Press Briefing Opening Statement
January 5, 2005
Thank you, Marie. Good morning. With the beginning of the new year, the convening of the 109th Congress and the 2nd term inauguration of President Bush just weeks away, we want to talk this morning about our policy agenda for 2005.
This is an important year for retired Americans, those nearing retirement, and those who ever hope to retire. The huge boomer generation is graying, and the first boomers will be eligible for early Social Security benefits before we elect our next president.
Many are asking whether our nation can afford to grow older. Given an aging population, huge budget deficits and other challenges, there is a call for changes in Social Security, Medicare, Medicaid and other programs in order to ease the financial burden.
So, can America afford to grow older? We believe that—with the right policies and a strong partnership among government, corporate America, not-for-profits and individual citizens—the answer is yes. We can afford it, and benefit from it as well.
We can create a society where people 50+ will have independence, choice and control in ways that are beneficial and affordable for them and for society as a whole. This is our goal.
Achieving this goal does not depend solely on government action, but in some important areas government must take the lead.
As Marie said, our top priority this year is Social Security. Economic security for all generations requires strengthening Social Security. It has delivered much needed, guaranteed benefits to older Americans, people with disabilities, widows and other survivors for 70 years. For over half of all beneficiaries, Social Security provides more than half their annual income.
Social Security is not in danger of going broke, but the program needs reform so that it will always be able to pay full benefits, for all generations of Americans-today and tomorrow. These changes don't have to be drastic, but the sooner the better.
Let me give you three examples:
- Raising the total wage base taxed by Social Security to 90 % of nationwide earnings. This would move the cap from $ 90,000 in 2005 to $ 140,000 – perhaps phased in over a decade. This in itself would lower the projected shortfall by some 43 %.
- Diversifying Trust Fund investments to get a higher return, and
- Adding newly hired state and local government workers to the Social Security system.
These three steps could get us about two thirds of the way toward solvency, and there are other possible options to consider (chart). But the longer we wait, the more difficult and painful the steps we will have to take.
That's why we're pleased that the President has put Social Security reform high on his agenda. Our goal, like his, is long term solvency and fiscal soundness.
However, we believe that taking money from Social Security taxes for private investment accounts would worsen the solvency outlook rather than improve it. This approach is risky, hugely expensive and unnecessary.
Estimates are that a 2% private account carve-out would create a shortfall of over a trillion dollars. That amount eventually would have to be covered by raising taxes, cutting benefits, and/or taking on new debt.