monitor his speech for you. But his chief Social Security reform would be allowing younger workers to invest some of their payroll taxes in personal investment accounts. We will talk about that in just a moment.
We want to let you know that Democrat Al Gore is scheduled to respond with his own Social Security speech at 3:00 p.m. Eastern. CNN will carry that address for you too.
Beth Fouhy is executive producer of the CNN political unit. She joins us now.
And Beth, it seems like Social Security is going to become a major theme of this election.
BETH FOUHY, EXECUTIVE PRODUCER, CNN POLITICAL UNIT: Yes, and it is pretty remarkable. The plan, while it is just a series of principles right now that Governor Bush is outlining, he is not getting into a lot of specifics, it is very bold for him to be getting into this. Because it is the famous third rail of American politics. Many, many people have gone before him in trying to attempt a revamp of the system. Many have been burned. He is obviously a candidate who has got a lot of confidence right now that he is venturing into something that he knows he is going to get criticized about quite a bit, primarily by Gore, but by a lot of others as well, Republicans and Democrats.
ALLEN: Well, he even addressed that, talking about some people say that it is risky, the personal investment accounts. What will the critics, what have the critics said about this plan?
FOUHY: Well, again, he hasn't said how much he is advocating a person can invest of their own money, some say as much as two percent of a person's retirement could go toward these private accounts that they could control on their own. It's risky, just on its face, because you can't ever be sure the market is going to be stable for ever and ever. We have had a great market now for many, many months. But as well all know, in the last month or tow, we have seen a significant downturn. What the Bush people are banking on, though, is that it is going to be very healthy over about, you know, the course of about 20 years. Governor Bush, in fact, said that in the part that we took live. There has never been a period of time where the market has not been in the positive territory over a long term. And this plan that he's outlining is a long-term investment plan. It is not for current retirees who might be seeing the vagaries in the market and being very concerned. It is for people who, as he said, are already invested in the market, believe that the market is place to put their money, and why not put this money, which is for their retirement, most important thing of all.
ALLEN: Bush has called Gore's plan a "band-aid approach." Gore calls Bush's plan "stock market roulette." So we will let them bicker about that for the next few months. But tell us more about what Gore might be saying at 3:00 today?
FOUHY: Well, Gore has actually spoken about Social Security quite a bit, and at 3:00 today he is going to reiterate some of the basic principles he has already outlined, and he is going to criticize the Bush plan. But let just pick through what Gore is talking about. He is talking about really what he wants to do is pay down the federal debt, and use interest savings to go back into the Social Security program. That would shore it up to the year 2050. Fifty years, that is a good long time, and then they predict that the interest that we're now paying down on the national debt will be gone, and that can be just permanently put back into the Social Security system for after 2050.
Next thing is to provide higher benefits for widows, and better benefits for worker who take time off to be with their children, women primarily. This whole program is very much targeted toward women, it would be about five percent of the surplus. They say that is a very manageable amount to go shore-up for a specific group of people.
Right now he is doing a lot of targeting of women because he is not as strong among women as he ought to be, given Democrats' tendency to be very strong among women of all ages. So this is primarily for older women, for married moms, for moms who stay at home. it is a way to really build it us in their favor.
But other than that pretty much keep things stable, keep it in a system that people can actually envision and have said to many pollsters that they think that is where the Social Security surplus ought to go, plowed back into the market, just to shore-up the existing system, rather than to start something new, which is what Bush is talking about.
ALLEN: As we said, Gore announces this at 3:00 p.m. Eastern. We'll bring live coverage of that. Beth Fouhy thanks. It is an issue that we will be hearing much more about.
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