President William J. Clinton

small picture of President Clinton President Clinton's Remarks on Social Security- 1993-1998



1. Remarks by the President in Addressing the Future of Entitlements Conference, Bryn Mawr, Penn.,-- December 13, 1993

Ladies and gentlemen, it's a pleasure for me to be here. I have looked forward to this conference with great anticipation for some time. I want to thank Congresswoman Margolies-Mezvinsky for getting this together and for inviting me here. I thank President McPherson and this wonderful institution for hosting us. (Applause.) I'm delighted that Speaker Foley and Congressman Penny are here for the Congress; and Senator Kerrey and Senator Walker, your own senator, are here to talk about these important issues.

I want to also thank all the people who helped to put this conference together and to all the people in our administration who were invited and are here participating. We pretty much shut the town down in Washington today and just sort of came up here to Pennsylvania to talk about entitlements. (Laughter and applause.)

This is a very serious subject, worthy of the kind of thoughtful attention that it will be given today. I hope there will be a great national discussion of the issues that we discuss today, and I hope that this will be the beginning of a debate that will carry through for the next several years.

I ran for President because I thought our nation was going in the wrong direction economically, and that our society was coming apart when it ought to be coming together. I wanted to work hard to create jobs and raise incomes for the vast mass of Americans; and to try to bring our country back together by restoring the bonds of family and civility and community, without which we cannot hope to pass the American dream on to the students who are here at Bryn Mawr or the students who will come

To do this, we must all -- without regard to party or philosophy -- at least agree to face the real problems of this country: 20 years of stagnant wages; 30 years of family decline, concentrated heavily among the poor; 12 years in which our debt has quadrupled, but investment in our future has lagged leaving us with twin deficits, a massive budget deficit and a less publicized investment deficit -- the gap between what we need to invest to compete and win, and what we are receiving in terms of new skills and new opportunities.

These things are linked. Creating jobs in growth requires that we bring down both the budget deficit and the investment deficit. High government deficits keep invest --interest rates high, they crowd out private demands for capital, they take more government money to service the debt. All this tends to reduce investment, productivity, jobs and ultimately, living standards.

The deficit increased so dramatically over the last 12 years because of things that happened on the spending side and on the revenue side. Defense increased dramatically until 1987, but it's been coming down since then quite sharply. However, the place of defense, as we'll see later, has been more than overtaken by an explosion in health care cost going up for the government at roughly three times the rate of inflation. Interest on the debt is obviously increased more when interest rates were high than now, but always when the accumulated national debt goes up. And the larger number of poor people in our country has inevitably led to greater spending on programs that are targeted to the poor.

On the revenue side, the tax cut of 1981 wound up being roughly twice the percentage of our income that was originally proposed by President Reagan as the President and the Congress entered into a bidding war. And then in 1986 we adopted indexing, a principle that is clearly fair, but reduced the rate of growth of federal revenues by adjusting people's taxes downward as inflation pushed their incomes upward. And finally, a prolonged period of very slow growth has clearly reduced government revenues and added to the deficit.

If you look at this chart, you will see that we inherited a deficit that was projected to be actually -- when I took office, for the fiscal year that ended at the end of September -- above $300 billion. It was obvious that -- and it was headed upward. This was the line -- the blue line here is what I found when I became President. It was clear that something had to be done. I asked the Congress to pass the largest deficit reduction package in history. It had $255 billion in real enforceable spending reductions from hundreds of programs. Now, let's make it clear what you mean. When you hear the word spending reductions or cuts in Washington terms, it can mean two things. One is a reduction in the rate of increase in government spending from the previous five-year budget, which is still an increase in spending, but not as much as it would have been had the new reduction not taken place.

The second thing it might mean is what you mean when you say cut, which is you spend less than you did before you used the word. (Laughter.) And it is important to know which one you're talking about. However, both are good in terms of reducing the deficit over a five-year period. We not only reduced the rate of increase, but actually adopted hundreds of cuts this year. The budget year that started on October 1st has less spending than the previous year in 342 separate accounts of the federal budget.

Adjusted for inflation, this means a discretionary spending cut of 12 percent over the next five years, more than was done under the previous two administrations. If this continues, according to the Wall Street Journal, then by 1998, discretionary spending -- that is the non-entitlement spending and discounting interest on the debt, the things that we make decisions on every year -- will be less than 7 percent of our annual income; about half the level it was in the 1960s.

In addition to the discretionary spending cuts, our budget did reduce entitlements, making reductions in agricultural subsidies, asking upper-income recipients of Social Security to pay more tax on their income, lowering reimbursements to Medicare providers, making other adjustments in Medicaid and in veterans' benefits. Now, all these cuts are already on the books. We are also cutting -- with the help of the Vice President's National Performance Review -- over 250,000 positions from the federal payrolls, largely by attrition and early retirement over the next five years. We're finally attempting to reform the system in ways that will permit us to save billions of more dollars in discretionary spending through reform of personnel budgeting and, most importantly, procurement systems -- if the Congress will authorize all three of those systematic reforms.

We also passed some taxes -- a modest 4.3 cents-a-gallon gas tax which, so far, has been barely felt because we have the lowest price in oil in many, many years so the price of gasoline has actually dropped since the gas tax was put on. We also asked the top 1.2 percent of Americans to pay higher income taxes because their incomes went up the most and their taxes dropped the most in the previous 12 years. The corporate income tax on corporations with incomes above $10 million a year was raised. Middle-class families will pay slightly less taxes because, again, of the adjustments for inflation. And taxes were cut for 15 million families who worked for very modest wages as a dramatic incentive to get them to continue to chose work over welfare.

When Congresswoman Mezvinsky and her colleagues voted for this economic plan, they voted for your economic future, for lower deficits, higher growth and for better jobs. They did vote to cut spending. They did not vote to raise taxes on the middle class. And, frankly, the kinds of radio ads that have been -- this is the only political thing I'm going to say today (laughter) -- but the kind of radio ads that have been run against here in this district do not serve the public interest because they do not tell the truth. (Applause.)

If somebody wants to say that we should not have raised income taxes on the top 1.2 percent of the American people, let them advertise that on the radio. If someone wants to say that the corporate income taxes above $10 million a year in income should not have been raised, let them advertise that on the radio. If someone wants to say that the gas tax was unfair, let them advertise that on the radio. But do not try to tell the American people there were no budget cuts and they paid all the tax increases, because that is simply not true. And we have a lot of work to do in this country and a lot of honest disagreements to have, we need not expend our energy on other things. And if you don't believe that read the front page of the Wall Street Journal this morning. That is hardly the House organ of my administration. (Laughter.)

Read the front page of the Wall Street Journal this morning talking about the unprecedented cuts that this budget made. It does not do anybody any good to continue to assert things about that economic plan that are not true. The markets had it figured out. That's why interest rates are down and investment is up. That's why inflation is down and more jobs have come into this economy in the last 10 months than in the previous four years. The markets figured it out. All the smoke and mirrors and radio ads in the world couldn't confuse the people that had to make investment decisions and read the fine print. (Applause.)

That's the good news. Now let's talk about the continuing problems, the real problems. The economic plan which the Congress adopted represents the red line. That's how much less the deficit will be. And the aggregate amount between these two lines is how much less our total debt will be by 1998. The yellow line represents where we can go, by conservative estimates, if the health care plan is adopted. You still have an operating deficit, and the national debt will still increase by this amount, but not by that amount.

So we are clearly better off with the economic plan. We will have to make further cuts, by the way, to meet this red line. We're not done with that. We will be better off still if we do something about health care -- I'll say more about that in a minute -- but there is still more to be done. The debt of this country now is over $4 billion. That means our accumulated debt is more than two-thirds our annual income. It is important that the debt, as a percentage of our annual income, go down. It is way too high, much higher than it has been outside of war time.

It is important that the annual deficit, as a percentage of our income, go down. It will go down under this plan, but we can do more to try to reduce the aggregate debt and the deficit as a percentage of our income. Both of them are too high.

Now, let's look at the next chart here. I think you all have it out in the audience. This chart just basically shows where you money goes. When you pay federal taxes, or when the government -- on your behalf -- borrows money, in debt, we spend 47.4 percent in entitlements -- that is what we're here to talk about today -- about 21 percent on defense, it's going down, as you'll see in a minute; about 18 percent on non-defense, discretionary, which is being held constant; and about 14 percent in interest on the national debt.

Let's look at the next chart now. This chart gives you an idea of which spending categories are headed in which direction. Average annual real growth -- now, I want to tell you what this means. I haven't lived in Washington very long so I still use ordinary meanings for words. (Laughter.) When you see real on a government chart, that means adjusted for inflation. (Laughter.) You'll never find that in a dictionary, but that is what it means. In other words, these are the numbers adjusted for inflation at a projected inflation growth of more or less three and a half percent a year. If you look at that you see defense is going down. Frankly, we're reducing it as much as I think we responsibly can; and, in fact, more than we responsibly can unless Congress will pass the procurement reform so the Defense Department can buy what it needs for our national defense at more efficient prices. But I hope that will happen.

Other entitlements -- we'll come to that in a minute what those other entitlements are -- they're also going down relative to inflation. That is basically the entitlements for the poor and the veterans' benefits and agriculture benefits.

Non-defense discretionary is a little under zero, as you see. That's all the investments for education, for training, for technology, for defense conversion, for you-name-it, anything for infrastructure, for roads; anything we spend money on that we have an option not to spend money on that -- we'll come back to that -- is going down relative to inflation. If there were no inflation numbers here, it would actually be just a tiny bit above the line, but it is functionally zero. For all practical purposes, if I want to increase the amount of money, for example, we spend on Head Start in Pennsylvania by a million dollars, we have to cut something else by a million dollars. We are not increasing the aggregate amount of this kind of discretionary spending. Net interests will go up and, again, this is adjusted for inflation, so it is continuing to rise because the amount of the debt is continuing to rise.

Social Security will go up, again, adjusted for inflation. This is about -- this is the population increase, effectively, in Social Security. There aren't new benefits being added, so there will be a couple of percent growth in population between now and 1998. So it will go up by the amount of increasing numbers of people on Social Security.

And look what happens to health entitlement. It's going up more than twice as much as Social Security, more than three times as much as net interest, and everything else is going down. Now that's what's happening. Let's go on to the next chart.

As the chart shows here, this is the new revenues we're getting in this year. Now, the new revenues include the tax increases that we just talked about. They're about 40 percent of that revenue growth. The rest of it's just ordinary increases in tax revenues to the government coming from increasing employment or increasing incomes. So it's -- every year -- and inflation -- so every year we get some revenue growth. This revenue chart is about 60 percent ordinary revenue growth, 40 percent new taxes. As you can see, the whole thing goes to deficit reduction, interest increases and entitlement increases. That's where the money went. Eighty percent of the new revenues, including taxes and revenue growth went to deficit reduction and interest increases; 20 percent of it went to entitlement increases. As you can see, that does not leave a great deal of room for any kind of future investments.

This is something that presumably both Senator Kerrey and Congressman Penny will talk about today. But there is, I think it's fair to say, a broad consensus in the Congress among Republicans and Democrats, among liberals and conservatives, that there are some things on which we are not spending enough money to get us to the 21st century. We have put ourselves in a box after the last -- trying to work our way out of this deficit business, so that we do not have the flexibility to make those kind of growth-oriented investments in the public sector.

That is a dilemma. So we have two continuing dilemmas, if you will -- one, we still got a deficit and a debt problem; two, there are things which literally over 80 percent of the Congress -- both parties -- would agree we should invest more in that we simply cannot invest more in because of the problem we have with the budget.
Could we go on now into the next chart? Let's go into the next chart.

Now, this gives you a picture of entitlement spending. And I know Alice Rivlin talked about this a little before -- and she knows a lot more about it than I ever will -- but I think it's worth going back over because this is an entitlements conference. So it's worth focusing on what an entitlement is. And when you hear people use that term, what they are.

So look at this. These entitlement programs are programs that provide benefits for people that have certain characteristics. People who meet the test of eligibility for the program get it, notwithstanding some previously budgeted amount for that program. That's why they're called entitlements.

For example, someone who has paid into the Social Security Trust Fund, along with his or her employer, who is 65 becomes "entitled" to Social Security. You just go to the Social Security office with the documents that prove you're eligible and you're going to get the check no matter how many other people qualify for Social Security. Since it's hard to know in advance exactly how many people will apply for benefits, Congress doesn't set aside a specific amount of money as it does for the discretionary spending programs. Instead, it simply directs to Treasury to make payments to everybody who applies and qualifies for the benefits under the laws.

There are two main kinds of entitlements. And you can just see by looking up here what they are. They are the contributory entitlements; that is, you're entitled to something because you paid into it. It's contract oriented. Social Security is a contributory entitlement. Medicare is a contributory entitlement. Federal retirement is a contributory entitlement. You did the work, you put the money aside, you get it back.

Then there are the entitlements for those in need, or entitlements that are in a special category because you can't predict how much is going to be needed every year. The entitlements for those in need would include AFDC, supplemental security income, the Medicaid program, medical care for the poor. Agriculture is in a separate category. It has been treated as an entitlement partly because it's so caught up in the global economy, it's impossible to predict from year to year how much of the support subsidies will be needed.

Now, the contributory retirements are sometimes called middle-class entitlements because they benefit everybody. The middle class, or Mr. Peterson will tell you in a few minutes, the upper-middle-class or the wealthy -- if you pay in, you get it back plus a cost of living increase. Now, the poor people's entitlement, I said, are mostly in the category of like AFDC and food stamps and Medicaid. But let me show you something about these entitlements, because most people, I think, don't know this. Social Security is 43 percent of the total. Medicare is 18 percent, Medicaid is 11 percent, federal retirement is 8 percent, unemployment is 5 percent -- obviously it goes up or down, depending on what the unemployment rate is and how long people are unemployed. Food stamps are 4 percent, other is 11 percent. In the other you have agriculture, veterans, supplemental security income -- which is for lower-income elderly people -- and AFDC. The welfare program of this 11 percent is 2 percent. The average monthly welfare benefit in America is actually lower today, adjusted for inflation, than it was 20 years ago. The program is more expensive because there are more poor people. But I think it's quite interesting to point that out. Most people are surprised to know that the welfare budget is about two percent of the entitlements, or about one percent of the overall federal budget.

Now, the entitlement programs for the needy, as you can see, make up about 12 percent of the whole budget; or about a quarter of the entitlement spending. The biggest entitlements are Social Security and Medicare. They are about 61 percent of the total. When you add federal civilian retirement and military retirement, you've got over two-thirds of the retirements there -- of the entitlements there.

Now, I think it's important to point out, just in passing, that behind every one of these entitlements there's a person. That's why it's so controversial when they're debated in Congress. It's not just organized interest groups, there are people who believe they are literally entitled to receive something back that they paid into. It is the middle-class entitlements, that have united us and brought us together, that also have the strongest constituencies and provoke the biggest controversies when we get into dealing with this. And these programs are also very important in human terms. And I just might mention, too, the -- if you look at Medicare, before Medicare, there was a good chance that Americans, when they got older, would need charity care, would simply do without health care. Today nearly 34 million people go to see a doctor, or get medical care because of the Medicare program.

Social Security has changed, literally, what it means to be old. In the beginning of 1985, for the first time in our history, the percentage of our elderly people who were above the poverty line was better than the percentage of the population as a whole. In other words, the poverty rate for the elderly was lower than the poverty rate of the general population.

It is very difficult to say that this was a bad thing. That was -- I argue -- a good thing. We should not view this whole program, in other words, as welfare. It is not a welfare program. Does that mean that there should be no changes in it? No. It just means that we should be very sensitive about the fact that this is something that has worked. Because of these programs, we are a healthier people. We are a more unified country. We treat out elderly with greater dignity by having allowed them to earn a decent retirement and to maintain a middle-class standard of living, independent of whatever their children are required to do, and to make them more independent over the long run. This is a huge deal in a country where the fastest growing group of people, in percentage terms, are people over 80 years of age. (Applause.) This is a big deal. (Applause.)

Now, I recommended exposing more of the incomes of the top 10 or 12 percent of Social Security recipients, somewhere in that range, to taxation, and Congress adopted a modified version of that plan. That was an entitlements move. I thought it was an appropriate thing to do because a lot of people in upper-income levels, by definition, have other sources of income, too, and will get back what they paid into Social Security plus reasonable interest growth in a reasonably short period of time, so I thought it was fair to do that.

We recommended upper-income people pay more for Medicare benefits. I think that is reasonable to do because the Medicare payment itself only covers a small percentage of the total cost of Medicare. Where I think we should draw the line, however, is in trying to have happen to the elderly middle class what is happening to the non-elderly middle class. All over the world today, and certainly in all the advanced countries of the
world, the middle class is under assault. Earnings inequality has increased in the last 12 years. It is becoming very difficult for working people to sustain a middle-class way of life. We are going to have to all change. We've got to change our government policies. People are going to have to acquire much higher levels of skill and be committed to training for a lifetime. There are a lot of things that have to be done. But the general policy point, I think, is valid. We do not want to deal with a problem like the deficit which is aggravated because middle-class people's incomes have stagnated by having the same sort of income stagnation for the middle-class elderly.

So I think there are things we can do to deal with this. They will be discussed later. We did some things to deal with the entitlements in the last budget. But let us not say that it was a bad thing to dramatically reduce poverty among elderly people, or that it is a bad thing for our consumer economy to maintain a large number of middle-class people in their retirement years. That means that we have to have honest, specific and clear discussions of this, as unencumbered as possible by these sort of rhetorical bombs flying in the air from the left and the right.

Just talking it through and listening to each other and asking ourselves what will be the practical impact of proposed change A, B or C; and will we all be more secure, will our children and our grandchildren be better off; will this help to stabilize and increase the middle class ballast of our society? And I think we are on the verge, perhaps, of having that discussion in no small measure because of this kind of conference.

Now, let's go on and let's look at what I think the real problem in the entitlements is, is clearly the danger signal for the long run. Let's look at the next chart. As you can see, 20 years ago health spending and entitlements -- Medicare and Medicaid -- 13 percent of the total; 1983, 19 percent of the total; 1993, 30 percent of the total; 2003, 43 percent of the total. Keep in mind -- and this is with the number of elderly people going up like crazy, so the population of people drawing Social Security is going way up, right? And still, look at that.

So, clearly, that is the portion of government spending that is out of control. That is the portion of entitlement spending that is out of control. Now let me just illustrate it by a couple more charts, real quickly. Let's go to the next one.

Non-defense discretionary outlays are going down as a percent of our income. Social Security outlays as a percentage of our income is solid, stable here. It could go up some in the next century, is projected to when all the baby boomers go in. I heard Ms. Rivlin refer to that as the President's generation. (Laughter.) I am the oldest of the baby-boomers.

But still, you see, it's a stable as a percentage of the gross national product. And the Congress, in 1983, after the Bipartisan commission on Social Security made recommendations for fixing Social Security, attempted to keep this number stable by gradually raising the retirement from 65 yo 67, by about a month a year over a prolonged period of time starting just in the next century.

Now let's go on to the last one. This chart shows you that unlike Social Security and discretionary spending, medical spending is going up like a rocket. Medicare and Medicaid have tripled since 1982. Medicare and Medicaid will soon cost more than Social Security. And next year for the first time -- in large measure because Medicaid is a state-federal matching program, so that every state has to put in money along with the federal government -- next year, for the first time, states will spend more money on health care than education. And since we -- and since I supported this, I see other present and former governors around this table -- in the 1980s we said to the national government, "You've got a problem with the deficit, we'll spend more on education. You do what you have to do to deal with your other problems." This is a very serious danger signal. If you want the states to spend more educating people, getting children to the point where they can compete, training the work force -- to have the states all of the sudden spending more on health care than education is a very serious danger signal for the distribution of responsibilities between the state and the federal government.

Now, we have some options. If we want to control Medicare and Medicaid spending, basically we have some options. And to be fair, again I want to say during the 1980s under the Reagan and Bush administration -- the two administrations and the United States Congress did try to cooperate on several things to control Medicare and Medicaid spending. They took total pricing controls away from hospitals and doctors. They tried to do a number of things. But what happened? If you control the price of a given product in this environment, what happens? Providers can provide more products, I mean, more of the same product, right? You increase the volume if you lower the price, and the money still goes up. That's one problem. Secondly, poverty increased in the '80s and is continuing to increase among the poor and the -- both the idle and the working poor -- and that drives the Medicaid budget up. So controlling unit prices didn't work. The other thing you could argue that we could do is to try to control the categories within Medicare and Medicaid; basically, just spend less. In other words, even though they're entitlements, just say we are going to spend less on certain categories by both controlling volume and price. Is there a problem with that? Yes there is. What is it? Any doctor or hospital will tell you that there has been a lot of cost shifting in this health care system, and it's one of the causes of rising prices and inefficiency. Cost shifting largely occurs in two ways -- when hospitals have to care for people who don't have any insurance, or when they provide government funded health care at less than their cost of providing the service, they shift the cost onto the private sector.

So we could bring this deficit down -- we could do this -- I want to -- let's 'fess up, we could do this. We could just cut how much we're going to spend on Medicare and Medicaid, even though it's an entitlement, in terms of price per unit and volume. We can just take 'er down. But if we do that, what will happen? Those costs will be shifted by the health care providers to the people who already are providing insurance; with the impact that it will be a hidden tax increase on businesses and on employees. Employees will probably see it in not getting pay raises they otherwise would have gotten. Businesses will see it in spending more on health insurance premiums and having less to reinvest in the business or to take in profits. I don't think it is fair thing to do. That is why our administration has argued that if you really want to solve this problem, you have to go back and have comprehensive health care reform. This is the only country in the world that doesn't find a way to solve that issue, that doesn't give -- the only advanced nation, that is -- that doesn't give basic health care to all its citizens within a framework that controls costs in the public and private sector.

We're spending 14.5 percent of our income on health care. Nobody else is over ten; Germany and Japan are at nine. The health outcomes of other countries are roughly similar to ours. We can't get down to where they are because we spend more on technology and more on, basically, costly treatments than other countries do, and more on medical research. And that's fine. And we can't get down to where they do because we have more violence and higher rates of AIDS and other very expensive diseases than other countries. But we could do better. And unless we do better in an overall way, in my judgement, we are going to be in trouble.

Now we had a nonpartisan analysis by the respected firm of Lewin-VHI last week about our health care plan. This company does research on the economics of health care for businesses, unions, consumer groups. It includes people who served in the Reagan and Bush administrations as budget and health officials. They say that our plan will reduce the deficit. We think it will reduce it even more than they will. I won't get into the details of that today. We're here to talk about entitlements. The point I want to make is I believe you don't entitlement control, you don't get ultimate deficit control unless you do something about Medicare and Medicaid. I believe you don't get that done just by cutting Medicare and Medicaid unless you want to hurt the private sector. Therefore, I think we have to have some sort of health reform. That's what I believe. You have to decide if you believe that, but I think it's important. (Applause.)

Let me just close with this. This is the lead editorial in this morning's Washington Post. It says -- on the entitlements mess -- and it says as follows: "Nor have all the entitlements been badly behaved in recent years in terms of costs. The health care programs are the budget busters. By contrast Social Security costs have risen in "stately fashion" with population and inflation. And the costs of all the other entitlements taken together, including those that support the poor has declined in real terms" -- remember what "real" means in Washington, less than the rate of inflation. "The real federal budget problem" -- that's the normal word "real". Here they mean real like you do. (Laughter.) "The real federal budget problem isn't entitlements, it's health care."

So I say to you we can talk about these other entitlements and we should. As we talk about them, let us not make our middle-class squeeze problem worse than it is already. That's one of the profound problems that is driving this country. One of the reasons that Senator Wofford is in the Senate today, is because of the anxieties of middle-class workers in Pennsylvania.

Let us continue to work on this deficit. Let us realize the deficit is too big and the debt is much too large as a percentage of our gross national product. Let us realize that there are two problems with it. One is the deficit and the other is we aren't investing enough. But on the entitlements issue, I would argue the real culprit is health care costs, and we can only address it if we have comprehensive health care reform.

And let me close by saying one more time, if Marge Mezvinsky hadn't voted for that budget, we wouldn't be here celebrating economic progress or talking about entitlements. We'd still be back in Washington throwing mudballs at each other. And I respect her for that and I'm glad to be here today. (Applause.)

2. Remarks on Signing the Social Security Independence and Program Improvements Act of 1994 --August 15, 1994

August 15, 1994

Thank you very much. Thank you, Senator Moynihan, Chairman Gibbons, Secretary Shalala. To all the distinguished Members of Congress who are here, especially Senators Mitchell and Dole and the Speaker and to one who is not here, Andy Jacobs, who worked so hard on this endeavor, let me thank you all. Let me especially thank Senator Moynihan, who identified the need to reestablish the Social Security Administration as an independent agency 11 years ago. I was sitting here thinking, when I saw him up here so full of pride that this day had finally come to pass, of two things. First of all, about 8 months ago, Senator Moynihan said to me, "We have a lot of important business to do this year. And we'll have to fight like crazy on all of it. But if you will just come out and say, you're for an independent Social Security agency, I think we can do this unanimously. And that would be a very good thing for Congress to do." [Laughter] And then I was wondering whether, if we waited 11 years we could be unanimous about every issue that comes before us. [Laughter] I want to thank Senator Moynihan for his persistence and guidance and all the others who have worked so hard on this legislation.

When Franklin Roosevelt made a speech to the New York legislature in 1931, he said this: "The success or failure of any government must be measured by the well-being of its citizens." That was the goal that moved him 59 years ago yesterday. On that day, in a ceremony in the Cabinet Room, just behind us, he signed the Social Security Act into law. And that is what guides us today.

With an independent Social Security Administration, we are reinventing our Government to streamline our operations so that we can serve the American people better. We are strengthening those things which Social Security ought to do and taking precautions to make sure it does not do things which it ought not to do. It is proving that Government can still work to improve people's lives. And now Social Security, we know, will work even better.

For millions of Americans, that signature 59 years ago transformed old age from a time of fear and want to a period of rest and reward. It empowered many American families as well, freeing them to put their children through college to enrich their own lives, knowing that their parents would not grow old in poverty. Nine years ago, thanks to that effort, for the first time in the history of the United States, the elderly had a lower poverty rate than the rest of the population.

In fighting for Social Security and for so much else, President Roosevelt knew that the American people always would have a personal stake in overcoming the status quo when the need was great enough. That is something we should all remember as we go into the next few weeks, as we delay the August recess, as we struggle to come to grips with the challenges of this age, the challenge of crime, the challenge of health care.

These kinds of changes are difficult, but they always have been. In 1935, even Social Security as we know it nearly died in a congressional committee, as Senators considered stripping away the old-age pension. Congress almost left town with this and other critical work unfinished. But they found the grit to work on through the summer of 1935, when they didn't have as much air-conditioning as we have today. And they accomplished so much in that period now known as the Second Hundred Days. President Roosevelt said then that that session of Congress would be regarded as historic for all time.

What we do here today maintains that historic commitment. If we keep focus on the work we are sent here to do, what we do here today can be but the precursor of things that we also can do to benefit the American people that will be historic for all time.

Now I'd like to ask the folks here to join me as I sign this bill. In the beginning, I will for a letter or two at least, use the pen that President Roosevelt used 59 years ago yesterday.

Thank you very much.

Written Statement on Signing the Social Security Independence and Program Improvements Act of 1994

August 15, 1994

Today I am pleased to sign into law H.R. 4277, the "Social Security Independence and Program Improvements Act of 1994." Fifty-nine years ago, President Franklin Delano Roosevelt signed the original Social Security Act, creating one of the most important and successful Government programs of all times. With the enactment of H.R. 4277, we are beginning a new chapter in the history of the Social Security program, one which recognizes the program's importance by elevating the stature of the agency responsible for its administration. Once combined with a genuine reform of our health care system, we will have fulfilled the vision of the original architects of the Social Security system to provide Americans protection against the vicissitudes of old age and ill health.

Establishing the Social Security Administration as an independent agency within the executive branch reflects my commitment to maintain the confidence of all Americans in the Social Security program. I sincerely hope that it will reassure those currently paying into the system that they too will receive benefits when they retire. For nearly 60 years, the Social Security Administration has done an admirable job of carrying out its principal mandate: ensuring that Americans receive the Social Security benefits to which they are entitled. The agency's new status recognizes and strengthens our commitment to this tradition of public service.

As I have stated many times, my Administration is committed to "putting people first." Consistent with this philosophy, I issued Executive Order 12862 directing public officials to "embark upon a revolution within the Federal Government ... to provide service to the public that matches or exceeds the best service available in the private sector." Establishing an independent Social Security Administration will enhance its ability to meet this goal and provide "world class service" to all Americans.

I also want to highlight that H.R. 4227 includes important provisions designed to strengthen the integrity of the disability programs administered by the Social Security Administration. For example, recipients disabled due to substance abuse will now only receive benefits for a limited time (generally 36 months). These recipients must also undergo appropriate, available treatment.

Finally, I must note that, in the opinion of the Department of Justice, the provision that the President can remove the single Commissioner only for neglect of duty or malfeasance in office raises a significant constitutional question. I am prepared to work with the Congress on a corrective amendment that would resolve this constitutional question so as to eliminate the risk of litigation.

Again, I am pleased to approve H.R. 4277 and to reaffirm my commitment to carrying out the Social Security program for the benefit of our Nation's citizens.

William J. Clinton
The White House,
August 15, 1994.

3. President's Statement on Signing H.R. 3161-- March 29, 1996

Today I have signed into law H.R. 3136, a bill providing for an increase in the public debt limit, an increase of the Social Security earnings limit, and increased flexibility for small businesses to comply with regulations.

I applaud yesterday's bipartisan congressional vote to maintain the Nations's creditworthiness and financial integrity. With the signing of this bill, millions of Americans will, once again, be secure that this great Nation will stand behind its obligations to pay not only beneficiaries of Federal programs but bondholders as well.

Over 8 months ago, Secretary of the Treasury Rubin wrote to the leaders of the Congress, urging them to pass an increase in the debt limit sufficient to extend through the current political season. Secretary Rubin pointed out that attempting to use the prospect of a Federal Government default to achieve leverage in a budget debate was not in the best interests of the American people. Now that we no longer need to focus our efforts on avoiding a default, we can turn our full attention to continuing to bring down the budget deficit as we have successfully done for the last 3 years.

When I took office, the deficit was $290 billion -- and rising. By the end of fiscal 1995, the deficit was $164 billion. As a share of the economy, we have cut the deficit by more than half. And just yesterday, the Congressional Budget Office announced its estimate that the deficit for the current fiscal year will fall to $140 billion -- thus cutting the deficit that I inherited in half and fulfilling my commitment to do so in my first term.

We should now continue this progress -- and limit future increases in the public debt -- by reaching an agreement to balance the budget by 2002. Over the last several months, I have worked closely with congressional leaders to reach agreement on balancing the budget. In fact, we have about $700 billion in common savings, enough to balance the budget and provide a modest, targeted tax cut. Let me reiterate: I am committed to reaching an agreement with the Congress to balance the budget -- and to reaching that agreement this year.

I also am pleased that this legislation increases the Social Security earnings limit. Currently, retired workers ages 65 through 69 who earn wages above a certain amount have their Social Security benefits reduced by $1 for every $3 in earnings. Over 900,000 Social Security beneficiaries lose some or all of their benefits. This reduction in benefits discourages work by senior citizens who are able and willing to do so. Raising the earnings test will increase the standard of living of the elderly and help the Nation's economy.

This legislation also responds to the legitimate concerns of small businesses regarding regulatory burdens. The bill includes several recommendations of the White House Conference on Small Business that I have supported. In addition, it codifies a number of my reinvention initiatives that will help small businesses comply with Federal regulations and, just as important, enable them to become meaningful partners in the regulatory process.

Finally, this legislation increases congressional accountability for regulations, providing expedited procedures for the Congress to review those regulations. I have long supported this concept, and my Administration endorsed the Senate's efforts of last year in this regard. I am, however, concerned about changes that the House made to this bill, which will unduly complicate and extend this congressional review process. We will work with the Congress to resolve these concerns.


March 29, 1996

4. Excerpts From President's 1998 State-of-the-Union Address -- January 27, 1998

When I took office, the deficit for 1998 was projected to be $357 billion, and heading higher. This year, our deficit is projected to be $10 billion, and heading lower. (Applause.) For three decades, six Presidents have come before you to warn of the damage deficits pose to our nation. Tonight, I come before you to announce that the federal deficit -- once so incomprehensibly large that it had 11 zeroes -- will be, simply, zero. (Applause.) I will submit to Congress for 1999 the first balanced budget in 30 years. (Applause.) And if we hold fast to fiscal discipline, we may balance the budget this year -- four years ahead of schedule. (Applause.)

You can all be proud of that, because turning a sea of red ink into black is no miracle. It is the product of hard work by the American people, and of two visionary actions in Congress -- the courageous vote in 1993 that led to a cut in the deficit of 90 percent -- (applause) -- and the truly historic bipartisan balanced budget agreement passed by this Congress. (Applause.) Here's the really good news: If we maintain our resolve, we will produce balanced budgets as far as the eye can see.

We must not go back to unwise spending or untargeted tax cuts that risk reopening the deficit. (Applause.) Last year, together we enacted targeted tax cuts so that the typical middle class family will now have the lowest tax rates in 20 years. (Applause.) My plan to balance the budget next year includes both new investments and new tax cuts targeted to the needs of working families: for education, for child care, for the environment.

But whether the issue is tax cuts or spending, I ask all of you to meet this test: Approve only those priorities that can actually be accomplished without adding a dime to the deficit. (Applause.)

Now, if we balance the budget for next year, it is projected that we'll then have a sizeable surplus in the years that immediately follow. What should we do with this projected surplus? I have a simple four-word answer: Save Social Security first. (Applause.) Thank you.

Tonight, I propose that we reserve 100 percent of the surplus -- that's every penny of any surplus -- until we have taken all the necessary measures to strengthen the Social Security system for the 21st century. (Applause.) Let us say to all Americans watching tonight -- whether you're 70 or 50, or whether you just started paying into the system -- Social Security will be there when you need it. (Applause.) Let us make this commitment: Social Security first. Let's do that together. (Applause.)

I also want to say that all the American people who are watching us tonight should be invited to join in this discussion, in facing these issues squarely, and forming a true consensus on how we should proceed. We'll start by conducting nonpartisan forums in every region of the country -- and I hope that lawmakers of both parties will participate. We'll hold a White House Conference on Social Security in December. And one year from now I will convene the leaders of Congress to craft historic, bipartisan legislation to achieve a landmark for our generation -- a Social Security system that is strong in the 21st century. (Applause.) Thank you.

5. Excerpts From President's Speech in Champaign-Urbana, Illinois -- January 28, 1998

Now, the last thing I want to ask your help on in the coming year -- because we're going to have a big dialogue about it -- is something that all of you students probably never think about, and that is Social Security and your retirement. I don't know about you, but when I was your age I never thought about it. (Laughter.) I thought I would live forever, always young. And what Senator Moseley-Braun said is true, the older you get, the faster time goes.

I never will forget, once a few years ago I saw a man who was 76 years old at an airport, meeting his brother, getting ready to go to his sister's funeral. And I said, what are you thinking about? And he said, oh, I'm thinking about when we were five years old, how we used to play together. He said, you know, Bill, it doesn't take long to live a life. I say that to say that even the young must care for the future. Even the young must think about their obligations to generations yet unborn; that America must work as a seamless web of community, always doing what is best for today and tomorrow.

Now, what's that got to do with Social Security? There are polls that say that young people in their 20s think it's more likely that they will see UFOs than that they will ever collect Social Security. (Applause.) And all of you know that the Social Security system is supposed to be in trouble. Now, what does that mean? It is not in trouble today. Nobody today has got any problems drawing their money. In fact, today we collect more money in Social Security taxes every year, quite a bit more, than we pay out.

The problem is that when the baby boomers retire --starting with me; I'm the oldest of the baby boomers -- people my age and down about 18 years younger, we are the largest group of Americans that have ever lived, except the group that started first grade last year, -- second grade, or third grade, whatever it is, something in grade school -- because we've got more children in schools now, public schools, than we had during the baby boom generation for the first time. But we're going to have 18, 20, 25 years where there will be a huge number of people on Social Security in their retirement years compared to the people who are paying in. That is the issue.

Now, the question is, what is the best way to prepare for the retirement of the baby boomers in ways that do not either rob those people who need it of their secure retirement, or impose intolerable burdens on our children, who, in turn, will be burdened in raising our grandchildren.

I don't know anybody in my generation who believes that we ought to just take it out on you and put our feet up when we turn 65 and turn away from the obligations we have to contribute to the further growth and vitality of people who are younger than we are.

So the question is, what is the fairest way to change this? What's best for people who are on Social Security now? What's best for the baby boomers? What's best for young people in their 20s and 30s just starting to pay into the system? What's best for the kids that are in high school now who haven't even started.

We're going to spend a year having forums all across the country, completely non-partisan, trying to bring people in and debate it. And then about a year from now, I'm going to convene the leaders of Congress and we're going to try to craft historic bipartisan legislation to reform Social Security, to save it for the 21st century, to make sure it's there not just for the baby boomers, but for everybody in this audience and all your children, too, so we'll have a system that works, so that people who work hard and do their part will know they'll have elemental retirement security and that we can do it without bankrupting the country. I think we can do it. I know we can do it. But it's going to take your good-faith involvement -- people of all ages. (Applause.)

And since what we do may affect how you proceed throughout your entire work life, we've got to have people involved in their 20s, in their 30s. The young people of this country have got to be involved in this debate. It will affect you as much as anybody else. But if we do it, it will be just sort of like balancing the budget.

You know how people said, oh, you'll never get that budget balanced, you'll never do that, that's just something politicians talk about. It is a huge thing to do. Why? We spend less money on debt, we invest more money in our future, we have a stronger economy. The same thing will be true of Social Security. Once we make the adjustments necessary to fix it, the increase in confidence, the increase in savings, the increase in belief in the future of this country as we go forward together will be absolutely astonishing. And we need you to be a part of it.


East Room 10:44 A.M. EST

THE PRESIDENT: Thank you very much for that warm welcome. Good morning. Thank you, Mr. Vice President, Mr. Bowles, members of our economic team, members of the Cabinet and administration. And I thank the large number of members of Congress who have come here today, and others, all of you here for the submission of the first balanced budget in 30 years, one that will truly strengthen our nation for the 21st century.

This budget marks the end of an era, an end to decades of deficits that have shackled our economy, paralyzed our politics, and held our people back. It can mark the beginning of a new era of opportunity for a new American Century.

Consider what has been achieved in so short a time. In the 12 years before I took office, trickle-down economics led to an explosion in the federal deficit which quadrupled our national debt in only 12 years. Government deficits soaked up trillions of dollars in capital that should have been used for productive investment. Massive deficits led to high interest rates that slowed growth. And massive deficits also paralyzed the Congress in their attempts to invest in our future, as we spent more and more and more of the taxpayers' dollars just to pay interest on the debt we had run up.

The new economy was being held back by old political ideas and arrangements. The deficit was more than an economic reality; it was a powerful symbol that government had simply failed to meet its most basic obligations. And doing something about the deficit was one of the reasons I ran for President in 1992.

The day I took office, the deficit was projected to be about $300 billion for that year. For five years, beginning in 1993, as the Vice President said, the Congress and the American people have worked tirelessly to put our economic house in order. We have worked hard here to put our fiscal house in order. The government is the smallest it's been in 35 years. And deficit reduction has given us lower interest rates, higher investment, and, I might add, lower unemployment, more taxpayers, and more funds to invest in America's future.

That is the gamble we took in 1993 -- a gamble now that I thought was not such a gamble at all. But it did, as the Vice President said, cost several members of Congress their jobs. Wherever they are today -- wherever they are -- I hope they know and remember that we passed that budget in '93 by one vote in the Senate and by one vote in the House and we did not have a vote to spare. And everybody that stood up, and especially those who lost their seats, can know they gave 14 million Americans jobs that would not have been there otherwise and a brighter future for all the American people, and I'm very grateful for that. (Applause.)

I also want to point out, as the Vice President did, that the job to be finished and to eliminate the structural deficit, came with a balanced budget agreement last year. And we should applaud all those in both parties who were part of that. Because it will not only enable us to achieve a balanced budget, it will enable us to maintain a balanced budget long into the future if we stay with the disciplined framework that was embraced last year by very large majorities in both Houses of both parties. And that is very important. It's one thing to get the deficit down, another thing to hold it there. And that balanced budget agreement will not only go from a much smaller deficit down to balance, but also will hold it there if we stay with the discipline. We have not done all this work to let it go.

Now, I believe, if we will stay with the plan, we can balance the budget without further cuts. Indeed, the balanced budget I submitted shows we can balance the budget and still hire 100,000 new teachers and modernize 5,000 schools. We can balance the budget and allow hundreds of thousands of middle-aged Americans who have no health insurance through no fault of their own to buy into Medicare. We can balance the budget and still extend child care to a million more children. And above all we can balance the budget and save Social Security first. (Applause.)

In other words, it is obvious that you can have a smaller government but a more progressive one that gives you a more stronger America. We've done more than simply balance the budget, more than just line up numbers on a ledger. We have restored the balance of the values in our policy, restored the balance of confidence of between government and the public. Now, we'll have a balanced budget not only next year but as far as the eye can see.

We have to use this opportunity to build a stronger America. And let's just talk about that. First and foremost, we project that the budget will not only balance, it will actually run a surplus of $9.5 billion next year and over $200 billion over the next five years -- fully $1 trillion over the next 10 years. This budget reserves that surplus -- I want to say it again -- this budget reserves that surplus, saving it until we have taken the steps necessary to strengthen Social Security into the next century.

One of the reasons that balancing the budget has been hard is that we have insisted on a balanced budget that honors our values. Finding a way to reduce red ink without shrinking the circle of opportunity has been at the heart of our efforts. And when we started, most people said you couldn't do it. They said there is no way to cut the rest of government enough to reduce the deficit and increase investment in important areas. But that is an important achievement as well.

Now it is most important of all that we balance the budget while renewing our commitment to save Social Security. When I left Washington last week and went to Champaign, Illinois, and La Crosse, Wisconsin, I was moved by the strength and depth of the American people's priority for the surplus they created. I think they want us to save Social Security first, as well. And I hope all of you, and members of Congress in both parties, will support that.

We have a great opportunity now to take action now to avert a crisis in the Social Security system. We have a great opportunity now to be able to tell all these young people who are shadowing their Cabinet and administration leaders that Social Security will be there for them when they retire. We have a great opportunity, those of us in the baby boom generation, to tell our own children that when we retire and start drawing Social Security, it isn't going to bankrupt them to take care of us and undermine their ability to take care of their own children. We need to do this.

We don't need to take any shortcuts, we don't need to take any short-term benefits. Before we do anything with that surplus, let's save Social Security first. (Applause.)

The budget continues our efforts at education reform. As I said, it enables us to hire 100,000 new teachers working with states to reduce class size to an average of 18 in the 1st, 2nd, and 3rd grades, and to help modernize or build 5,000 schools. It helps to give our parents the tools they need to meet their responsibilities at home and at work, among other things allowing people between the ages of 55 and 65 who lose their health insurance to buy into the Medicare program.

It includes a breakthrough investment in child care through tax credits, vouchers for states, scholarships for care givers. It will help America to meet its obligations in international leadership -- meet our obligations to stabilize the world's financial markets, to pay our dues to the United Nations, to continue our support of our military so that our men and women in uniform can continue to do the job for us.

It will provide tax cuts in research and development to help meet the challenge of global climate change in a way that enables us to grow the economy while actually improving the environment. It continues to support our urban empowerment strategy, bringing more private sector investments to our hardest-pressed cities and neighborhoods while continuing to put 100,000 police officers on the streets and giving our children something to do after school, so more of them can stay out of trouble and on a path to success.

It will lead to future generations the gift of scientific and medical advances. The 21st Century Research Fund, the largest funding increases ever for the National Institute of Health, the National Science Foundation, and the National Cancer Institute, will speed the progress of biomedical breakthroughs in the fight against many of our deadliest diseases.

The budget funds these initiatives by continued cuts in government programs, by closing unwarranted tax loopholes, and from the passage of tobacco legislation, which, as every passing day shows, is critically important to the future of our children and therefore of our country. (Applause.)

This budget meets the test I set out before Congress last week: no new spending initiatives, no new tax cuts unless they can actually be accomplished without adding a dime to the deficit. For more than two centuries, Americans have strengthened our nation at every critical moment with confidence, unity, a determination to meet every challenge. For too long the budget deficit, a worsening crime wave, the seemingly unsolvable welfare difficulties -- they all seemed to challenge our innate American confidence. In the past five years, the American people have met these challenges and have moved to master them. Now we have a chance, in a period of peace and prosperity with renewed confidence, to build for the future. That's what this balanced budget does.

Now, it is -- I am going to close my remarks now, by asking the Vice President to give me a magic marker so that I can be the first person to actually certify what the budget will say for the coming year. Even we can do this. I am technologically challenged, therefore, we're not doing this on a computer. (Laughter and applause.)

END 10:55 A.M. EST


Gaston Hall, Georgetown University, Washington, D.C.

10:53 A.M. EST

THE PRESIDENT: Thank you very much. Special thanks to those of you who had to wait all night to get in. (Laughter.) Hope you won't be disappointed. (Laughter.)

Mr. Vice President, Father O'Donovan, to all the groups here who are concerned with Social Security, especially to Congressman Penny and the Concord Coalition, and John Rother and the AARP, I thank you all for being here.

I thank Senator Bob Kerrey, who when he cast the decisive vote for our budget in 1993 said that he would do so only if I were also committed to dealing with the long-term structural problems of Social Security, to heal the deficit there as well. I thank Gene Sperling and the members of my staff who worked with us on this. And thank you, Mannone Butler, for embodying what this struggle is all about. Weren't you proud of her? She did a great job I think. Thank you very much. (Applause.)

When I first ran for President six and a half years ago now, I came to this hall to set out my vision for 21st century America, and a strategy for achieving it. Often in the years since I have come back here to discuss our nation's most demanding challenges. And on many occasions, but none more relevant than today, I have recalled the assertion of my freshman professor in the history of civilizations course, Carroll Quigley, that the distinguishing characteristic of Western civilization in general and the United States of America in particular is what he called future preference -- the idea that the future can be better than the present or the past; that each of us has a personal, moral responsibility to work to make it so, to plan for it, to work for it, to invest for it.

There is no better example of that principle for the strength of America than the opportunity and the duty all of us as Americans have now to save Social Security for the 21st century. So today I return to discuss what we have to do to achieve that and why it is so important.

You know, there was a recent poll which said that young people in the generation of the students here felt it was far more likely that they would see a UFO than that they would draw Social Security. (Laughter.) And others may think that it's a long way off, as Mannone said, and the Vice President said he thought it was a long way off.

A couple of days ago I went to New Mexico to visit our national labs -- you may have seen the story. And our national labs at Los Alamos and Sandia and Lawrence Livermore, where we do a lot of the research that not only helps us to preserve the security of our smaller and smaller nuclear arsenal, but helps us to deal with our environmental questions and a lot of other fascinating challenges of the future. But anyway, after I finished this, I had lunch with a few of my friends, including a man that I went to Georgetown with. And at the end of the lunch, he whipped out this photo and gave it to me, and we were sitting in a park together, about a week after I graduated in 1968. And I looked at that photo and I said, my goodness, where did all the time go? It seems like it was yesterday to me.

I say that to make this point: It may seem a long way away from the time you now -- where you are until you will need retirement. It may seem a long way away before most of your parents need retirement -- but it isn't. And great societies plan over long periods of time so that individual lives can flower and take root and take form. And that is what we have to do today.

Social Security is a lot more than a line in the budget. It reflects some of our deepest values -- the duties we owe to our parents, the duties we owe to each other when we're differently situated in life, the duties we owe to our children and our grandchildren. Indeed, it reflects our determination to move forward across the generations and across the income divides in our country, as one America.

Social Security has been there for America's parents in the 20th century, and I am determined that we will have that kind of security for the American people in the 21st century. We are entering this new millennium, the new century, with restored confidence -- the Information Age, a growing global economy, they're changing the way we live and work. And the scope and pace of change, well, it may seem commonplace to those of you who have grown up with it, but to people my age it is still truly astonishing. And I can tell you, it is without historical precedent.

For a long time our country failed to come to grips with those changes and we paid the price in a stagnant economy and increasing inequality among our working families, in higher child poverty, in record welfare rolls, higher crime rates, other deepening social problems. Before the present era we had only run budget deficits, and the deficit I think came to symbolize what was amiss with the way we were dealing with the changes in the world. We had only run budget deficits for sound economic reasons -- either because there were some overwhelming need to invest or because there was a recession that required stimulation of the economy, or because there was a national emergency like war. The idea that we would just simply have a structural deficit and run one year in and year out was unheard of. But that is exactly what has happened throughout your lifetime.

And it got so bad in the 1980s that between 1981 and 1992 the total debt of the country was quadrupled -- quadrupled -- in a 12-year period, over and above the previous 200 years. That raised interest rates. It took more and more tax money away from investments in education, for example, or the environment to pay interest on the debt. It slowed economic growth and it definitely compromised your future.

Five years ago I determined that we had to set a different course, to move past the debate that was then paralyzing Washington and, frankly, didn't have much to do with the real world, between those who said government was the enemy, those who said government was the solution and as long as you can fight about something, then you don't have to get down to the nitty-gritty of dealing with the real problems.

When the British Prime Minister was here last week, Tony Blair, we stressed that we both think, and many other leaders increasingly around the world are beginning to think that this debate is fruitless and that there has to be a third way -- that 21st century government, Information Age government, must be smaller, must be less bureaucratic, must be fiscally disciplined and focus on being a catalyst for new ideas and giving you and all other Americans the tools they need to make the most of their own lives.

For five years we have reduced the size of the deficit, reduced the size of government, dramatically reduced the budget deficit by over 90 percent, but continued to invest in your future. And in very dramatic ways that's changed the experience of going to college.

Student loans that are guaranteed by the government have been made less expensive and easier to repay. There are hundreds of thousands of more Pell Grant scholarships, 300,000 more work-study slots. AmeriCorps has allowed 100,000 young people to earn money for college while serving in their community. There are now tax-free IRA accounts for college education. Last year we enacted the HOPE Scholarship, which is a $1,500 tax credit for the first two years of college. And then there's a lifetime learning tax credit for junior and senior years for graduate schools and for adults who have to go back for further training. For the first time in history, while reducing the deficit by 90 percent, we can honestly say if you're willing to work for it, whatever your circumstances, you can go on to college in the United States, and that is a very important achievement.

Now, all of these things have worked together to give us the strongest economy in a generation -- almost 15 million new jobs, the lowest unemployment rate in 24 years, the lowest inflation rate in 30 years, the highest homeownership in history, average incomes rising again. I've submitted to Congress for 1999 the first balanced budget in 30 years. All that is a remarkable achievement. But, as I said, we have to be thinking about the future. And all of you know to a greater or lesser degree of specificity, every one of you know that the Social Security system is not sound for the long-term, so that all of these achievements -- the economic achievements, our increasing social coherence and cohesion, our increasing efforts to reduce poverty among our youngest children -- all of them are threatened by the looming fiscal crisis in Social Security.

Today I want to talk about what it is and how we propose to deal with it. And as the Vice President said, we should use the economic good times. That old saying that you don't wait for a rainy day to fix the roof is good for us today; it's very sunny outside. And on this sunny day, we should deal with Social Security.

In very specific terms, we've got a great opportunity because it is projected that we stay with the present budget plan, that taking account of the fact that we won't always have the greatest economic times as we've had now -- there will be times when the economy will grow faster, times when it will grow slower, we may recessions -- but structurally, we have eliminated the deficit, so that over time we should have a balanced budget, and over time, most times we should be running a surplus now if we stay with the discipline we have now over the next couple of decades.

Now, if that's so, it is now estimated that with normal ups and downs in economic growth, over the next 10 years, after 30 years of deficits, that the United States will have a budget surplus in somewhere in the range of a trillion dollars in the aggregate over the next 10 years. I have said before we spend a penny of that on new programs or tax cuts, we should save Social Security first. I think it should be the driving principle of this year's work in the United States Congress -- do not have a tax cut, do not have a spending program that deals with that surplus -- save Social Security first.

That is our obligation to you and, frankly, to ourselves. And let me explain that. This fiscal crisis in Social Security affects every generation. We now know that the Social Security trust fund is fine for another few decades. But if it gets in trouble and we don't deal with it, then it not only affects the generation of the baby boomers and whether they'll have enough to live on when they retire, it raises the question of whether they will have enough to live on by unfairly burdening their children and, therefore, unfairly burdening their children's ability to raise their grandchildren. That would be unconscionable, especially since, if you move now, we can do less and have a bigger impact, especially since we now have the budget surplus.

Let me back up just a minute, mostly for the benefit of the young people in the audience, to talk a little bit about the importance of this effort. It's hard for even people in my generation to understand this, much less yours. But early in this century, to be old meant to be poor. To be old meant to be poor. The vast majority of people over 65 in America early in this century were living in poverty. Their reward for a lifetime of work, for doing right by their children, for helping with their grandchildren, unless their kids could take care of them, was living in poverty.

If you ever have a chance you ought to read some of the books that have thousands of letters that older people sent to President Roosevelt, begging him, in the words of one typical letter writer, to eliminate -- and I quote -- "the stark terror of penniless, helpless old age." That's what prompted President Roosevelt to launch the Social Security system in 1935, to create what he called the cornerstone of a civilized society.

Now, for more than half a century Social Security has been a dramatic success. If you just look at the first chart over here on the right, you will see that in 1959 -- I don't see as well as I once did -- (laughter) -- the poverty rate among seniors was still 35 percent. As recently as 1959, still over a third of seniors lived in poverty. By 1979, it had dropped to 15.2 percent. By 1996, it had dropped to 10.8 percent.

To give you an idea of the profound success of the program over the last 30 years -- as you know, there have been increasing number of children being raised in single-parent households, where the incomes are not so high -- the child poverty rate in America is almost twice that. But no one can begrudge that. So the first thing we need to say is, Social Security has succeeded in ending the stark terror of a penniless old age. And that is a terrific achievement for the American society.

Now, it's also known, however, that the changes that are underway today will place great stresses on the Social Security safety net. The baby boomers are getting grey. When my generation retires -- and I'm the oldest of the baby boomers; I was born in 1946, I'm 51 -- and the generation is normally held to run for the 18 years after that, that's normally what people mean when they talk about the baby boomers -- it will dramatically change the ratio of workers to earners, aggravated by increasing early retirements and other things, offset by gradual increase in the Social Security retirement age enacted back in 1983. So if you look at that, that's the second chart here.

In 1960, there were 5.1 Americans working for every one person drawing Social Security. In 1997, there's still 3.3 people working for every one person drawing Social Security. In 2030, the year after the Social Security trust fund supposedly will go broke unless we change something, at present projected retirement rates -- that is, the presently projected retirement age and same rates -- there will be two people working for every one person drawing Social Security.

Now, if you look at that plus the present investment patterns of the funds of which are designed to secure 100 percent security and, therefore, get a somewhat lower return in return for 100 percent security for the investments, that's what will cause the problem. So if you look at the presently projected retirement and the presently projected returns, that will cause the problem.

It's very important you understand this. Once you understand this, you realize this is not an episode from the X Files, and you're not more likely to see a UFO if you do certain specific things. On the other hand, if you don't do anything, one of two things will happen -- either it will go broke and you won't ever get it; or if we wait too long to fix it, the burden on society of taking care of our generation's Social Security obligations will lower your income and lower your ability to take care of your children to a degree most of us who are your parents think would be horribly wrong and unfair to you and unfair to the future prospects of the United States.

So what's the bottom line? You can see it. Today, we're actually taking in a lot more money from Social Security taxes enacted in 1983 than we're spending out. Because we've run deficits, none of that money has been saved for Social Security. Now, if you look at this little chart here, from 1999 forward we'll be able to save that money -- or a lot of it, anyway. We'll be able to save a lot of it that will go into pure surplus in the budget. It can be invested. But other things will have to be done, as well. That will not be enough.

And if nothing is done by 2029, there will be a deficit in the Social Security trust fund, which will either require -- if you just wait until then -- a huge tax increase in the payroll tax, or just about a 25 percent cut in Social Security benefits. And let me say today, Social Security -- I want to put that in, too, because I want you all to start thinking about this -- Social Security was conceived as giving a floor for life. It is not enough to sustain the standard of living of almost any retiree retiring today.

So you also will have to make provisions for your own retirement savings, and you should start early when you go out and go to work, with a 401(k) plan or whatever. But this is what is going to happen unless we change. if we change now we can make a big difference.

I should also point out that Social Security also goes to the spouses of people when their widowed. Social Security also goes to the disabled. There's a Social Security disability program. Cassandra Wilkins, who's here with us, who the Vice President recognized, ran the Social Security disability program for me when I was governor. It's a very important program. But all of these things should be seen in terms of these economic realities.

Now, again I say, if we act soon, less is more. If we can develop a consensus as a country to act soon we can take relatively modest steps in any number of directions to run this 2029 number well out into the future in ways that will keep Social Security's role in providing some retirement security to people without unfairly burdening your generation and your ability to raise your children to do that. And I can tell you, I have had countless talks with baby boomers of all income groups and I haven't found a single person in my generation who is not absolutely determined to fix this in a way that does not unfairly burden your generation. But we have to start now.

We have to join together and face the facts. We have to rise above partisanship, just the way we did when we forced the historic balanced budget agreement. This is -- as you can well see, this is reducible to stark mathematical terms. This need not become a partisan debate. Oh, there ought to be a debate, a good debate on what the best way to invest the funds are. There ought to be a good debate on what the best trade-offs are between the changes that will have to be made. But it ought to be done with a view toward making America stronger and, again, preserving the ties that bind us across the generations.

I have asked the America Association of Retired Persons, the AARP, a leading voice for older Americans, and the Concord Coalition, a leading voice for fiscal discipline, to organize a series of four nonpartisan regional forums this year. The Vice President and I will participate. I hope the Republican and Democratic leadership will also participate. I was encouraged that Speaker Gingrich said the other day that he felt we should save the surplus until we had fixed the Social Security first.

The first forum, which will set out before the American people the full nature of the problem -- essentially, what I'm doing with you today with a few more details -- will be in Kansas City on April 7th. Then in subsequent ones we will hear from a variety of experts and average citizens across all ages. It is very important to me that this debate involve young people -- very important, because you have a huge stake in it and you need to imagine where you will be and what kind of investment patterns you think are fair for you and how you think this is going to play out over the next 20, 30, 40 years. We want people of all ages involved in this.

This national call also will spread to every corner of the country, to every member of Congress. There are other private groups which have to play a role. The Pew Charitable Trust has launched a vital public information campaign -- Americans Discuss Social Security. On March 21st, I will help kick off the first of many of their town hall meetings and teleconferences.

Now, when we go out across the country and share the information and get people's ideas -- then, at the end of the year in December, I will convene a historic White House Conference on Social Security. And then, in a year, I will call together the Republican and Democratic leaders of the House and Senate to begin drafting comprehensive, bipartisan landmark legislation to save the Social Security system.

This national effort will require the best of our people -- and I think it will get the best of our people. It will ask us to plan for the future. It will ask us to be open to new ideas, not to be hide bound and believe that we can see the future through the prism of the past. But it will ask us to hold on to the old values that lifted our senior citizen from the burden of abject poverty to the dignity of a deserved good, solid old age.

Keep in mind, most of you who are sitting out here can look forward to a life expectancy well into your 80s. Most of you, by the time you get to be my age, if you live to be my age, your life expectancy will probably be by then 90 or more. We're going to have to rethink this whole thing. But we have to do it with a view towards preserving the principles and the integrity of our society, binding us together across the generations and across the income divides.

We can do this. President Roosevelt often called us to the spirit of bold, persistent experimentation. We will have to do that. But he also reminded us that our greatest challenges we can only meet as one nation. And we must remember that. With our increasing diversity, and the way we work and live, and our racial and ethnic and other backgrounds -- religious backgrounds -- we still have to be, when it comes to treating people with dignity and fulfilling our obligations to one another, one nation.

Acting today for the future is in some ways the oldest of American traditions. It's what Thomas Jefferson did when he purchased the Louisiana Territory and sent Lewis and Clark on their famous expedition. It's what Abraham Lincoln did when at the height of the Civil War, he and the Congress took the time to establish a system of land grant colleges, which revolutionized the future of America. It's what we Americans did when, in the depths of the Depression, when people were only concerned about the moment, and 25 percent of the American people were out of work, our Congress and our President still took the time to establish a Social Security system, that could only take flower and have full impact long after they were gone.

That is what we do when we do best -- what Professor Quigley called "future preference." What I prefer is a future in which my generation can retire, those who are not as fortunate as me can retire in dignity, but we can do it in a way that does not burden you and your ability to raise our grandchildren. Because I believe the best days of this country lie ahead of us if we fulfill our responsibilities today for tomorrow.

Thank you very much. (Applause.)


Hyatt Regency Hotel
Washington, D.C.
10:40 A.M. EST

THE PRESIDENT: Thank you all so much. Thank you, Marc, and Paul Reid and Mike Ferrell and all the officers and staff of the Mortgage
Bankers Association; to our National Treasurer and members of the National Association of State Treasurers. I'm delighted to be here,
along with Frank Raines, my OMB Director, who used to spend some time with some of you, and Gene Sperling and others on our staff.

I have looked forward to this day for a long time, just to be able to thank you for the work that all of you have done in giving America
the highest homeownership rate in the history of the Republic. It means a lot to a lot of people out there in the country and I
appreciate your role in this historic achievement and I thank you very much. (Applause.)

In my State of the Union address I called upon all our people to strengthen our country for the new century ahead. Historically, that
has always meant deepening the meaning of America's freedom, strengthening our union, and drawing our people closer together across
all the lines that divide us and, clearly, always widening the circle of opportunity.

Now, we are seeing a remarkable increase in the circle of opportunity. In addition to reaching the highest level of homeownership in history, millions of Americans have been able to refinance their mortgages, which has amounted to billions and billions of dollars in tax cuts for families -- putting more money in their pockets, freeing up more for investment and savings. Access to capital has spread to minorities who for years have been locked out of the economy. And I appreciate what Marc said about going to New York. We do see increasing homeownership rates for minorities now and I hope it will continue.

Our capital markets are the strongest in the world, and clearly they have played a major role in helping us to do well in this new economy. Today, what I'd like to do is talk to you just for a few minutes about why we have to follow a consistent strategy of fiscal discipline and investment in our future, in our people. The strategy that has worked for the last five years we must continue into the next century.

I also want to talk about how all the discussions surrounding the tax system and the IRS fit into this -- what is the right way to cut taxes, what is the right way to reform the IRS, what is the wrong way to do it. I especially want to comment on what I believe strongly is a misguided scheme recently introduced in the Congress that I believe could take us back to policies which have failed us in the past.

These are good times for our country, with a new economy powered by technology, nurtured by the ingenuity of the human mind, enlarged by our newfound fiscal discipline at home and increasing trade among all nations. Over the past five years our new economy has produced now almost 15 million new jobs, with the highest percentage of those jobs in the private sector of any recovery in memory. Unemployment is the lowest in 24 years; business investment is growing at 11 percent, the fastest pace in 30 years; since 1993, family incomes are up about $2,200.

Today we have fresh new evidence that the economy continues to grow. Personal income rose six-tenths of one percent last month alone.
Our social problems, from crime to welfare, are bending to our efforts. The welfare rolls are the lowest in 27 years; the crime rate the lowest in 24 years. We now have literally a system in which we have opened the doors of college education to all people in this country who are willing to work for it, with tax credits, with IRAs, with better student loans and tax deductibility for the interest on those loans, more Pell Grants, more work-study positions.

We are adding 5 million children from working families to the ranks of those with health insurance. Combined with our record levels of homeownership, the American Dream is clearly within reach for more and more American families.

This did not happen by accident, but no one alone can claim credit for it. It was the product of a remarkable concerted endeavor by tens of millions of Americans. But it also was supported by the economic policies that we have followed with discipline and consistency over the last five years. We moved beyond the sterile debate between those who said government was the problem and those who said it was the solution, to a new way, a new government for the Information Age that gives our people the tools they need to make the most of their own lives, that is unashamedly a catalyst for new ideas where the old ones don't work, that is a good partner with the private sector.

We have the smallest government here in Washington since President Kennedy was in office. But it is still more progressive, more active. It is smaller, but the nation is stronger. We put in place a three-part economic strategy, rejecting these false choices from the past. First, restoring fiscal discipline and conquering the deficits that hobbled growth, spiked interest rates, and robbed our economy of capital for investment throughout the 1980s. Second, investments in our people, in science and technology, in education and job training and health care, so that everyone has a chance to reap the rewards of growing prosperity. And, third, we responded to the global nature of the new economy by opening new markets to our goods and services.

The strategy is clearly working. There is renewed confidence in the American economy. Its stability, its strength, its steady growth are the envy of the world. More than ever we are also investing in the future. A record two-thirds of Americans almost --as Marc said, almost two-thirds -- now live in their own homes and we must finish the job. I agree with you that the most important thing we can do in this session of Congress is to support Secretary Cuomo's plan to raise the FHA loan limit. We can pass it and we must. (Applause.)

Now, last month I submitted to Congress the first balanced budget in a generation. If we are fortunate and if we can work together with our allies around the world to minimize the impact of the recent difficulties in Asia on our own economy, Mr. Raines says that we'll probably have a balanced budget this year. Instead of deficits, America can now look forward to about a trillion dollars in surpluses over the next 10 years.

Now, that is a tempting target in an election year in Washington. first of all, let me remind you they have not materialized yet. And we
shouldn't count those chickens before they hatch. Secondly, we should remember what we did to the long-term strength of America when we quadrupled the debt of this country in the 12 years from 1981 through 1992. And we should not repeat that error again.

Finally, we shouldn't use the surplus for any new tax cuts or new spending programs until we have confronted the challenge of saving
Social Security first. I think that is very important. (Applause.)

All of you are generally familiar with the problem -- it's projected that the Social Security trust fund will not cover payments starting in the year 2029. That's the year when all the baby boomers will finally be in the Social Security system; and at presently projected birth and immigration rates and labor force participation rates, it means that there will be only about two people working for every person drawing Social Security.

Now, those things could all change to some extent; but no matter what, it is clear that the generation of the baby boomers entering the
Social Security system will be quite larger than the generation just following it. Indeed, the generation now in public schools, starting
last year, is the first generation in American history larger than the baby boom generation. I do not know a single person my age or younger
-- because I'm the oldest of the baby boomers -- I hate that but it's true -- (laughter) -- I don't know a single person who doesn't think about the problems we could create for our children if we don't make the changes now in the Social Security system we need to. No one wants
to burden our children and their ability to raise our grandchildren.

On the other hand, it is important to remember that it's just since 1985 that senior citizens have been less poor than the rest of us. That is an astonishing achievement for a country that 60 years ago had 70 percent of its seniors living below the poverty line, many of them in abject poverty. Now, if we make small changes today with discipline, we can deal with this issue. And I also want to point out something all of you know, which is that hardly anybody -- even though Social Security helps people keep body and soul together -- hardly anybody in America can retire and maintain his or her standard of living on Social Security alone. So we must also do more to help Americans save for their own retirement. We've done a lot of work with the 401(k) plans and other things; we need to do more.

So we're going to work in this next year very hard in what I hope will be a completely nonpartisan way to acquaint the American people with the details of the challenge before us, to explore all the alternatives, and then to come up with a solution, which I hope the Congress will pass early next year to deal with this. You say, well if you pass it in 1999, 2029 -- that's 30 years away. First of all, those of you in the audience who are my age or older know that 30 years can pass in the flash of an eye. But, secondly, I would remind everyone that the longer we wait to deal with this, the more severe actions will be required to deal with it. If we move now, with modest but disciplined changes, we can do a great thing to ensure the financial strength of America in the 21st century and to preserve the compact that binds us together across the generations. I cannot emphasize how strongly I feel about this.

Now, there are other economic challenges we face as well, and I'll just mention two very briefly. One is, how do we extend the benefits of enterprise that have brought so much to America in the last few years to those who still have not felt the impact of the economic recovery, principally in the inner cities and isolated rural areas. We have a whole range of proposals in that regard, a lot of them coming out of Secretary Cuomo, a lot of them coming out of the Vice President's community empowerment initiative. But I think it is very important that we recognize that these people who are still unemployed or underemployed are the great target we have for the rest of us to keep the economy growing with low
inflation, so we can do what is morally right to try to expand opportunity to people who still don't have it and help the overall American economy as well.

The second point I'd like to make is that if we want to continue to see this economy grow, we have to have people who are skilled enough and well trained enough and well educated enough to take positions in tomorrow's economy, not yesterday's economy. There was a study which came out a couple of weeks ago, I can't remember the exact number, but there was something like nearly 400,000 openings in America today for people in information technology related jobs.

And when you go to some of our larger inner-city neighborhoods where the unemployment rate is still 10 percent, you say, well, what is wrong with this picture? Well, we got one indication of what is wrong with this picture last week when we saw that our 12th graders in the International Math and Science Survey scored 19th among 21 countries in their performance in math and science.

So the other big economic issue before America is how to make our system of elementary and secondary education as good as our system of higher education. No one doubts that we have the best system of colleges and universities in the world; we should not rest, and we cannot rest, until we have the best elementary and secondary education in the world. It is a major economic issue for our country. (Applause.)

Anyway, it's against this background that I think you have to see the emerging debate, or, if you will, the continuing debate, on the tax system -- what taxes should be cut and how; and the IRS, how should we go about collecting taxes. This is a hazardous discussion that it's easier for me to enter into maybe because I'm not on the ballot anymore. (Laughter.) Since there's no such thing as a positive thing anyone ever wants to say about this.

But we need to think about it. This debate can be a very healthy thing. We should always be examining, you know, whether there are
changes in the tax system we could have which would either be fairer, or which would achieve our common objectives more, or which would grow the economy faster. And we should always be looking for ways that through either common sense or new technology we can ease the burden on our people of paying taxes -- always. The door should never be shut to reform and there will always be more to do, no matter what
system we adopt. I think all of us know that.

But the point I want to make today is that this debate must occur within the context of our commitment to a long-term economic strategy that will work for our people. It should occur within a context of our commitment to maintain economic confidence in the future. There is a right and a wrong way to do reform. And the right way must involve our continued commitment to fiscal discipline, to investing in our people and to making the future a predictable and confident one in terms of our economic policy.

Now, within that context, over the last five years we've worked hard to reform our tax laws. We've honored our responsibilities as parents with the $500 per child tax credit. We've rewarded work by more than doubling the Earned Income Tax Credit, which basically is designed to say if you're a parent and you work 40 hours a week your child ought not to be in poverty. Over 2 million children have been lifted out of poverty because of the changes in the Earned Income Tax Credit. (Applause.)

We've recognized the importance and the cost of college education -- with the HOPE Scholarship tax credit, which is worth $1,500 a year for the first two years of college; lifetime learning credits for junior and senior years and graduate schools; the tax deductibility of student loan interest payments; and other initiatives.

We've encouraged homeownership by eliminating capital gains on almost all home sales. And we've helped Americans save for their
retirement, for their education and health care costs, by expanding IRAs. At the same time, billions of dollars in tax loopholes that were more wasteful have been closed.

This year, the balanced budget proposal I presented to Congress continues to help working families with new tax cuts to make child care more affordable, our economy stronger, and our environment cleaner by meeting the challenge of climate change.

We also had to continue our work to improve the operations of the IRS. Like every American and the majority of IRS employees, who are
trying hard to do their jobs well, I get outraged when I hear about abuses in the IRS. But we are making changes, and we must continue to
do so. I've already signed into law 40 tax simplification measures and a new Taxpayer Bill of Rights.

As of February the 20th, less than two weeks ago, 10.7 million Americans had filed their tax returns electronically for this year -- that's a 19 percent increase over last year; 3.8 million Americans have filed by telephone -- that's a 25 percent increase over last year. The average telephone conversation is 10 minutes. I think that's pretty good, and I hope more will continue to do that.

We are having problem resolution days, which have been widely publicized by the media, and I thank them for that, in every IRS district, at least once a month, where the IRS employees are open -- they open the offices at night or on the weekends, people come in with their tax problems, and we try to resolve them in a quick and informal way.

I think all these things are very important. We just approved new regulations to protect so-called innocent spouses, who are left with tax liabilities by their spouses, that they had no role in undertaking. Now, there's more to do, but a lot has been done. Among the new reforms proposed are new citizen advocacy panels, new systems to file taxes by phone or computer to make it even more easy and more widely used, stronger taxpayer advocates, phone lines opened 24 hours a day, further relief for innocent taxpayers.

Late last year, the House passed these reforms almost unanimously. I think there were over 400 votes for them, and only three or four against. So, again let me say, I hope that the Senate will quickly pass this legislation and send it to me for my signature. It's a good bill, and it will do a lot of good for Americans.

Now, we need to continue to do these kinds of things, and we need to be open to broader reforms of the tax system. But there are some
people in Congress who have made a proposal that I think would not fit within the formula of economic discipline and confidence that I believe
we have to stay with. Under the guise of reform, they have proposed what, to me, is an irresponsible scheme -- to eliminate our tax laws
without any system to replace them.

Now, at first glance, this might look good. Sunset the tax code, when everybody knows there will be no more tax code that will shake everyone up, and then they will come forward with a responsible alternative. And, trust me, everything will be fine. That's the message. Once you know that the old code is gone and on a date certain it won't be there, well, everyone will surely have to come up with something, and it must be something that will be better. Don't worry about the details. That's what this proposal is, and it has a lot of appeal.

It's like saying you can't go on a diet until the refrigerator is empty. But if you think about it, it only works if you know that you can fill the refrigerator up again and what will be in there.

Now, instead of proposing reform, this proposal is really economic uncertainty. What we have done is to restore some confidence and
predictability to the American economy. When you knew that we were going to stay on a path of fiscal discipline and the deficit was not
going to go to $300 billion a year, was not going to go to $370 billion a year -- which was what it was predicted to be for this year when I
took office -- instead of $10 billion or zero, which is what it's going to be. This is a way of going back to that era -- a total economic uncertainty.

What would it do? Think about your business. It would cripple families' and businesses' ability to plan and save for the future while the uncertainty existed. It would undermine the fiscal progress of the last five years. No one concerned about fighting crime would even think about saying, well, three years from now we're going to throw out the criminal code and we'll figure out what to put in its place. No one would do that. That is what this proposal is. That is exactly what some people in Congress are proposing to do.

Now, think about what repealing the tax laws with no known alternative would mean. It would mean that you would know there would be no home mortgage deduction, but you wouldn't know what would be in its place. There might be no charitable contribution deduction, but
you wouldn't know what would be in its place. We would repeal the Roth IRA, but you wouldn't know what would be in its place. All that
would be certain about this proposal is uncertainty. And again I say, as all of you in this room well know, uncertainty is the enemy of economic growth.

We live in a world where there is a lot of change and unpredictability and uncertainty by definition in the nature of this new economy. But to do well you have to at least know what the rules are. Our economy is growing because consumer confidence and business investment are at record highs. Last week the two indexes of consumer confidence came out -- one was at a 30-year high, the other was at an all-time high. What people think is going to happen, as all of you know, in an economy, is just as important as what, in fact, is happening today.

Almost every business investment has tax consequences. With no ability to predict the consequences, businesses might decide to postpone, cancel or pare back on plans to buy new computers, build a new factory, hire new workers. How could you plan, construct or finance a new apartment complex or shopping center if you couldn't calculate the return on investment, because you couldn't determine the tax consequences. Business growth would stall in that kind of uncertainty.

And economic uncertainty is no friend to families. The scheme to abolish the tax code could threaten nearly every American family's best laid plans for the future. For example, mortgage rates are low now. People are refinancing their mortgages all the time. This has been a wonderful thing for America. What would happen to family behavior with regard to homeownership if people thought the home mortgage deduction might disappear. Would students be as serious about going to college if they thought the HOPE scholarships and the other tax credits and interest deductions wouldn't be there. Would families think twice about how much they were going to give to their church or their synagogue or their favorite charity if they thought there would be no tax deduction for it.

We were just talking about the Social Security reform and how no matter how we reform Social Security, people have to save more for their retirement. Will young families who have a hard enough time paying their bills really be setting aside money for their retirement if they think the tax incentives or pensions or 401(k)s and IRAs are about to evaporate. In other words, I just think it's wrong to shut down the old tax system and tell people it's going to be shut down by a date certain without saying, at the same time, what is going to be in its place.

None of us would say that no one on earth couldn't devise a better tax system than we have. There may be better options. But I think before we say we're going to get rid of the one we have on a date certain, we need to know what we're going to replace it with. And I would implore you, if you agree with me, to make that case to your member of Congress without regard to party.

Again, I don't see this as particularly a partisan issue. I just think it sounds great. I will vote for a bill to get rid of this cursed tax code. Thank you very much. (Laughter.) It's almost irresistible, you know, but so was the siren's song. We must continue to have predictability in the investment climate. We must continue to have predictability when it comes to savings. We must continue to have a framework, which will keep us doing what we've been doing for the last five years.

And that means, by the way, it means we have to continue to be open to changes in the tax law and in the way the IRS operates, and in all of these systematic things that we have to continue to modernize. Of course we must. But we mustn't buy a pig in a poke. We have to continue to proceed with discipline: scrapping the home mortgage deductions. Scrapping other middle class tax cuts without presenting a clear alternative is simply reckless for the economy, reckless for businesses, reckless for families' budgets. I will not permit it if I can stop it. But it shouldn't pass in the first place, and I hope you will help us on that. (Applause.)

Now, again I say, Congress should pass the IRS reforms that are before it. It should pass further tax cuts. But we should balance
the budget, do nothing with the surplus until we have saved Social Security, not abolish the tax code until we know what we're going to replace it with.

We're going to change around here. This system has proved that we are capable of change. No one should stand in the way of constructive change, but we should stay with the plan that we know works. You look at where we are today in your business compared to where we were five years. Look at where we are today with the people that you work to serve compared to where we were five years ago. Imagine where you want to be 10 years from now. Imagine what you want the future to look like for your children and your grandchildren, to do those things, which will build that future.

Thank you very much. (Applause.)

END 11:10 A.M. EST


THE PRESIDENT: Thank you. I'd also like to thank Rebecca Rimel. And I'm delighted to join the Pew Charitable Trusts and all of you for this important discussion of Social Security. The Pew Trust has done a great service to the country for making this possible. We have to discuss how we can ensure that one of the greatest achievements of this 20th century continues to serve our people very well into the next.

Before I start, let me tell you about -- a little bit about my upcoming visit to Africa. Because tomorrow, I'm going to embark on the most extensive trip ever taken to that continent by an American President, where I hope to introduce Americans to a new Africa -- a place where democracy and free markets are taking hold. I hope all of you will follow my travels closely.

These are good times for America. We have 15 million new jobs, the lowest unemployment in 24 years, the lowest core inflation in 30 years, the highest homeownership in our history. Last month, I was pleased to present the first balanced budget in a generation. Indeed, we can now look forward to $1 trillion of surpluses over the next decade. But I don't believe we should spend a penny of this surplus until we have saved Social Security first for the 21st century.

I am very pleased with the strong support the American people have shown for this meeting and for meeting this challenge. I thank "Americans Discuss Social Security" for leading the way. For 60 years, Social Security has meant more than a monthly check in the mail. It reflects our deepest values -- our respect for our parents, our belief that all Americans deserve to retire with dignity.

We can't break this solemn compact between the generations. And if we act soon -- and responsibly -- we can strengthen Social Security in ways that won't unfairly burden any generation. So I challenge my own generation to act now to protect our children, to ensure that Social Security will be there for them after a lifetime of hard work. And I challenge young people to do their part, as well, to get involved in our national effort to strengthen Social Security for the 21st century.

In the coming months, the Vice President and I will attend a series of nonpartisan forums to help reach a national consensus on how to go forward. In December, I'll convene a White House Conference on Social Security, with a view to early 1999, when I hope and believe we can craft historic, bipartisan legislation to save Social Security.

In the darkest days of the Great Depression, Americans had the courage to commit to a daring plan whose impact would not be fully known for a generation. In the midst of these prosperous times, we must strengthen that commitment for generations yet to come. Your views will be vital to our work here in Washington, and I look forward to hearing your comments.

Thank you very much.

* * * * *

THE PRESIDENT: Let me try to respond a little bit to what all the folks said. Obviously, I don't know in the previous meetings exactly how much information was out there and how much not. And we're in the process, as I said, of a year-long dialogue. But let me just offer a couple of observations.

In 1983, there was a bipartisan commission to deal with the problem in Social Security. And they came up with a whole set of changes which included, very slowly over a period of years, raising the retirement age to 67 for people drawing full Social Security benefits --which will happen sometime in the next century -- because the average life expectancy is much longer. When Social Security was enacted and the retirement age was 65, the average American did not live to be 65 years old. So that happened.

Then there was an increase in the payroll tax back in '83, and it was estimated that for a period of time Social Security would bring in more money than it paid out, and that the money could safely be pledged, in effect, to buy government bonds, to finance the deficit. And that's what has essentially happened. Now, I've done my best to try to turn that situation around by getting us back to balance and now moving us into surplus so that we can recover some of these funds in the future to deal with the long-term challenge of Social Security.

But here's the basic problem -- which I'm sure you understand. In 2029, all the baby boomers will be 65 or over. Most of them will be in the retirement system. At that time, if we continue to work at present rates, retire at present rates and grow our population at present rates, there will be only about two people working for every one person drawing. Even today, very few people can actually live on only their Social Security income. But it's important to remember that if we didn't have Social Security income, nearly half the seniors in this country would not be above the poverty line.

So the trick is how to make this system last beyond 2029 without having undue new tax burdens on younger people who are trying to raise their children; what options are out there for doing that; and how can we also make it easier, as many of you said, to save for your own retirement. The one think I think is very important is that young people understand especially what the realities are. I mean, I saw a survey the other day that said that some people -- a lot of people in their 20s thought it was more likely that they would see a UFO than that they would ever draw Social Security. Now, that's not accurate. We can easily save this system. And we may be able to do a number of things, including some of the things that some of you suggested that would give a higher rate of return on the investment.

But under presently conceivable circumstances, no matter what we do with the Social Security system, Americans should be saving more for their own retirement. So we're working very hard right now to make it easier, for example, for more people in small businesses and more self-employed people to take out 401(k) plans; to take those plans with them when they move jobs; to have a system that would guarantee the security of that kind of retirement savings. And we've done a number of things in the last two years -- there is some more legislation before Congress now. And some of you in these hearings may have even greater ideas about what we can do to make it easier for people to save for their own retirement.

But I always tell people that we actually have two things we have to do. We have to secure the safety, the soundness and the salvation of Social Security into the 21st century and look at all the options that have been raised here by you. But we also have to educate the American people that they must save more for their own retirement; and then we have to make it easier for them to do so and to succeed in doing so.

The last point I'd like to make is this: because of the reductions in the deficit, the reduction in interest rates, we may have already added a few years to the life of the Social Security trust fund. We can put a lot of years on the life of the fund, we can stabilize the fund. And now that we've eliminated these chronic, huge deficits of the last decade and a half, we can set this thing right. And if we act now-- meaning early next year -- with the support of the American people across party lines and regional lines and income lines, we can make modest changes today that will have a huge impact in the next century.

So the last thing I'd like to say to all of you is, one of you said that you wanted us to do what we needed to do in a hurry and in a non-partisan, fair way. That's the message I think that all of us need to hear -- all the members of Congress, all the members of our administration. We do not need to put this off. Many people are afraid that anything you do to Social Security is political dynamite. I think it's worse dynamite to walk away from a problem when we can solve it with discipline, modest, far-sighted actions now that will have a huge impact 20 and 30 years from now.

So I thank you. I was profoundly impressed by what you had to say, and I wish I had more time to go through all your questions. I know in two hours, Ken Apfel, our Social Security Administrator, will be on this program and he'll be able maybe to pick up some of the more specific questions you asked me and others that you doubtless will have for him.

And again let me thank the Pew Charitable Trust. This is a wonderful public service.

The Oval Office
10:06 A.M. EST

THE PRESIDENT: Good morning. Today, I want to talk about Social Security and how all of us can ensure that one of the greatest achievements of this century continues to serve our people well into the next.

These are good times for America. We have 15 million new jobs, the lowest unemployment in 24 years, the lowest core inflation in 30 years, the highest homeownership in history. Over the past five years, we've reduced the size of government and nearly eliminated the budget deficit -- even as we've expanded opportunities for education, strengthened our families, invested in our people.

But this is no time to rest, it's a time to build. Last month, I sent to Congress the first balanced budget in a generation. Instead of deficits, America can now look forward to $1 trillion in surpluses over the next 10 years. But as I said in the State of the Union, we must not spend a penny of this surplus until we have saved Social Security first.

For 60 years, Social Security has meant more than an ID number on a tax form; more than a monthly check in the mail. It reflects our deepest values -- our respect for our parents and our belief that all Americans deserve to retire with dignity.

Social Security has changed the face of America. At the beginning of this century, to be old meant to be poor. As President Roosevelt said, "The aged worn-out worker, after a life of ceaseless effort and useful productivity must look forward in his declining years to a poorhouse." Even in 1959, more than a third of all seniors were poor. But today, thanks to Social Security, that number has dropped to 11 percent. But without Social Security, even in these times of prosperity, half our elderly would live in poverty.

Now, if we don't act, the Social Security trust fund will be depleted by the year 2029, and payroll contributions will only cover 75 percent of benefits. We mustn't break the solemn compact between generations. We must be guided by a strong sense of duty to our parents, but also to our children. Now, if we act soon and responsibly, we can strengthen Social Security in ways that will not unfairly burden any generation -- retirees, the baby boomers, their children or their children's children.

So I challenge my generation to act now, to protect our children and ensure that Social Security will be there for them after a lifetime of hard work. I challenge young people to do their part, to get involved in this national effort to strengthen Social Security for the 21st century.

I'm pleased that so many Americans are already taking steps to meet this challenge. Later today I'll be discussing the future of Social Security with 1,200 Americans in a satellite meeting sponsored by the Pew Charitable Trusts. And in the coming months, the Vice President and I will attend a series of non-partisan forums that will help us reach a national consensus on how to go forward. In December, I'll convene a White House Conference on Social Security, so that by 1999 we can craft historic, bipartisan legislation to save Social Security for the 21st century.

In the darkest days of the Great Depression, Americans had the courage and the vision to commit to a daring plan whose full impact would not be known for a generation. Today, in the midst of the best economy in a generation we must strengthen that commitment, our commitment, for generations yet to come.

Thanks for listening.

END 10:10 A.M. EST


Penn Valley Community College
Kansas City, Missouri

11:25 A.M. CDT

THE PRESIDENT: Thank you very much, ladies and gentlemen. Good morning. Thank you, Governor Carnahan, for your leadership on so many areas and your friendship. I'd like to thank the leaders of this fine institution for welcoming us here and for the mission they perform every day. I thank Senators Kerrey and Santorum for their concern, longstanding, for Social Security reform and their presence here, and Representatives Hulshof and Pomeroy, who are participating in the program, and Representative McCarthy, and also Representative David Dreier from California, who is a native of Kansas City, who are here.

I thank the members of our administration who have come who will be participating: the Director of the Office of Management and Budget, Frank Raines; the Deputy Secretary of the Treasury, Larry Summers; the Director of the National Economic Council, Gene Sperling; and the Administrator of Social Security, Ken Apfel.

Attorney General Nixon, Treasurer Graeber, Insurance Commissioner Sebelius, thank you all for being here. Mayor Cleaver, thank you for hosting us. I don't know if Mayor Marinovich is here or not, but if she is, hello. (Laughter.)

I'd also like to thank the leaders of the AARP, including Horace Deets, and the leaders of the Concord Coalition, including Martha Phillips, for their hosting of this forum. The AARP has long been a leading voice for the elderly, the Concord Coalition long a leading voice for fiscal responsibility over the long run, and their willingness to work together is very important. I'd also like to thank the Speaker of the House, the Senate Majority Leader, and the House and Senate Democratic leaders for nominating and being represented here today by the members of Congress who are on the program.

As the Governor said, this is a good time for America and a time of great hope. Our economy is the strongest in a generation. Many of our social problems are on the mend. Our leadership in the world is unrivalled. Within the next year, we will have a balanced budget. And where once there were deficits projected as far as the eye can see, we now have projected surpluses as far as the eye can see -- a trillion dollars' worth over the next decade.

But this sunlit moment is not a time to rest. Instead, it is a rare opportunity to prepare our nation for the challenges and the opportunities of the 21st century -- or in the words of the old saying, to fix the roof while the sun is shining. In the coming century, the aging of our society will present both great challenges and great opportunities. I hope to live to be one of those people and so, to me, it's a high-class problem.

But because a higher percentage of our people will be both older and retired, perhaps our greatest opportunity and our greatest obligation at this moment is to save Social Security. In the State of the Union address, I called on Congress to set aside every penny of any surplus until we had dealt with Social Security first. Both parties in both chambers of Congress have joined in this call. That is the good news.

Today we turn to the business at hand -- building public awareness of the nature and scope of the problem, and building public consensus for the best changes. Clearly, we will strengthen Social Security and reform it only if we reach across lines of party, philosophy, and generation. And that is one reason for the broad representation of age groups in this audience today. We have to have open minds and generous spirits. And we all have to be willing to listen and to learn.

For too long, politicians have called Social Security the "third rail" of American politics. That's Washington language for, it's above serious debate. This year we must prove them wrong. This conference, with its wide participation, is a good start. On the political calendar, 1998 is an election year. But on the Social Security calendar, we must resolve to make it an education year, when we come to grips with the problems of the system and come together to find the answers.

This issues is complicated, so we need the best ideas -- whatever their source. The issue is controversial, so we have to have a national consensus on both the nature of the problem and the direction we must take.

That's why I've asked all the members of Congress to also host town hall meetings in their own districts. I'll be talking with several of them by satellite later today. And we'll hold more additional forums like this one around the country. In December, there will be a White House Conference on Social Security. In January, I intend to convene the leaders of Congress to draft a plan to save it. With this effort we can forge a national consensus, and we must.

For 60 years, Social Security has meant more than an ID number on a tax form, more than even a monthly check in the mail. It reflects our deepest values, the duties we owe to our parents, to each other, to our children and grandchildren, to those who misfortune strikes, to our ideals as one America.

Missouri's native son, Mark Twain, once said, "I've come loaded with statistics, for I've noticed a man can't prove anything without statistics." So I thought we would begin today with a few statistics. Today, as the first chart shows, 44 million Americans depend upon Social Security, and for two-thirds of our senior citizens it is the main source of income. For 18 percent of our seniors it is the only source of income.

But Social Security is more than just a retirement program. Today you can see that more than one in three of the beneficiaries are not retirees. They are children and spouses of working people who die in their prime. They are men and women who become disabled, or their children.

So Social Security is also a life insurance policy, and a disability policy, as well as a rock-solid guarantee of support and old age. That is why we have to act with care as we make needed repairs to the program occasioned by the huge growth in retirees.

Since its enactment over 60 years ago, Social Security has changed the face of America. When President Roosevelt signed the bill creating the Social Security system, most seniors in America were poor. A typical elderly person sent a letter to FDR begging him to eliminate "the stark terror of penniless old age." Since then, the elderly poverty rate has dropped sharply. You can look here and see that in 1959 the poverty rate was over 35 percent for retirees. In 1979, it had dropped to 15.2 percent. In 1996, the poverty rate is down below 11 percent.

Now, there's something else I want to say about this. Even though most seniors need other sources of income in addition to Social Security to maintain a comfortable lifestyle: if Social Security did not exist, today half of all American retirees would be living in poverty -- 60 percent of all women. Fifteen million American seniors have been lifted out of poverty through the Social Security system.

Today the system is sound, but the demographic crisis looming is clear. The baby boomers -- 76 million of us -- are now looking ahead to their retirement. And people, clearly, are living longer, so that by 2030, there will be twice as many elderly as there are today.

All these trends will impose heavy strains on the system. Let's look at the next chart here. You can see that in 1960, which wasn't so long ago, there were over five people working for every person drawing Social Security. In 1997, last year, there were over three people --3.3 people -- working for every person drawing. But by 2030, because of the increasing average age, if present birthrates and immigration rates and retirement rates continue, there will be only two people working for every person drawing Social Security.

Now, here's the bottom line. The Social Security Trust Fund is sufficient to pay all the obligations of Social Security -- both retirement and disability -- until 2029, after which it will no longer cover those obligations. Payroll contributions will only be enough to cover 75 cents on the dollar of current benefits.

If we act now, we can ensure strong retirement benefits for the baby boom generation without placing an undue burden on our children and grandchildren. And we can do it, if we act now, with changes that will be far simpler and easier than if we wait until the problem is closer at hand. For example, a $100 billion of the budget surplus, if used for Social Security, would add a year or more to the solvency of the Trust Fund with no other changes being made. Other changes, which could be made, can be phased in over time, and keep in mind, small changes decided on now can have huge impacts 30 years from now.

So how should we judge the proposals to change the Social Security system? Here are principles that I believe we should follow, and they're on the next chart here. I believe, first of all, we have to reform Social Security in a way that strengthens and protects a guarantee for the 21st century. We should not abandon a basic program that has been one of the greatest successes in our country's history.

Second, we should maintain universality and fairness. For half a century, this has been a progressive guarantee for citizens; we have to keep it that way. It was not until 1985 that the poverty rate among seniors was lower than the poverty rate for the population of America as a whole. It is an astonishing achievement of our society that it is now so much lower, and we should not give it up.

Third, Social Security must provide a benefit that people can count on. Regardless of the ups and downs of the economy or the financial markets, we have to provide a solid and dependable foundation of retirement security.

Fourth, Social Security must continue to provide financial security for disabled and low income beneficiaries. We can never forget the one in three Social Security beneficiaries who are not retirees.

And fifth, anything we do to strengthen Social Security now must maintain our hard-won fiscal discipline. It is the source of much of the prosperity we enjoy today.

Now, these are the principles that will guide me as we work to forge a consensus. I hope they're ones that all of you can also embrace. This national effort will call on the best of our people. It will require us to rise above partisanship. It will require us to plan for the future, to consider new ideas, to engage in what President Roosevelt once called "bold, persistent experimentation." It will remind us that there are some challenges that we can only meet as one nation acting through our national government, just as there are others we can better meet as individuals, families, communities.

This is also a challenge for every generation. To the older Americans here today, let me say, you have nothing to worry about. For you Social Security is as strong as every. To the younger people here today who may believe that you will never see a Social Security check -- indeed, I saw a poll which purported to be serious that said that Americans in their twenties thought it was more likely they would see a U.F.O. than that they would every draw Social Security. (Laughter.) That skepticism may have been well founded in the past, but just as we put our fiscal house in order, we can and must put Social Security in

And above all, to my fellow baby boomers, let me say that none of us wants our own retirement to be a burden to our children and to their efforts to raise our grandchildren. It would be unconscionable if we failed to act, and act now, as one nation renewing the ties that bind us across the generations.

Thank you very much. (Applause.)

END 11:39 A.M. CDT


Penn Valley Community College
Kansas City, Missouri

1:20 P.M. CDT

THE PRESIDENT: Good afternoon. Thank you, Ken. As Ken said, I'm speaking to you from Kansas City, where we're talking about what we must do as a nation to strengthen Social Security for the 21st century, and
I'm looking forward to continuing to talk with you today.

Let me begin by thanking Representatives Bob Borski, Ben Cardin, Nancy Johnson, Jim Kolbe, and Jerry Weller for holding these town meetings across our nation. For each of you lawmakers, these forums
are not the only way you've worked to strengthen Social Security. Representatives Borski and Cardin are cosponsors of key legislation to establish the Save Social Security First Reserve Fund. Representative Borski supports saving any budgetary surplus for investment in Social Security, and I know Representative Cardin does
as well.

Now, Representative Johnson has been a strong advocate for SocialSecurity beneficiaries. She has urged her fellow members of Congress to continue to act with fiscal restraint as they debate what to do with the budget surplus. Representative Kolbe is one of our foremost experts on retirement and pension policy and is the sponsor of a resolution to establish a joint commission on Social Security reform. And Representative Weller has been a powerful voice for protecting the Social Security trust fund and was an original cosponsor of the Social Security Preservation Act.

Together, all of you are proving that we can work in a bipartisan way to make sure that Social Security is as solid for our children as it was for our parents, and I thank you for that.

As you know, this year, working together with Congress, we'll be balancing the budget for the first time in 30 years. We have a right to be proud of that achievement, but we must also build on it. In the State of the Union, I called on Congress to set aside every penny of any budget surplus until we save Social Security first. Social Security is deeply woven into our nation's social fabric. For 60 years, it's meant more than an ID number on a tax form, even more than a monthly check in the mail. It reflects our deepest values and the duties we owe to one another.

Today 44 million Americans depend upon Social Security. For two-thirds of our seniors, it's the main source of income. And one in three beneficiaries are non-retirees. Social Security is life insurance and disability benefits as well as a rock-solid foundation of retirement security.

Today Social Security is sound, but a demographic crisis looms if we fail to act. For over the next 30 years, 76 million baby boomers will retire. By 2030 there will be twice as many elderly Americans as there are today. If we don't act now, by then payroll contributions will only cover 75 percent of benefits. That's why I've challenged our nation to act now to strengthen Social Security for the 21st century.

Here are the principles, I want to follow for meeting this challenge. First, any reform should strengthen and protect Social Security for the 21st century. We can't abandon the basic core program that's been one of the great successes of our nation's history.

Second, we must maintain the universality and the fairness of Social Security. For a half-century this program has been a progressive guarantee for citizens. We have to keep it that way.

Third, Social Security must provide a benefit people can count on. Regardless of the ups and downs of the economy or the financial markets, we must make certain that Social Security will provide a foundation of
retirement security.

Fourth, Social Security must continue to provide financial security for disabled and low income beneficiaries. We can never forget the one out of three Social Security beneficiaries who aren't retirees.

And fifth, any strengthening of Social Security must maintain America's hard-won fiscal discipline, one of the main reasons we're enjoying our prosperity today.

These are the five principles that will guide me on Social Security, principles by which I'll judge all possible proposals. They're principles I believe can and should guide us all as we work to forge a national consensus for reform.

Above all, I know that we can strengthen Social Security only if we reach across the lines of party, philosophy, and generation with open minds and generous spirits. For too long, politicians have called Social Security the third rail of American politics. That's Washington language for, you can't really discuss any changes seriously. This year we have to prove them wrong.

I know that on the political calendar 1998 is an election year. But on the Social Security calendar, let's all resolve to make 1998 an education year, a year we come to grips with the problems of the system and come together to find the answers. These forums are a very hopeful beginning, and I'm pleased to have had this chance to start this vitally important dialogue with all of you today. This December we'll host a White House conference on Social Security, and in January I'll convene the leaders of Congress to draft a plan to save Social Security for the 21st century.

I'm confident we'll meet this challenge as Americans always do -- by working together, honoring our values, and preserving the solemn compact between generations that helped to build our nation.

Now I'd like to turn the discussion over to Congressman Borski. Bob, take it away. (Applause.)

* * * * *

THE PRESIDENT: Thank you very much, Congressman. Let me try to go back over some of what all of you said. First of all, Congressman Cardin talked about the need to increase private saving; some others did. Congressman Borski talked about the fact that there were still some people on Social Security living in poverty.

Let me try to address those things together, along with some of the other concerns which were mentioned. It is true that there are still about 11 percent of our elderly people in America living in poverty. But it's important to recognize that that's a lower percentage than in the overall population in America, and that it's just been since 1985 that the poverty rate among seniors was lower than the overall poverty rate.

Now, what can we do to make it better? There have to be other sources of income. There have to be other sources of private savings. And that is -- of course, the possibility that some part of that could come out of Social Security reform is one of the things were discussing.

But over and above that, I'd like to point out that Congress has done a lot of work with our administration over the last five years, first of all to save 8.5 million pensions that were underwater when I took office, to stabilize 40 million others, and to make it increasingly more attractive for employees on modest wages and for small business employers to take out 401(k) plans, and then to make it easier for people to move from job to job and take their 401(k) with them. We've also dramatically expanded the availability of IRAs.

So we've tried to do some things already to help increase the ability and the attractiveness of saving, over and above Social Security. I don't think, no matter what we do with Social Security, the American people are going to have to be sensitized, the younger generation is, to do more to save for their own retirement.

On the other hand, I think it would be a great mistake, even for the youngest members of these audiences today, to believe that we shouldn't preserve Social Security as a universal guarantee, because without Social Security today almost half the seniors in America would be living in poverty, even though most seniors have income over and above that. So the trick is to save Social Security, but also to have more income coming to people from private savings.

Now, let me mention just one or two other things. Nancy Johnson talked about wanting -- made one Medicare statement about annual physicals. I believe that more and more, as people live to older ages and are healthier, we'll have to do more preventive care within the Medicare program. Nancy, you know, we've worked hard to deal with -- to have more mammographies, for example. We're doing other preventive screening now. I think the more of that we do, the more we're going to save over the long run. And, more importantly, we'll improve the length and the quality of life.

And she said, people want to know whether the seniors can count on Social Security. The answer to that is, absolutely yes. The Social Security trust fund, according to Mr. Apfel, who has got a legal responsibility to tell the truth about it, is stable until 2029. In 2029, shortly thereafter, the taxes coming in will only cover about 75 percent of our obligations. One of the reasons we want to move now is that by making relatively modest changes now we can extend the life of the Social Security trust way out beyond 2029.

Can young people, the high school students here, look forward to drawing Social Security? The answer to that is, they certainly can if we do our jobs here in the next several months. You know, a few years ago, I can understand your skepticism because we were running huge deficits, we were projected to have $300 billion a year deficits as far as the eye can see. Now we're going to have a balanced budget sometime in the next year, and it's projected we'll have a trillion dollars in surpluses over the next decade -- more than enough money, if we do some other things to fix the Social Security system for the younger people listening here today.

But I want to say again, no matter what we do to Social Security, those of you who are 16, 17, 20, and 21, I know it's hard to think about the end of your life, your later years when you're that age, but you will have to do more, through your employer or through your own individual efforts, to save for your own retirement over and above Social Security if you want to maintain your standard of living when you retire.

Now, Mr. Kolbe asked a couple of questions about rasing the retirement age, and then Mr. Weller asked about specific plans. Let me say, I don't want to dodge any of that, but I think all those proposals should be out there on the table. And I think that the most important thing now is if I advocate a specific plan right now, then all the debate will be about that. The first thing we've got to do is to get the American people solidly lined up behind change. Let's stick with these basic principles I've outlined, and I want to encourage other people to come forward with their ideas. In December, we'll all sit down, come up with our -- we'll all put our various ideas on the table, and we'll begin hammering out a plan that we can present in January.

I still hear some new ideas almost every week coming from Democratic and Republican members of Congress and private citizens that I think should be aired. If I put a specific plan on the table now, it will undermine and weaken debate, not strengthen it.

I do agree with those of you who say it ought to be possible for us to save Social Security without a payroll tax increase. I don't think we ought to automatically rule out any ideas over the next 30 to 50 years, as some would do, but I think that we plainly know that we can do this and provide for increased strength of the system without a payroll tax increase, given current assumptions. So I believe that will be possible.

Now, let me just answer one last question. You asked about rating the Social Security fund. Let me say that that just depends on how you look at. The Social Security trust fund is basically a guarantee that certain obligations will be paid out to retirees, including the COLA, as well as to the disabled and to those who are the survivors who are eligible to be paid under it.

Now, in 1983, when the Social Security reforms were passed, it is true that the government was collecting more in Social Security taxes than were needed in any given year to pay for that. So rather than raise other taxes to pay for other governmental expenses, the rest of the government borrowed and gave a bond to the Social Security trust fund, with the full faith and credit of the United States behind it, a legal obligation to pay back the money with interest to the Social Security trust fund when it was needed to pay out. And so there is no reason to believe that all the money that's been taken out since 1983 will not be paid back in as soon as it's needed to meet the legal obligations of the Social Security trust fund.

By doing that, by borrowing that money and paying it back, we didn't do anything to affect the obligations of the fund to pay Social Security recipients in the future. But we did keep the government from borrowing more money out in the private sector, competing with the private sector for money, and running interest rates up. So I think on balance it's been a safe and sound thing to do, and I do not believe that the raid has occurred on the Social Security trust fund. It would be a raid if the money were not paid back when it's due to be paid to you, but the money will be paid back when it's due to be paid to you.

And that's one of the things that we have to make sure is never interfered with, the legal obligation of the United States government to replenish that trust fund and pay back the money when it's needed for the recipients.

Thank you very much. (Applause.)

END 1:44 P.M. CDT


The Oval Office
10:06 A.M. EDT

THE PRESIDENT: Good morning. This morning I'd like to talk to you about one way we are working to restore Americans' faith in our national government, in our efforts to shore up Social Security and other vital benefits by cracking down on fraud and abuse.

For 60 years, Social Security has meant more than just an ID number on a tax form, even more than a monthly check in the mail. It has reflected our deepest values, the duties we owe to our parents, to each other, to our children and grandchildren, to those who misfortune strikes, to those who deserve a decent old age, to our ideal of one America.

That's why I was so disturbed some time ago to discover that many prisoners who are, by law, barred from receiving most of these federal benefits, were actually collecting Social Security checks while locked up behind bars. Inmates were, in effect, under our law, getting away with fraud, primarily because it was so difficult to gather up-to-date information on criminals in our nation's more than 3,500 jails. But thanks to an unprecedented federal, state, and local cooperation, as well as new, innovative incentive programs, we're now finishing the job.

The Social Security Administration has produced a continually updated database that now covers more than 99 percent of all prisoners, the most comprehensive list of our inmate population history. And more important, the Social Security Administration is using the list to great effect. By the end of last year we had suspended benefits to more than 70,000 prisoners. That means that over the next five years we will save taxpayers $2.5 billion -- that's $2.5 billion -- that will go toward serving our hard-working families.

Now we're going to build on the Social Security Administration's success in saving taxpayers from inmate fraud. In just a few moments I will sign an executive memorandum that directs the Departments of Labor, Veterans Affairs, Justice, Education and Agriculture to use the Social Security Administration's expertise and high-tech tools to enhance their own efforts to weed out any inmate who is receiving veteran's benefits, food stamps, or any other form of federal benefit denied by law.

We expect that these comprehensive sweeps by our agencies will save taxpayers millions upon millions of more dollars, in addition to the billions already saved from our crackdown on Social Security fraud. We will ensure that those who have committed crimes against society will not have an opportunity to commit crimes against taxpayers as well.

The American people have a right to expect that their national government is always on guard against every type of waste, fraud and abuse. It is our duty to use every power and every tool to eliminate that kind of fraud. We owe it to the American people to ensure that their Social Security contributions and other tax dollars are benefiting only those who worked hard, played by the rules, and are, by law, eligible to receive them. That's exactly what we're trying to do.

Thanks for listening.

END 10:11 A.M. EDT

The Rose Garden 1:55 P.M. EDT

THE PRESIDENT: Five and a half years ago, America chose a new course of fiscal discipline and ecOnomic growth, balancing our budget and investing in our people. Holding fast to that course, our people have built the strongest economy in a generation.

The success of this strategy cannot be cause for complacency, however. Instead, it offers us an opportunity and an obligation to act boldly to strengthen our nation for the new century. Above all, we can harness our unsurpassed prosperity to uphold our duty to our parents, to our children and to each other through Social Security and Medicare.

I've just been briefed by the four Social Security and Medicare trustees for the administration: Secretaries Rubin, Shalala, Herman and Social Security Commissioner Ken Apfel. The trustees have issued their annual report on the future financial health of these vital programs.

The trustees have told us today that the Balanced Budget Act I signed into law last year has significantly improved the financial future for Medicare. The unprecedented reforms included in that law have cut the so-called 75-year deficit of Medicare in half -- even as we have extended new preventive benefits, provided more health choices for Medicare beneficiaries, and instituted other reforms that extended the life of the Medicare trust fund for a decade.

In fact, because of the bipartisan steps taken last year, the long-term prognosis for Medicare is stronger than it has been in over a decade. A bipartisan commission is now at work to craft further steps to strengthen the complex program into the 21st century. I look forward to their recommendations.

The trustees also report that the strength of our economy has led to modest improvements in the outlook for Social Security. They project that economic growth today will extend the solvency of the Social Security trust fund by three more years, now to 2032.

Today's report is encouraging. It shows we can honor our values and meet our most fundamental obligations, even as we balance the budget. However, these modest improvements only underscore the fundamental challenge we face. We must act to make certain that Social Security is as strong for our children as it has been for our parents.

Above all, let me say again, we must save every penny of any budget surplus of any size until we have strengthened Social Security. I've been heartened by the support this approach has received from lawmakers from both parties. But as estimates of the possible surplus have grown, the demand for new tax and spending initiatives that could upend our fiscal discipline have grown as well. Fiscal responsibility created our prosperity. Fiscal irresponsibility could undercut it. So I will resist any proposals that would squander the budget surplus, whether on new spending programs or new tax cuts, until Social Security is strengthened for the long-term. Once more I will insist that we save Social Security first.

In the coming months we will work to build public awareness of the nature and scope of the challenge, and to build public consensus for solutions. We must proceed with care, remembering that Social Security offers our people not only a guarantee of retirement security, but also a life insurance and a disability insurance policy as well.

Any changes we make now will be far easier than if we wait until the problems of Social Security are at hand. We will strengthen Social Security only if we reach across lines of party philosophy and generation, as we did when we drafted last year's balanced budget. And if we make this year a year of education on Social Security, I'm confident we will come together to take the necessary steps next year.

Finally, let me say that as we continue to take the necessary steps to sustain the growth of our economy, we must look ahead to the challenges that remain. Today, once again, I have asked Congress to strengthen America's commitment to the International Monetary Fund and the U.N. In this new era, the health of our economy will be deeply affected by the health of the world economy, and the security of the United States is clearly affected by the security of the rest of the world. Failure to act on these matters will put at risk both global economic stability, which will affect our own, and the prosperity that has widened the opportunity that we have enjoyed in this country -- the very prosperity which has made possible the progress on Social Security and Medicare that I announced today.

We've got a real opportunity here, and a rare one, to act today to provide for our children's tomorrows. We should seize the moment, and I'm confident that we will.

Thank you.

Q Mr. President, Newt Gingrich says your administration postures more and achieves less than any administration in America history. How do you respond?

THE PRESIDENT: Well, I think the achievements speak for themselves. And he said a lot of things last night that I don't think it would serve any useful purpose for me to respond to. There is enough negative political talk in Washington every single day without the President adding to it. I want to focus on the challenges facing our country, and that's what I intend to do.

Q Mr. President, he also said that you should tell your supporters to stop attacking the independent counsel, Ken Starr.

THE PRESIDENT: I don't have -- I've already told you, Mr. Gingrich said a lot of things last night that I don't think deserve a response, and I think it would not serve the American public well for me to waste my time doing it. I think I need to be focused on the public issues that affect them, and that's what I intend to do.

Q Do you have any thought of firing Ken Starr? I mean, he made that suggestion.

THE PRESIDENT: Of hiring him?

Q Firing him, sir. (Laughter.) He said, if you want, you could do it in the morning. I mean, have you ever thought of that?

THE PRESIDENT: First of all, that's not what the statute says.

Q I'm just quoting him, sir.

THE PRESIDENT: I know, but I don't want to respond to what he said.

Q Are you concerned that the Canadian Prime Minister's visit is undermining your efforts to isolate Castro?

Q -- tax cuts --

THE PRESIDENT: Wait, wait, I'll take both, but -- go ahead.

Q Are you concerned that the Canadian Prime Minister's visit to Cuba is undermining your efforts to isolate Castro?

THE PRESIDENT: Well, Canada and most other countries in the world do not agree with the extent of our embargo. But Canada has been a good, loyal ally in the cause of human rights. And I talked to the Prime Minister at some length both on the telephone and when I saw him about the importance of advocating a human rights agenda, and I believe that he will do that. I think he will push for democracy and human rights in Cuba. And if he does that effectively and makes that case, the same case that President Cardoso of Brazil made when we were in Chile -- when he said that it would be possible for Cuba to preserve its social contract in health care and education and still make the transition to democracy, and that's what they should be working on now -- then it could serve our common goal. We can have different approaches to a common goal and I think we do have a common goal.

Go ahead, Helen, I'm sorry.

Q I was asking, are you threatening a veto for any tax cuts?

THE PRESIDENT: I tried to make it clear that I will do my best to stop any legislation that does not honor the principle of saving Social Security first.

There are lots of good ideas out there that deserve to be evaluated in the coming months about what we should do to promote long-term security and stability for not only our parents, but the younger generation, and secure Social Security, and they all ought to be debated. But when we move we ought to move in the context of Social Security reform.

Then, after that's out of the way, we can see what the Treasury looks like and what else should be done. But I think we need to deal with Social Security first. And I still believe that a majority of members of both Houses in Congress and both parties believe that. I hope they do and I hope they'll stick with it.

Q Do you have any ideas of how to save it?

THE PRESIDENT: Well, sure I do. But as I said in the first forum -- and I think I've been proved right -- you see Senator Moynihan's got a proposal out there, Senator Kerrey's got a proposal out there, there are many proposals that have been offered by various Republican members of the Congress. It is important for me to keep this process going and get these ideas out there. And if I were to actually take a position now, it would undermine debate and public education and immediately focus on the specific piece of legislation, which I think is the worst thing we can do.

We know -- every survey of American opinion shows that there's a far different level of understanding about this issues today even than there was a year ago. Nearly everybody knows that something substantial, really substantial, has to be done to reform the Social Security system to accommodate the baby boom generation and then, subsequent, the generations after that. And yet there is a dramatic difference of opinion across the age lines about what exactly should be done and what the facts are.

So we have to -- we really need to continue this effort we're making in this calendar year to educate the public and to get all the ideas out there, and to encourage all the proposals to be viewed against the backdrop of how it fits into the overall scheme of things. And then I think what you'll see is -- and what I certainly hope you'll see -- is very rapid action early next year. I have a plan. We're going to end up in December with a conference here, we're going to meet with the leaders of both parties in Congress, and I'm going to do my best to hammer out a plan, which then will be a centerpiece of what I recommend to the American people and the Congress early next year.

Q Mr. President, on the Iraqi report at the U.N. --

Q May I ask on the U.N. and the IMF, sir? Despite what you said, it seems unlikely Congress will pass funding this year. Can you spell out in more detail what you think will happen if there's not funding? Do you have any other mechanism to give --

THE PRESIDENT: Well, let me just make it clear that Secretary Rubin has done a good job, I think, managing a difficult situation. But let's just look at Asia, for example. There's been a lot of talk about whether the IMF should be active in Asia, what it should be doing. The United States has had a good deal of success over the last five years by exercising economic leadership to open more markets to American products and services on terms that were fair not only to ourselves, but to our trading partners. About a third of our economic growth has come as a result of that increase in trade. Just under a third of our exports are going to Asia. Now, I think, therefore, it is clear that it is in our long-term interest for the IMF to be involved in trying to stabilize those Asian economies and help them to recover.

In our personal interest, how can we expect to be the leader of the world and also to benefit, personally, economically, from a system that we won't contribute to, and we won't pay our fair share on? I think, virtually, every American now believes -- or at least a huge majority -- when it comes to the United Nations that in this interdependent world we should share responsibilities. I think people liked it when we shared responsibilities in Haiti, when we shared responsibilities in Bosnia.

And we're saying to the world, yes, we want to continue to lead the world toward peace and freedom; we understand this is an important part of our security and our prosperity; but we're having a little political spat in the United States, and we don't think we ought to pay our dues to the U.N. We think that different rules apply to us, and we have a right not to pay our way, so we can have this fight over an issue that is unrelated to our U.N. responsibilities or our IMF responsibilities.

I don't think that is a responsible, mature message to send to the world by the leading country in the world. I think that if we want to lead, we ought to lead and we ought to lead by example by paying our way. That's what I believe. And I hope that I'll be able to prevail upon the Congress to make some progress in that direction.

Thank you.



In just over a decade from now, the first of America's 77 million baby boomers will celebrate their 65th birthdays. Fortunately, visionary programs like Social Security, Medicare, and the Older Americans Act will help to make life easier for them as they reach this milestone.

For more than 60 years, Social Security has provided our older citizens with a measure of economic security. For more than 30 years, Medicare has given them access to quality health care and the latest in medical advances. And older Americans in need of greater assistance have been able to look to programs under the Older Americans Act for the critical home and community-based care services that have enabled millions of elderly men and women to live independently. Together, these farsighted measures have played a major role in dramatically reducing the poverty rate and extending the longevity of older Americans, allowing our citizens to grow old with dignity and peace of mind.

This year's Older Americans Month celebration centers around the theme "Living Longer; Growing Stronger in America." As we enter a new
century and address the challenges of an aging America, we must commit ourselves to the health and welfare of our older Americans and to
protecting and strengthening Medicare and Social Security. One of the most important achievements of the Balanced Budget Act that I signed
last summer was its unprecedented reform of the Medicare program. This bipartisan effort extends the life of the Medicare Trust Fund for a
decade, includes new health plan choices, and adds coverage of preventive benefits. The legislation also established the National Bipartisan Commission on the Future of Medicare to, among other things, review and analyze the financial condition of Medicare so that it remains as strong for our children as it has been for our parents.

We must respond with equal resolve to the increasing strains on the Social Security system. Now that we have succeeded in dramatically
reducing the Federal budget deficit, I have called on the Congress to reserve all of the anticipated budget surplus until we have a comprehensive plan to strengthen Social Security for the 21st century. We are holding a series of regional conferences throughout the year to engage in a national discussion on the future of Social Security, both to raise awareness of the problem and to allow all Americans to contribute their ideas for a solution. At the end of the year, I will host a bipartisan White House Conference on Social Security to summarize the lessons we learn from this dialogue and to map out an effective strategy that will enable us to ensure that Social Security will be there for future generations of Americans.

During Older Americans Month -- and throughout the year -- I encourage all Americans to pay tribute to our older citizens and to follow their example by planning for the future. As individuals, we should take care of our health through proper diet, exercise, and appropriate preventive care, and we should plan for our future financial security by participating in retirement and savings programs. As families and communities, we can help older Americans to remain active and independent members of our communities. And as a Nation, we must recognize our obligation to those who will come after us by preserving and strengthening Medicare and Social Security for the 21st century and beyond.

NOW, THEREFORE, I, WILLIAM J. CLINTON, President of the United States of America, by virtue of the authority vested in me by the
Constitution and laws of the United States, do hereby proclaim May 1998 as Older Americans Month. I call upon Government officials, businesses, communities, educators, volunteers, and all the people of the United States to acknowledge the contributions older Americans have made, and continue to make, to the life of our Nation.

IN WITNESS WHEREOF, I have hereunto set my hand this fourth day of May, in the year of our Lord nineteen hundred and ninety-eight, and of
the Independence of the United States of America the two hundred and twenty-second.



The Rose Garden
11:32 A.M. EDT

THE PRESIDENT: Thank you, Jack. And let me thank the other members of the economic team.

This is of course very good news for the American people, as the chart shows. Now it's official that this year, well ahead of the most
ambitious schedule, America has balanced the budget. In fact, as the chart shows, the achievement of the American people will not stop there.
OMB predicts that the budget surplus will be $39 billion this year, the largest dollar surplus in our history, the largest surplus as a share of the economy in more than 40 years. America can now turn off the deficit clock and plug in the surplus clock.

Given the speed with which our nation has reached this remarkable milestone, it is perhaps all too easy to forget how hard it was and how
far we've come. Just six years ago, because of the drag of deficits, our people were running place, our nation was falling behind, interest rates were high and so was unemployment. On the day I took office the deficit was projected, this year, to be $350 billion.

How did this greatest projected deficit in history turn into the greatest projected surplus? The old-fashioned way, we earned it. Our nation earned it as a result of hard work by the American people; and, as the Vice President said, we earned it here in Washington with the help of two visionary actions in Congress. First, the courageous vote by the Democrats in 1993 in the midst of withering, extreme criticism that led to a cut in the deficit of 90 percent. And then the truly historic bipartisan balanced budget agreement passed by Congress last year that finished the job.

I think it would also be wrong if I didn't mention, as Mr. Lew did, that the reinventing government efforts headed by the Vice President played a major role. We not only have the smallest government since the Kennedy administration, with more than 300,000 fewer people, we also have savings in excess of $130 billion during the budget period as a result of those efforts. And Mr. Vice President, I am very grateful for what you have done.

Now that we're about to have the first surplus since Neil Armstrong walked on the moon, we face a crucial decision about what to do with it. We can use these good times to honor those who put in a lifetime of work and prepared for the future retirement of the baby boomers by saving the Social Security system for generations to come. Or we can give into the temptation in this election year to squander our surpluses the moment they start coming in.

I think the choice is clear. We got to where we are today with 4.3 percent unemployment, more than 15 million new jobs, the lowest inflation in over 30 years, low interest rates, high growth, the highest homeownership in history by doing what was right for the American economy over the long run. That is what we should do now. Social Security has been a cornerstone of our society for the last six decades, but the present system is not sustainable as we look forward to the full retirement of the baby boom generation. We have to protect it for the 21st century.

I was deeply heartened after I spoke about this at the State of the Union, that there were broad public statements of support from the leaders of both parties in both Houses in Congress about saving Social Security first. However, in recent weeks, senior Republican leaders in the House of Representatives seemed to have retreated from that pledge. In this election year, some now want to raid this surplus for initiatives instead of preserving every penny of the surplus until we strengthen Social Security.

We cannot ignore the long-term challenge, which we have a unique opportunity and responsibility to meet now, in favor of short-term schemes that, however popular in the moment, could compromise our future.

Let me be clear: I will oppose any budget that fails to set aside the surpluses until we have strengthened Social Security for the 21st century. Let me also be clear that does not mean that in the future there could never be a tax cut. It simply means that we need to know how we're going to pay for the challenges of reforming Social Security. Once we know that -- and we should know that sometime next -- I would hope early next year because of the work being done this year -- then we can have a debate about what ought to be done if there are funds that still are unaccounted for and unobligated.

Today, our economy is the envy of the world. But the progress was not predestined nor is its future guaranteed. We cannot abandon the
strategy of fiscal discipline and investments in the future which has brought us to this moment.

Instead, we should work together across party lines to maintain fiscal responsibility, to save Social Security first, to prepare for an even brighter future. Again, let me thank the members of the economic team, those who are here and those who proceeded them, for their work in this remarkable effort and every member of Congress whose votes have contributed to it. Thank you very much.

Q: Mr. President, over the weekend, those same Republican leaders-- I defer to Sarah.

Q: -- overcome the disruption which we face with the computers as millennium starts April 1, '99. That will disrupt all --

PRESIDENT CLINTON: Well, let me say that we're very concerned about that, Sarah, And I asked John Koskinen, formerly a deputy at OMB
and before that, a man who had a very distinguished career in the private sector, to come back into public service to supervise and coordinate our efforts to deal with the computer 2000 problem.

It's not something that grabs the headlines everyday but it is, in fact, a profound challenge, not only for the United States but for every country -- which is every country now -- that has extensive reliance on computers. And there are a lot of very complex questions. There are computer hook-ups where people at both ends have computers that can be programmed to move easily to 2000, but there's something in the connection in between which won't. This is a very complicated problem.

Interestingly enough, we discussed it in some detail at the G-8 meeting in England recently, and I can tell you that we are working very hard on it. We're working very hard, first of all, to monitor the progress of every government agency to see that they're ready, and some are doing better than others because some have more profound challenges than others. And, secondly, we want to do what we can to be supportive of the private sector in the United States and their efforts to make these adjustments. But it is a very big problem.

And I would urge -- since you've asked the question, I would urge everyone in America who hears this exchange to make sure that they have
done everything they can do within their own business sectors to be ready for this.

And we also agreed, by the way, when I was in England to work with other countries so that we can help share information and do everything
we can do make sure that when the new millennium starts, it's a happy event and not a cyberspace headache.

Q: Mr. President, over the weekend Republican leaders called on you to postpone your trip to China, or at the very least, not have a welcoming ceremony in Tiananmen Square. What will you do, sir?

THE PRESIDENT: I think it would be a mistake to postpone the trip to China. Our partnership with China has succeeded in persuading the
Chinese not to transfer missile technology and other dangerous materials to nations that we believe should not have them. We have seen some
advances on the human and political rights fronts recently. We have worked closely with them in North Korea. Today, we are working with
them to try to diffuse the tension and prevent a new nuclear race in South Asia.

So I think we have a broad range of issues to deal with, and I think we have enough evidence now to justify the partnership that we've had. So I believe we ought to go forward.


11:40 A.M. EDT

Hyatt Regency Hotel, Washington, D.C.

THE PRESIDENT: First let me say a special word of thanks to the members of Congress who are here and especially those who sponsored the legislation which created this summit. I thank Governor Allen and Secretary Herman for doing their sort of bipartisan introduction thing. I couldn't help wondering what all of us looked like up here to all of you. (Laughter.) I bet we look like a bunch of school boys in the spelling bee dying for the recess bell. (Laughter.) But this has actually been better -- it's been enlightening for me.

The most encouraging thing of all that was said to me, from a purely selfish point of view was when the speaker said, if I got to be 50 I could look forward to living another 30 years. Yesterday I was in Cleveland and I went to an elementary school to see some work that some of the AmeriCorps volunteers are doing, and I was shaking hands with all these little kids. And it really is true that they say the darndest things. And this young boy was six or seven years old, maybe, a little bitty boy, and he said, "Are you the real President?" And I said, yes. And he said, "And you're not dead yet?" (Laughter.) And I realized -- I didn't know what he meant. First I thought he'd been reading the local newspaper here. (Laughter.) And then I realized that to him the President was George Washington or Abraham Lincoln and he actually thought it was a qualification of the job that you had to be deceased to hold it. (Laughter.) It was an amazing encounter. (Laughter.) But now, I've been reminded of the actuarial tables and I'm ready to go back to work. (Laughter.)

Let me say just a couple of words by way of introduction. Most of what should be said has already been said, and very eloquently. And I thank all the previous speakers. But I would like to make one point that has been alluded to, but I want to try to drive it home.

We're living in a time where we have the lowest unemployment rate in 28 years, the lowest welfare roles in 27 years, the lowest crime rates in 25 years, the lowest inflation rate in 32 years, the smallest government in 35 years, and the highest home ownership in history. And we're about to have a balanced budget and a surplus for the first time in 29 years. This has given this country enormous self-confidence. We know that when we work together we do get things done. We do not know when we'll have a time like this again.

All of our reading of human history teaches us that nothing ever stays the same forever. If we can't deal with this issue now, when will we ever deal with it? We have an obligation to deal with this challenge, and deal with it now. And we have an opportunity to do so. (Applause.)

The balanced budget has freed up capital. It's led to an increase in -- the efforts in fiscal responsibility have led to a significant increase in our national savings rate, even as individual savings have gone down. And that's been very good to this point because it's enabled us to have lower interest rates, higher investment, and higher growth. And you see here the relationship between savings and investment and growth, which has already been alluded to. So we've had an increase in net national savings and a decline in the budget rate and it's led to more growth.

But the problem is that we have to have more personal savings as well. And we have to deal with the problems presented especially by Social Security and with the fact that there are 50 million Americans without private pensions, and by the fact that very few people are doing any savings above Social Security in whatever pension they have or don't have for their own retirement. So this is a deeply personal issue that Senator Lott, I thought, grippingly discussed, and it's also a big issue for our country.

We have the opportunity and the obligation, I believe, to deal with a lot of our other long-term challenges, but a lot of our other long-term challenges affect our children and affect children who have a poverty rate much higher, almost twice as high, as senior citizens. Unless we deal with this issue, unless we nail down Social Security for the 21st century and stabilize it, and unless we deal with the need for more private pension coverage, and unless we deal with the need for more savings, it will also -- make no mistake about it -- it will impair in a direct financial way our ability to fulfill our responsibilities to our children who are living in difficult circumstances and now we can help to chart a different future, and eventually it will undermine the self-confidence we're now enjoying and it will make people very short-sighted again when we could be dealing with these issues that will shape the future 10, 20, 30, 50 years from now. So I think it's a very, very important thing.

And the answer to Senator Lott's question, let's begin with Social Security. And I want to thank him for what he said and for what he said to me in private, and to both the Speaker and Senator Lott and the other Democratic leaders of the Congress. I believe, while I think this savers summit should keep meeting, I don't believe we should wait until all of your meetings here in advance to deal with the Social Security issue. The demographics are too clear.

We now have until 2032 before it starts to run a deficit, but that's very misleading. With modest changes now, we can have huge impacts later. If you wait, the closer you wait, the more dramatic the changes you have to make just to pay the bills. So my view is that we should continue to have these forums around the country, these bipartisan forums; we should continue to solicit advice; but our goal ought to be to have the Congress take up Social Security reform as the first order of business early next year and finish in the first half of 1999, saving Social Security for the 21st century, so that we baby boomers do not bankrupt our children in their ability to raise our grandchildren. And my commitment is to try to get that done on that timetable. (Applause.)

In order to do it, I have to say I still believe that we have to resist two temptations with the budget surplus. The first temptation is to say, well, it's large and projected to be growing -- and maybe I've just been in executive positions too long in public life, but those projections don't mean a lot because sometimes they don't pan out.

Now, we've been real lucky for the last five years, all our projects have been too conservative and we've done better than we've projected. But I think the first thing we have to do is to resist the tendency to spend the surplus on spending our tax cuts until we have dealt with the Social Security issue. The second thing I think we have to do is to resist the temptation to take one thing, even it seems like a very good thing to a large number of people, like the individual accounts, and deal with that without knowing how you're going to deal with the whole system. So what my view is -- that we ought to say that we're going to pass comprehensive reform. And I don't rule in or out any ideas here on that. That's not my purpose. And I solicit all of your ideas.

But I just think it would be a big mistake, knowing what the magnitude of the money we're talking about is, to miss this chance to say we're going to hold on to this surplus until we pass comprehensive reform. Then if there is money over and above that after we do this --I hope in early 1999 -- we can have a wonderful, old-fashioned American political debate about what the best way to proceed is -- whether we should cut taxes, invest the money, pay down the debt -- we can have that debate. But I think we should commit ourselves again to the idea that saving Social Security first is the right policy for America and the right thing for the 21st century. And I hope we will do that. (Applause.)

Now, let me say, in addition to that, we have some very specific proposals which I think respond at least in part to the concerns which were raised by earlier speakers on pension matters. The Vice President mentioned the Retirement Protection Act, which passed, I believe, with an almost unanimous vote in Congress in late 1994, to protect the pension benefits of more than 41 million workers. But I want to build on that.

In the balanced budget proposal that I have presented to Congress, I proposed to offer tax credits to small businesses who start pension plans to help them deal with the problems, the costs that you mentioned of starting the programs up and getting the advice. It could work, I think, in the first year, about $1,000 for small business, which should cover the costs involved in the start-up.

It would encourage employers who don't provide pension plans to give workers the option of contributing to IRAs through payroll deductions, the budget would. The budget also cuts the vesting period for 401(k)s from five years to three years. Eventually -- I'll make a prediction -- it may not happen in our time here, but eventually we will have to figure out how to have people paying, investing continuously, no matter how frequently they change jobs, because, if you look at all modern advanced societies, you have a higher and higher percentage of people doing part-time work, you have a higher and higher percentage of people doing more than one job, and you have more rapid turnover. You have a very high rate of vitality and activity in the business community. It means a lot of places being started, but the more businesses that start, the more you're going to have that also won't go on, that won't make it.

And in the increasingly churning, dynamic world, we are going to have to focus very carefully on that. This is something I believe, by the way, that I think the Saver Summit could really work on in the years ahead because of the congressional legislation, you know, having you meet again in a couple of years and then again in a couple of years after that. But for right now -- we know enough now to know we can preserve financial stability in a responsible way and cut this vesting period from five to three years. And I hope very much that we'll be able to do that in the budget discussions with the legislation that passes this year.

Finally, there's an easy to administer, defined benefit plan that's part of our budget proposal, and I hope the Congress will pass that.

Also, in an effort to encourage more workers to enroll in the 401(k)s that are already available to them, we have made it clear that employers can automatically enroll workers in the 401(k) plan unless the workers themselves choose to opt out. Now, currently, most companies require the employees to opt in to the 401(k) plans, a process that takes some time and some paperwork. Companies that have cut out the paperwork with automatic enrollment policies that then the employees can opt out of report participation rates of about 90 percent, as compared to an overall participation rate of 67 percent for companies offering 401(k)s. So that's something that you will discuss. It sounds like a small thing, but it's one thing that can really affect a very large number of people in getting them into the business of saving for their own retirement.

Let me just say, lastly, we all know we have to do more about personal savings. We have worked together in a bipartisan way to expand the availability of IRAs and the attractiveness of them so that people could invest in IRAs and then withdraw tax free if the money were used for education purposes or health emergencies or other things of that kind. But we need, clearly, to do more. And this is an area where, quite apart from the 401(k) issues and the pension areas, I invite you to give your best ideas to the administration and to the Congress.

Because -- let me just give you an idea of what a difference it could make. A person who could afford to save $5 a day for 40 years would have $300,000 by the time he or she retired, at just a modest return, above and beyond Social Security and pension. Young people have a unique opportunity. If we can get it into their minds early, if you save $2,000 a year beginning at age 25 and you retire at 65, you have $328,000. If you wait until you're 45 to start, you only have $78,000. So that really matters.

And let me finally say that -- let me end where I began. This is a moment of real self-confidence for our country. People have the emotional space to think about the long-term. If you just think about your own businesses, your own families, raising your kids; if your child is sick and you're really worried, and you're child is 10 years old, it's hard to work up the emotional space to think about where your child is going to college and how much it will cost. If you think you can't pay the electric bill at your business, it's pretty hard to think about whether you're going to buy a piece of expensive equipment next year that will make you productive five years from now.

Events intrude on nations just as they do on people in their individual, personal, and business lives. We have been given a gift, and we have to use it. This is a wonderful moment, but it is a moment of responsibility that we dare not squander.

Some of you probably know this, but it makes the point, finally, that if we have a saving nation, it means we have a nation of people who think about the future and who believe in it. When Benjamin Franklin died -- you know, a penny saved is a penny earned -- he left 2,000 pound sterling to the cities of Boston and Philadelphia, with only one caveat -- nobody could spend any of it for 200 years. By 1990, the 2000 pound sterling had matured into $6.5 million -- quite conservatively invested.

By leaving that money to people 200 generations removed from himself and his family -- I mean, 200 years removed -- Benjamin Franklin made a simple, powerful, eloquent statement that he believed in the promise of America, he believed in the future of America, and he was prepared to contribute to it in a truly astonishing way. Well, we don't have to ask the American people to save for 200 years, but we do have to make sure they can think about tomorrow and prepare for it. And this is a magic moment to do it.

Thank you very much. (Applause.)


Albuquerque, New Mexico

11:35 A.M. MDT

THE PRESIDENT: Thank you, Ken. First of all, let me say I'd like to thank the Older Women's League who are watching in Chicago; Congressman Mike Castle of Delaware and his group; Congressman Earl Pomeroy of North Dakota, who's had such a leading role in this effort, and his group; and Congressman David Price of North Carolina. I thank you all for hosting this forum.

Our economy is the strongest it's been in a generation. We have the lowest unemployment rate in 28 years, the lowest crime rate in 25 years, the lowest percentage of our people on welfare in 29 years, the first balanced budget and surplus in 29 years, the lowest inflation rate in 32 years, the highest home ownership in history, and the smallest national government in 25 years. But this sunlit moment is not a time to rest. Instead, it offers us a rare opportunity to prepare our nation for the challenges ahead. And one of our greatest challenges is to strengthen Social Security for the 21st century.

As you know, I believe strongly that we must set aside every penny of any budget surplus until we have saved Social Security first.

Fiscal responsibility gave us our strong economy. Fiscal irresponsibility would put it at risk. And whether we save Social Security first I will not be moved, but on how we save Social Security-- that will require us to have open minds and generous spirits. It will require listening and learning and looking for the best ideas wherever they may be. We simply must put progress ahead of partisanship.

The stakes couldn't be higher. For 60 years, Social Security has reflected our deepest values -- the duties we owe to our parents, to each other and to our children. Today, 44 million Americans depend upon Social Security. For two-thirds of our seniors it is the main source of income. And nearly one in three beneficiaries are not retirees, for Social Security is also a life insurance policy and a disability policy, along with being a rock-solid guarantee of support in old age.

Today, Social Security is sound, but a demographic crisis is looming. By 2030, there will be twice as many elderly as there are today, with only two people working for every person drawing Social Security. After 2032, contributions from payroll taxes will only cover 75 cents on the dollar of current benefits. So we must act, and act now, to save Social Security.

How should be judge any comprehensive proposals to do this? I will judge them by five principles.

First, I believe we must reform Social Security in a way that strengthens and protects a guarantee for the 21st century. We shouldn't abandon a basic program that has been one of America's greatest successes.

Second, we should maintain universality and fairness. For a half-century this has been a progressive guarantee for our citizens. We have to keep it that way.

Third, Social Security must provide a benefit people can count on. Regardless of the ups and downs of the economy, or the gyrations of the financial markets, we have to provide and dependable foundation for retirement security.

Fourth, Social Security must continue to provide financial security for disabled and low-income beneficiaries. We can never forget that one in three Social Security beneficiaries are not retirees.

And fifth, anything we do to strengthen Social Security now must maintain our hard-won fiscal discipline. It is the source of much of the prosperity we enjoy today.

Now, all this will require us to plan for the future, to consider new ideas, to engage in what President Roosevelt called "bold, persistent experimentation." I thank you for doing your part and for participating in this important national effort to save Social Security.

Now I'd like to hear from all of you. I guess we should start with Betty Ongeley of the Older Women's League in Chicago. Then we'll go onto Representative Mike Castle in Wilmington, Delaware; then to Representative Earl Pomeroy in Bismarck, North Dakota; and then to Representative David Price in Raleigh, North Carolina. So let's begin.

* * * * *

THE PRESIDENT: Thank you. I'll be glad to comment on that. Let's go now to Congressman Pomeroy in North Dakota. And again let me thank you all for the leading role you've played in this right from the beginning, and for your efforts to increase retirement benefits generally for seniors.

* * * * *

THE PRESIDENT: Well, first of all, let me say that we're having this forum today in Albuquerque, New Mexico, with a number of experts whose opinions range across the spectrum from believing that we should have a large portion -- some believe almost half of the present payroll tax -- converted over a period of 20 or 25 years into individual investment accounts, to those who believe maybe you should have a small percentage tax of payroll tax or a small annual payment to people for individual investment accounts, to those who believe that the Social Security trust fund itself should invest, beginning with a modest amount, a limited amount of its funds to increase the rate of return. So let me try to answer all these questions.

Let me begin by going back to Betty Ongeley's question about the impact on women. First of all, I think it's quite important that we maintain in the Social Security system the life insurance benefits. Because so many women are the primary home raisers of their children -- even if they're in the work force -- I think maintaining this life insurance benefit for the children when the wage earner is killed or disabled is terribly important. And that is, I think, a very important thing.

Now, the second thing I would say is, I personally believe we're going to have to do some things beyond the Social Security system to help women to deal with the fact that they live longer and that today their earnings base is not as great because they're out of the work force for an average of 11 years.

On the question of getting pay up, I think that there is legislation in Congress that would deal with the equal pay issue, which would solve some of the other problems. And I would like to see more aggressive work done on that, to do even more work to enforce the equal pay requirements of our law for women. So, if I could just leave that there.

Now, let me move into the questions raised by the other people who called. And I want to give Ken Apfel a chance to talk, especially if I make a technical mistake.

In various ways, you all asked the same questions about the private accounts. First of all, let's back up and realize why we're dealing with this. By 2030, there will be only two people working for every one person drawing Social Security. The average rate of return on the investment any worker makes on Social Security will go down as more people live longer and more people are in the retirement funds, because government securities, while they're 100 percent certain, don't have a particularly high rate of return, like any kind of 100 percent certain investment.

So the question is then raised, well, if -- over any 30- or 40-year period, an investment portfolio that, let's say, was 60 percent in stocks and 40 percent in government bonds, or 40 and 60 the other way, would have an average rate of return far higher. And even after you take account of the stock market going down and maybe staying down for a few years, shouldn't we consider investing some of this money, because, otherwise, we'll have to either cut benefits or raise taxes to cover them, if we can't raise the rate of return. So -- and I think those are the three main options.

And younger people especially, many of whom are used to doing things on their own, accessing information over the Internet, and also have only experienced a growing stock market, which has been growing since 1980, and which, since 1993, has virtually tripled, have been especially interested in these individual accounts. So let me just try to deal with these issues.

First of all, what about individual accounts and how could we set them up? There are, I think, basically two basic options that have been options that have been advanced. One is, should we take a one percent, or two percent, or some percentage of the payroll tax and, instead of putting that into Social Security, put it into a mandatory savings account for workers and then they can invest it in stocks if they like? What's the downside of that? The downside of that is twofold. Basically, your investments might lose money and you might not be so well-off with them when you retire, so that the combination of your investment fund, plus your guaranteed Social Security fund might be smaller than would have otherwise been the case.

The second issue that's related to that is that if individuals are investing like this, the administrative costs of managing it can be quite high -- much, much higher than Social Security -- so that even though you might earn a higher rate of return, a lot of it would be taken right back from the people who are handling your accounts. So we have to work through that.

What about having the government do it? What about having everybody have an account -- a number, in effect, attached to their name for this money, but having some public source invest this money? Congressman Castle asked a question, as well as Congressman Price, and I think Mr. Weber in North Dakota asked this question.

Now, the virtue of that is that if the government were making these investments, you could do two things. Number one, you'd have much lower administrative costs. Number two, you could protect people who retire in the bad years, because you would average the benefits. And as I said, as we know, over any 30- or 40-year period -- and the average person will work 40 years -- the average rate of returns are higher. So you could always reap the average rate of return.

Now, if you were a particularly brilliant investor, you'd get less than you would have if you'd done it own your own, but on the other hand, you wouldn't get burned. And if you happen to be among unfortunate people who retired in a long period where the market wasn't doing well, like it was in between 1966 and 1982, you'd still be held harmless for that because of the overall performance of the market.

People worry about having the government invest that much money. There may be a way to set up an independent board immunized from political pressure to do it, but sill, that would be a whole lot of money coming from, in effect, one source, going into the stock market.

So we're looking at the experience of Canada and some other countries to see what we can learn about that. And we're also looking at the experience of Chile, as a place where they've used individual accounts, to see what the pluses and minuses are.

I think -- what I would like to say is, if we go down this road, we need to make sure that behind this there's still a rock-solid guarantee of a threshold retirement that people will be able to survive on. And then we can debate the relative merits of these individual accounts versus individual guarantees within these bigger units. But I think I've given you the main arguments, pro and con, of both the individual accounts and the government units -- government investment -- I'm sorry.

Let me just add one thing, if I might, because I think it was Mr. Weber who talked about a lot of -- either that or Congressman Pomeroy talked about a lot of the people in North Dakota that depend upon Social Security have very modest incomes from the farm or from other sources. One kind of modified proposal that has been debated is the question of whether, instead of dedicating a percentage of payroll to an individual account we should use the surpluses over the next several years to guarantee workers, let's say, $500 a year.

If you did that, obviously, as a percentage of income -- and that would amount to quite a bit after a few years of getting that $500 check in an investment account -- obviously, as a percentage of income, the impact on lower-wage workers would be far greater than the impact on higher-income workers, because the $500, and then the $1,000, and then the $1,500 and $2,000 and so on would be a much bigger percentage of a lower-wage worker's income than just giving everybody one percent of payroll. So the dollars would be much bigger if your payroll was bigger.

So that's another thing we've been asked to consider by various people, whether or not the fairest way to do it would be to just give a cash grant into the account of each Social Security-covered person who is paying in. And that's also being debated. And you all may have an opinion about that you want to forward to us.

* * * * *

THE PRESIDENT: I would also emphasize -- and, again, I don't want to further complicate this discussion -- but I believe we have to do two things. I think we have to reform Social Security in a way that makes it viable and available for the baby boom generation when all of us get into retirement age, and it doesn't bankrupt our children or our children's ability to raise our grandchildren.

But over and above that, we have to do some other things, which a number of the members of Congress who are here in New Mexico and out there at these forums have been interested in -- to increase the options for retirement savings beyond Social Security. Right now, Social Security is responsible for lifting about half the American senior population out of poverty, who would be in poverty without it.

But most seniors do not rely solely on Social Security. And more and more seniors, as we live longer, will need other sources of income, as well. So we're going to work hard on this, but we're also working on legislation to provide other avenues of retirement savings over and above this.

Thank you very much, all of you, for joining us. Commissioner Apfel and I are going to go back to work here in Albuquerque and we're going to try to listen to the arguments of these experts on the questions you've asked: Should the government invest in private securities, in the stock market, or should Social Security funds be invested in the stock market? And if so, should it be done by a public entity or should it be done by individuals with individual accounts?

And we'll try to get the pros and cons out and make sure they're widely publicized, and we welcome your views, as well. Thank you.

END 11:55 A.M. MDT

The Oval Office
10:06 A.M. EDT

THE PRESIDENT: Good morning. I want to talk to you this morningabout what I believe we must do to continue building a stronger Americafor our children and our grandchildren in the 21st century.

We're in a time of great prosperity, and even greater promise. For nearly six years I've done everything in my power to create theconditions for that prosperity and to make sure all Americans can sharein it. Today, we have nearly 17 million new jobs, the lowestunemployment in 28 years, the lowest inflation in 32 years, the smallestpercentage of our people on welfare in 29 years, the lowest crime rate in 25 years and the highest homeownership in history.

All Americans have a right to be proud of what together we have achieved. But we can't let these good times lull us into a dangerous complacency. The turmoil we see today in economies all around the world reminds us that things are changing at a rapid rate. We can't afford to relax. Instead, we must use our new prosperity, the resources it produces and the confidence it inspires to build a more prosperous future for all our people.

In just 12 days now we will have the first balanced budget and the first budget surplus since Neil Armstrong walked on the moon in 1969. This remarkable achievement is the product of hard work by the American people, by lawmakers of both parties who put progress ahead of partisanship. We have waited 29 years for this moment. Now we must ask ourselves, what should we make of it.

Above all, I believe we must use this moment of prosperity to honor the duty across generations and strengthen Social Security for the 21st century. Seventy-five million baby boomers will be retiring over the next two decades. We must act now across party lines to make Social Security as strong for our children as it has been for our parents.

In my State of the Union address I said we should reserve every penny of that hard won surplus until we had taken the steps to save Social Security first. At the same time, I did propose tax cuts for education, for the environment, to help families pay for child care. But not a penny of these cuts comes out of the surplus. Every one is fully paid for in my balanced budget.

My plan also provides tax relief to families while preserving the strength of the Social Security system. That is very important. When all the baby boomers retire there will only be about two people working for every person drawing Social Security. We can make moderate changes now and make sure that those who retire will be able to retire in dignity, without imposing on, burdening or lowering the standard of living of their children and grandchildren.

Unfortunately, the Republicans in Congress have a different idea. The black ink in the budget hasn't even had a chance to dry -- indeed, it hasn't appeared yet. But they already want to drain the surplus to fund a tax plan before we make the most of our opportunity, our historic opportunity to save Social Security.

I've already made it clear that if Congress sends me a bill that squanders the surplus before we save Social Security, I will veto it. But Republicans in the House of Representatives are proceeding anyway, and will try to pass their tax bill next week. I believe strongly that this is the wrong way to give American families the tax relief they deserve, the wrong way to prepare our nation for the challenges of the future.

So today I say again to the Republican leadership: go back to the drawing board. Look at the targeted tax cuts for working families I proposed. Scholarship for the first two years of college and college credits thereafter; IRA incentives to save for children. They all take effect this year, they'll all be on your tax forms in April and all of them are fully paid for.

So I say to Congress send me a plan like that, a plan with targeted tax relief while preserving all the surplus until we have saved Social Security. Send me a plan that rebuilds our crumbling schools, that helps working families with child care, and supports small businesses in getting pension plans -- and pay for it.

Send me a tax cut that keeps us on the path of fiscal responsibility, that honors our obligations to our parents and our children. If Congress sends me a tax cut plan like that, I'll gladly sign it. This is a time of great hope for our nation but a time where continued global economic growth demands continued American economic leadership. Fiscal responsibility has created our prosperity, and fiscal irresponsibility would put it at risk.

Let's do the right thing to provide for the security of our parents and opportunity for our children into the 21st century.

Thanks for listening.

END 10:12 A.M. EDT


The Rose Garden
12:20 P.M. EDT

THE PRESIDENT: She was terrific, wasn't she? Let's give her another hand. I thought she was great. (Applause.)

Congressman Cardin, welcome. I know you're proud of your constituent here. Jessica, welcome. We're glad to see you. I think Congressman Blagojevich is here. We welcome him, along with Senator Ephraim Gonzalez, who is the President of National Hispanic Caucus of State Legislators; and Councilman Robert Cantana of Buffalo.

Let me once again thank Monique for her remarkable statement and her even more remarkable life. I'm delighted to be joined here by our
economic team -- by Erskine Bowles and Secretary Rubin, Secretary Herman, Gene Sperling, Jack Lew, Janet Yellen, Larry Summers. Their
tireless, often literally sleepless work has been very instrumental in sparking and maintaining what soon will be the longest peacetime boom in
American history.

Officials of the Census Bureau who are here today, I want to thank all of you. We're going to be talking a little bit about some Census Bureau statistics. Sometimes we take your hard work and statistics for granted. The fact is that you ensure that our democracy is truly representative. And let me say in that connection once again, Congress must not hamstring the Census Bureau's efforts to maintain the most up-to-date, accurate scientific methods to produce the year 2000 census. They deserve the chance to succeed. (Applause.) Monique Miskimon has shown us today once again that every American counts. That means that every American deserves to be counted.

Now, before I get into the details of the very positive economic report, which Monique and her daughter so vividly represent, I think we all want to say just a few words and reflect on the powerful impact of Hurricane Georges. In the Caribbean islands, businesses and homes have been swept away; tragically, many lives have been lost. Meanwhile, the projected track of the storm places the hurricane center over or near the Florida Keys late tonight or early tomorrow morning. As we speak, we're helping the people of Florida prepare for the hurricane. We've already sent assistance to Haiti and the Dominican Republic. Obviously, we're working with the officials in Puerto Rico and the Virgin Islands.

James Lee Witt, the Director of the Federal Emergency Management Agency, has informed me that FEMA's Region Six Emergency Response Team arrived in Tallahassee, Florida, at 10:00 a.m. this morning. Here in Washington, the FEMA Emergency Support Team is operating at Level One, its highest level, on a 24-hour basis.

Our support teams and our prayers are with those in the Caribbean as they begin to rebuild, and those in the Florida Keys as they brace
for the impact of the storm.

Now, as President, from my first day here, I have done my best to fulfill a commitment I made to the American people: first of all, to restore the reality of the American Dream -- of opportunity for all responsible citizens, of a community in which we all count and work together -- and secondly, to reclaim the future for our children, to strengthen our country for the century ahead.

To accomplish that mission, we began first with an economic strategy to shrink the deficit and balance the budget, to invest in the education and skills of our people, and to expand the export of American goods. The census report released this morning represents one more year's worth of compelling evidence that this economic strategy is working, and that there are lots more people out there like Monique Miskimon.

The report shows that last year the income of the typical American household grew at nearly twice the rate of inflation. Since we launched
our economic plan in 1993, the typical family's real income has risen by more than $3,500. That's an extra $3,500 that hardworking families can
put toward their children's education or a down payment on a first home. Income for typical African American and Hispanic families increased by
more than $1,000 last year alone.

This report also shows that our growing economy is giving more and more families a chance to work their way out of poverty. The poverty
rate fell to 13.3 percent, and while we still have plenty of room for improvement, the African American poverty rate fell to another record
low. Hispanic poverty saw the largest one-year drop in two decades. Child poverty has dropped in the past four years, more than in any
four-year period in the last three decades. And the Earned Income Tax Credit, which Monique spoke of a moment ago, has raised more than 4
million people out of poverty in the last year alone.

The report this morning shows that economic growth continues to raise incomes, lift millions out of poverty, and extend opportunity. It also shows that we have more to do. Since 1993, every income group has benefitted from our nation's economic growth and the lowest 20 percent of our people in terms of income have had the highest percentage increases. That's the good news, after over 20 years of increasing inequality.

But that inequality is still too high, and it simply means there are too many American families out there working hard, doing everything we could possibly ask of them, and still having a hard time getting ahead. We have to use our prosperity and the confidence that it inspires to help our hardest pressed families and our hardest pressed communities to ensure economic growth for all Americans.

The most important thing we have to do, of course, is to maintain the economic strategy that got us here in the first place -- above all, the strict fiscal discipline that has given us low interest rates, low inflation, big investments and more jobs.

Exactly a week from today, we will have the first balanced budget and surplus since Neil Armstrong walked on the moon in 1969. Unfortunately, this week in the House of Representatives, the Republicans are moving forward with a proposal that drains the new surplus to pay for their tax plan. We can cut taxes. Indeed, my balanced budget includes targeted tax cuts for child care, for education, for environmental clean-up. But tax cuts must be paid for in full if we are to expand opportunity in the years to come.

I say again, we have been waiting for 29 years to see the red ink turn to black. We have a huge baby boom challenge coming when all the baby boomers retire. Social Security, as presently constituted, cannot sustain that retirement. We have to reform Social Security if we want to have it for our parents -- that's me, when the baby boomers retire -- without undermining the standard of living of our children and grandchildren.

So I say again, let us not get into this surplus we have worked for 29 years for -- or we've waited for 29 years for and worked for 6 years for. Let's don't get into that and spend it in an election year tax cut until we have saved Social Security for the 21st century, for the sake of our children and our grandchildren. (Applause.)

Second, we have to continue to invest in our people and lift them all up. I was deeply disappointed this week when 95 percent of the Republicans in the Senate voted not to raise the minimum wage. To reject an increase in the minimum wage when there are still so many people working full-time and raising children in poverty, when the unemployment rate and the inflation rate is so low, I believe is a mistake and sends the wrong signal to the American people.

I thank the 95 percent of the Democratic Caucus in the Senate who voted for the increase in the minimum wage. Working Americans deserve
it. I'm disappointed, with only a week left in the fiscal year we rejected this, and I haven't quit fighting for it. I think eventually we will get it in the next several months; if we have to wait until next year, we will get it.

But I'm also disappointed -- as I said, a week from today we end the fiscal year and we start a new one. And there's still been no action in the Congress on our vital education investments. Indeed, what action there has been in the House of Representatives has been negative, has been a setback for education.

Congress should work with us to enact my plan, paid for in the balanced budget, to reduce class size to an average of 18 in the early grades; to hire 100,000 teachers to teach those children in smaller classes; to rebuild or to construct or repair 5,000 schools so our kids will have good, adequate, safe schools to attend; to hook up all of our classrooms -- all of them, even in the poorest neighborhoods -- to the Internet by the year 2000; to improve early literacy by funding the program to send volunteers in to make sure that every eight-year old can read; to lift our children's sights with voluntary national standards and clear means of measuring them.

Now, if we hope to maintain our economic growth well into the next generation, we have to give every American child a world-class
elementary and secondary education. So I say again, we've been here for months and months; there's just a week left in the budget year -- let's
finally have action to improve our public schools and give all of our kids a world-class education. (Applause.)

The third thing I'd like to say is we have to continue to lead in the global economy if we want the American economy to continue to grow. We're enjoying unsurpassed economic prosperity, but all of you read the papers every day, you see the news at night, you know there are troubles
elsewhere in the world. You know our friends in Asia and Russia are facing great turmoil. You know we're trying to keep our big trading
partners and friends in Latin America from having the negative effect of that turmoil reach them even though they are pursuing good policies.

That's why it's important for Congress to fund our America's share of the International Monetary Fund, because the International Monetary
Fund helps the countries that are helping themselves to return to growth, and serves as an insurance policy against having the financial crisis spread to the countries that are doing the right thing and keeping Americans at work by buying our products.

Again I say, there is no reason not to do this. We've only got a week left in the budget year. We've been talking about it all year long. The problem has only gotten worse. It is time now to say, we're doing this because it's what America owes as the world leader; and more
importantly, we're doing it because it is absolutely necessary to keep American economic growth going. (Applause.)

Finally, let me say that with just a week left in this budget year, I'd still like to see the Congress pass a decent patients' bill of rights, one that covers -- (applause). Our bill would provide protections to all Americans, simple ones. If you get in an accident, you can go to the nearest emergency room, not be hauled to one halfway across town. If your doctor tells you you need to see a specialist, you can see one. If it comes down to a dispute about whether a medical procedure should or should not be applied, the decision should be made by a doctor, not an accountant. Your medical records ought to be protected in privacy. If your employer changes health care providers, it shouldn't affect you if you happen to be in the middle or a pregnancy or a chemotherapy treatment, or some other thing that would be entirely disruptive and dangerous and damaging to your health care if you had to change doctors in the middle of the procedure.

Now, we do that for everyone. The House passed a bill on a partisan vote, completely party-line vote, that doesn't protect 100 million people and doesn't provide any of those protections to the people that are covered. The Senate Majority Leader actually shut down business in the Senate a few days ago to keep them from voting for it, so they wouldn't be recorded -- they wouldn't be recorded as killing the patients' bill of rights -- but they could kill it and still satisfy the insurance companies that are doing their best to do it.

There's still time. We haven't broken for the election yet. We can still do the right thing by the American people. But we have to think about it, we have to focus on it, and we have to put our priorities where they ought to be. I think it's worth fighting for the patients' bill of rights in the closing days of this congressional session. (Applause.)

Again, I want to thank the economic team here and our supporters in the Congress, including those who are here today, for giving more
Americans a chance to live the story that Monique has told us about. I want to thank her for coming today and bringing her beautiful daughter.
I know we all wish them well.

Our prayers are with the people who are about to be affected and those who have been affected by the hurricane. And I ask that all of us
focus on using these last days of this congressional session to think about the American people, to think about our responsibilities, to think
about what got us here over the last six years, and instead of departing from it, to bear down and build on it. That is my goal and that's what
we ought to do.

Thank you very much. (Applause.)

Q: Mr. President, do you see any way out of an impeachment inquiry?

THE PRESIDENT: Well, let me answer you this way: the right thing to do is for us all to focus on what's best for the American people.
And the right thing for me to do is what I'm doing. I'm working on leading our country, and I'm working on healing my family.

And if you look at what we announced today, what does it tell you? It proves, number one, that the course we have followed has been the
right course for America. That's what it proves. After six years, it can't be an accident anymore.

But the second thing it proves is that it is utterly foolish for people to be diverted or distracted from the urgent challenges still before us. I told you that we had a record -- a record low in African American unemployment and poverty; a record low in the poverty rate for children, of African American children. Do you know what that record low is? It's about 39 percent. In other words, it's breathtakingly high. That's just one statistic.

So what does that tell me? It tells me that the right thing to do is, if we all put progress over partisanship, put people over politics, put the American people first -- what would we do? Well, we would keep the budget balanced. We would save Social Security before we squandered
the surplus. We would improve our schools. We would clean up our environment. We would pass the patients' bill of rights. And we would
keep the economy going. That's what we would be focused on. That's what I am focused on. That's the way out.

The way out here -- and the only way out is for people in Washington to do what the folks in America want them to do, which is to take care of their concerns, their children, and their future. That's what I mean to do, and I'm going to do my best. (Applause.)


12:38 P.M. EDT


Audio clip of President's remarks

THE PRESIDENT: Good morning. Yesterday, after nine days of difficult negotiations on Maryland's Eastern Shore, Israeli and Palestinian leaders signed an agreement that restores hope for peace in the Middle East. It strengthens security, increases cooperation against terrorism, and brings both sides closer to the day when they can live together as free people.

Keeping the peace process on track will require continued courage by Israelis and Palestinians in the months ahead. But this agreement shows what is possible when the will for peace is strong. And I'm proud that, together, we were able to make real progress. America will continue to work for a just and lasting peace in this land that is holy for so many people throughout the world. Now, I'd like to talk with you about an historic opportunity we face here at home. Ten days from now, the American people will head to the polls for one of the most important elections in recent years. You will help select a Congress that will determine whether we seize this moment of prosperity to save Social Security for the 21st century.

Earlier this month we celebrated America's first budget surplus in 29 years. But even before the black ink was dry, some in Congress were determined to squander our surplus on an unwise election year tax plan. But we turned back these efforts. The balanced budget I signed this week protects our hard-won surplus until we save Social Security first. As a result, the new Congress will have the best chance ever to ensure that the baby boomers can retire in dignity, without imposing unfair burdens on our children.

As we begin the process of reform, I have proposed five core principles to guide our way: First, we have to reform Social Security in a way that strengthens and protects the system for the 21st century. We simply cannot abandon a program that represents one of our country's greatest successes.

Second, we should maintain universality and fairness. Third, Social Security must provide a benefit people can count on, regardless of the ups and downs of the economy or the financial markets. Fourth, Social Security must continue to provide protection for disabled and low-income Americans. And finally, any reforms we adopt
must maintain our fiscal discipline.

Today I'm proud to announce the next important step we'll take in putting these principles to work. On December 8th and 9th, we'll hold the first-ever White HouseConference on Social Security to help pave the way toward a bipartisan solution early next year.

Unfortunately, some in Congress already may be backing away from this historic opportunity. Just last week, the Senate Majority Leader said he may not be willing to join me in our efforts to save Social Security. That would be a grave mistake. As with so many other long-term challenges, if we act now, it will be far, far easier to resolve the problem than if we wait until a crisis is close at hand. I believe we must save Social Security and do it next year.

I pledge to work with anyone from any party who is serious about this task. We cannot let partisanship derail our best opportunity to strengthen Social Security for the 21st

For more than 60 years now, Social Security has formed the sacred bond between the generations. In the words of one elderly woman three generations ago, "it is a precious shield against the terror of penniless, helpless, old age."

If the Congress you elect in 10 days chooses progress, it can strengthen that shield for generations to come. But if it chooses partisanship, this historic opportunity will be lost. You have the power to shape a Congress that will keep our Social Security system as strong for our children as it was for our parents. You have the power to elect a Congress pledged to save Social Security first.

Thanks for listening.


The East Room -- 2:30 P.M. EST (RealAudio Soundclip of President's Remarks)

(The White House Report on Women and Retirement Security)

THE VICE PRESIDENT: Ladies and gentlemen, on behalf of the President I want to welcome all of you. Please be seated.

I want to acknowledge members of the President's Cabinet and team here: the Secretary of Labor, Alexis Herman; the Deputy Secretary of Labor, Kitty Higgins; the Director of Office of Personnel Management, Janice Lachance; the Chair of the Council of Economic Advisors, Janet Yellen; the Director of the National Economic Council, Gene Sperling; and the Deputy Director, Sally Katzen; also the Deputy Social Security Commissioner, Jane Ross; and the Deputy OMB Director, Sylvia Mathews. And we're pleased to be joined by Congressman Ben Cardin and also Betty Freidan and other distinguished guests who are present with us today. We're very grateful to all of you for being here.

And in particular we are focusing today on what to do to strengthen Social Security for the 21st century and to strengthen it especially for the millions of American women who depend on it and who depend on it more than men.

We would like to say a special word of thanks to those who are joining us from around the country by way of satellite here today. I guess that's the satellite hook-up there. We welcome people from Boston, New York, Philadelphia, Atlanta, Chicago, Dallas, Kansas City, Denver, Seattle, Birmingham, and Richmond, California. We're honored that you're here. And, incidentally, we had first hoped to hold this important roundtable last week. And as you may have noticed and you may remember, President Clinton had a sleepless night for about 40 hours there with Prime Minister Netanyahu and Chairman Yasser Arafat and their delegations. They were putting the finishing touches on that agreement that takes such an important new step towards peace in the Middle East. And because of that this was rescheduled.

Mr. President, I have a feeling that not only is everybody here understanding of that, but, again, congratulations and thank you for that important agreement. (Applause.)


THE VICE PRESIDENT: So we're picking up today where we left off back a week ago. And it reminds me of how many important things have taken place right here in this room. Nearly a month ago I was proud to stand here in this room with President Clinton for the announcement that America had posted its first budget surplus since Neil Armstrong walked on the moon. And at that point, and actually, long before that surplus materialized, it seemed like everybody had a different idea about what should be done with the budget surplus.

But President Clinton ended that debate with four memorable words in his State of the Union address at the beginning of this year -- save Social Security first. That expression has forestalled the spending or wasting or use in any way of that budget surplus until we can save Social Security first. It would have been easy to join in with those who had risky budget-busting tax schemes or some other idea for using that money. But for the generation of Americans who saved Private Ryan, President Clinton committed us to saving Social Security first. And that's what we're going to do with the budget surplus.

That leadership couldn't have come at a better time, because over the next decade projections show more than $1.5 trillion in surpluses for Social Security. But consider this: 75 million baby boomers are going to be retiring over the next 15 to 20 years. Today there are more than 3 people working for each Social Security beneficiary, and by the year 2030 there will be only 2 people working for each Social Security beneficiary. That's just the fundamental fact of life that we have to adjust to. And it constitutes a serious challenge. By reserving the surplus until we fix Social Security, we can meet that challenge in a way that preserves the dignity of our seniors in retirement.

We all know that it's a lifeline for millions of Americans and especially women. And older women, on average, get more than half of their income from Social Security. For 25 percent of elderly women, a Social Security check is the only income they receive.

And of course, this is not just a story of numbers and statistics, it is also one of faces and families. And I want to acknowledge and introduce to you the people who will be joining us on this panel today: Bernice Myer, from Seattle. Bernice works with older Americans and disable seniors, helping them with personal care, shopping and cleaning. She expects to receive a small pension from a previous job when she retires in 15 years, but her current job doesn't have a pension plan. She's depending on Social Security to be a major part of her retirement.

We're also joined by Molly Lozoff from Miami Beach. Molly is a retired real estate broker and a 77-year-old widow who receives a Social Security check each month. When she was 35, her husband had an incapacitating stroke which left him unable to speak for the rest of his life. She became his legal guardian and in the process of getting her own life together, she discovered that there were programs that provide assistance for the minor children of disable parents -- government programs. She believes that the assistance that she received back then enabled her children to become the successful adults that they are today.

Also with us today is Wilma Haga from my home state of Tennessee. She's from Bristol, the birthplace of country music -- where the Carter family made their first recording, Mr. President. (Laughter.) And Wilma is a 76-year-old retired cafeteria worker with a small pension. Eight years ago her husband died, and she receives his Social Security check each month. Wilma says that she could not survive without Social Security and would do anything to help people understand how important it is to women like her. And there are lots of them.

We're also joined by Lucy Sanchez from right here in Washington, D.C. And over the course of 8 months her husband had heart surgery twice. To care for her husband, Lucy was able to use our Family and Medical Leave law. Today Mrs. Sanchez says, "If I had to go to work I would have been useless. Family and Medical Leave allowed me to do what I had to do because, no matter what, family comes first." And you're going to see how that ties in to this event here today in just a minute.

Now, finally, we are joined by Tyra Brown, a 20-year-old psychology major at Howard University, originally from Oklahoma City. Tyra is an honor student, a Ronald McNair scholar, and an AmeriCorps member. Her mother passed away when Tyra was only 15 years old. Thanks to Social Security, Tyra was able to receive Social Security survivors' benefits until the age of 18.

The message of these stories is clear: Strengthening Social Security is not just a fiscal responsibility, it is a profoundly moral responsibility. It is about preserving our oldest and most cherished values.

Nobody understands that better than President Bill Clinton. For decades now, few elected officials have been willing to take on this important challenge. Everybody here has heard Social Security referred to as the third rail -- people were afraid to touch it. Well, President Clinton believes that it's so important to America's future we can't afford not to take it on. And actually, if you study these numbers and statistics, you come away immediately with the conclusion the sooner the better, because the sooner we do take it on, the easier it will be to fix it in the right way.

His leadership is making an enormous difference for our seniors and for all generations. Ladies and gentlemen, it is my great pleasure and honor to present our President, Bill Clinton. (Applause.)

THE PRESIDENT: Thank you, ladies and gentlemen. Welcome to the White House. I want to thank the Vice President, the members of the administration, Congressman Cardin, all the panelists who are here, the satellite audience at the 12 other sites across our country. I'd like to say a special word of appreciation and welcome to Betty Freidan, who has written with such insight and appreciation for the challenges women face as they grow older.

We're here to talk about the special impact of the challenge to Social Security on the women of the United States. I would like to put it in, if I might, a larger context. Six years ago, when the Vice President and I came here, we brought a new vision of government against a backdrop of a $290 billion deficit and the kind of problem we're here to talk about today that we knew was looming in the future. We believed that we could give the American people a government that would live within its means, but at the same time invest in and empower our people.

It led to an array of new policies in education and the economy, the budget, the environment, in health care, in crime, welfare reform. Indeed, it led to the very effort to reinvent government, to use the Vice President's phrase, and the great effort that he made in that regard. But over the last six years we have been more active, among other things, in family matters and health matters, and a whole range of domestic areas, while giving the American people the smallest federal establishment since President Kennedy was here.

And the results, I think, have been quite good for our people, in terms of prosperity, opportunity is abundant, communities are stronger, families are more secure. This year, all year long, I have told the American people and done my best to persuade the Congress that it is terribly important to build on this prosperity and its newfound confidence to meet the remaining challenges this country faces on the edge of a new century -- particularly, and perhaps most important, the need to save Social Security and to prepare for the retirement of the baby boomers.

On December 8th and 9th we will hold the first ever White House Conference on Social Security, with a goal of paving the way toward a truly bipartisan national solution early next year. Social Security, as many of you know from your own experience, and as all our panelists will be able to discuss in one way or the other, is more than a monthly check or an ID number. It represents a sacred trust among the generations. It represents a trust not only between grandparents, parents and children, those in retirement and those that work, but also the able-bodied and those who are disabled. It is our obligation to one another and it reflects our deepest values as Americans. And it must maintain a rock-solid guarantee.

We have a great opportunity to save Social Security. As all of you know, just this month we closed the books on our first balanced budget and surplus in 29 years. It is the product of hardworking Americans who drive the most powerful economic engine our country has had in a generation; the product of hard choices by lawmakers who put our nation's long-term economic interest very often above their own short-term political interest. It is an achievement that all Americans can be proud of.

But we have to ask ourselves to what end has this been done. Of course, balancing the budget is essential for our own prosperity in this time of intense global competition. But it also gives us a chance to do something meaningful for future generations by strengthening Social Security. And doing that will help to keep our economy sound and help to keep our budget balanced, as we honor our duty to our parents and our children.

As the Vice President said, soon there will be many more older Americans. I hope that he and I will be among them. (Laughter.) Two of the 75 million baby boomers who will be retiring over the next 30 years. By the year 2013, what Social Security takes in will no longer be enough to fund what it pays out. And then we'll have to dip into the trust fund as provided by law. But by 2032, as this chart on the left makes clear, the trust fund itself will be empty and the money Social Security takes in will soon be only enough to pay 72 percent of benefits.

Now, that's the big reason I wanted to reserve the surplus until we decide what to do about Social Security. Every American must have retirement security in the sunset years. We plan for it, count on it, should be able to rely on it. That holds true for women, as well as men. But in the case of women, Social Security is especially important. On average, women live longer than men; women make up 60 percent of all elderly recipients of Social Security -- 72 recipients over the age of 85, as you can see here.

For elderly women, Social Security makes up more than half their income. And for many it is literally all that stands between them and the ravages of poverty. You can see what the poverty rate is for elderly women -- it's 13.1 percent with Social Security; without it, it would be over 50 percent. Study after study shows us that women face greater economic challenges in retirement than men do, for three reasons.

First, women live longer. A woman 65 years of age has a life expectancy of 85 years. A man 65 years of age has a life expectancy of 81 years. Second, for comparable hours of work, women still have lower lifetime earnings than men, although we're working on that. Third, women reach retirement with smaller pensions and other assets than men do.

Now, Social Security has a number of features to help women meet these challenges. And we have done a lot of work over the last six years to try to help make it easier for people to take out their own pensions and to make it more attractive for small businesses to help to provide pensions for their employees, which could have a disproportionate impact, positive impact for women in the years ahead. But the hard fact remains that too many retired women, after providing for their families, are having trouble providing for themselves.

Now, we have worked these last six years to expand pension coverage, to make the pensions more secure, to simplify the management of pension plans. We've worked for the economic empowerment of women, to end wage discrimination and strengthen enforcement of the Equal Pay Act. But we must do more until women earn $1 for every $1 men earn for the same work; and today we're only three-quarters of the way there. We must work harder to give retired women the security they deserve that they could not get for themselves in the years they were working.

Today, I am announcing two concrete steps we must take. First, I propose that workers who take time off under the Family and Medical Leave Act should be able to count that time toward retirement plan vesting and eligibility requirements. Sometimes the few months spent at home with a child mean the difference between pension benefits and no pension benefits. That is precisely the wrong message to send to people who are trying to balance work and family.

Millions and millions of people have now taken advantage of the Family Leave Act when a family member was desperately ill or a baby was born. None of them should have lost time for retirement vesting and eligibility benefits.

Second, I am proposing that families be given the choice to receive less of their pension when both spouses are living, leaving more for the surviving spouse if the breadwinner dies. That should help keep elderly widows out of poverty in their twilight years. And the poverty rate for single women, for elderly widows is much higher -- almost -- about 40 percent higher than that 13 percent figure there.

These proposals build on the work of Congressman David Price of North Carolina and Senator Barbara Boxer and Senator Carol Moseley-Braun. They will make a difference for our mothers, our wives, our sisters and some day for our daughters. But let me emphasize again the most important thing we can do for future generations is to strengthen Social Security overall.

When I said in my State of the Union address I would reject any attempt to spend any surplus until we save Social Security, I knew the congressional majority wanted to drain brilliance from the surplus even before it appeared on the books, much less having the ink dry. And not just this year, but permanently. Now, I am not opposed to tax cuts, and my balanced budget we have tax cuts for education, for child care, for the environment, and for making it easier for people to get pensions. I'm just opposed to using the surplus to fund tax cuts until we have used all we need of it to save the Social Security system for the 21st century.

The threat of a veto put a stop to that effort in this last Congress. The next Congress will be the Congress I call upon actually to move to save Social Security for the 21st century. It should not be a partisan issue, and we should not have another partisan fight to save the surplus until we reform Social Security.

But recently, Republican leaders are still saying the surplus should go to fund tax cuts first, and the Senate Majority Leader has suggested that he may not even be willing to work with me to save Social Security. Well, I hope that's just election season rhetoric. After all, they were willing to work with the insurance lobbyists to kill the patients' bill of rights. (Laughter.) And then they worked with the tobacco companies to kill our teen smoking bill to protect our children from the dangers of tobacco. And they were happy to work with the special interest who were determined to kill campaign finance reform. I think the Senate Majority Leader will be able to find time to work with me to save Social Security. (Applause.) And I certainly hope so.

I say this partly with a smile on my face, but in dead seriousness. This issue will not have the kind of money behind it that the tobacco interests can marshal or the health insurance companies can marshal against the patients' bill of rights. And everybody here with an opinion is going to have to give up a little of it if we're going to make the right kind of decision to get there. This is the sort of decision that requires us to open our minds, open our eyes, open our ears, open our hearts, think about what America will be like 30 years from now, not just what it's like today, and imagine what it will be like when those of us who aren't retired will be retired and our children will be raising our grandchildren -- increasingly, when those of us who are retired will be looking after our great-grandchildren as the life expectancy goes up and up.

This requires imagination. And it will be hard enough under the best of circumstances. It would be foolish to take this projected structural surplus that has been built in for six hard years of effort and squander it, until we know what it will cost to have a system that all Americans, without regard to party, can be proud of.

Now, this is an issue that offers us that kind of choice between progress and partisanship; moving forward, turning back; putting people over politics. In 11 days we will elect a Congress that will determine the future of Social Security. We need one that is 100 percent committed to saving Social Security first; to putting the long-term security of the American people -- our parents and our children -- ahead of the short-term politics.

Now let me say I am eager to hear from our panelists. I think it's important to note on this day with this subject that one of America's first great advocates for Social Security was the Secretary of Labor, Frances Perkins. As Secretary Herman would tell you, Frances Perkins' name now graces the Department of Labor building, just down Pennsylvania Avenue. She was the first woman to hold that office, or any other Cabinet office. Years later, on the 25th anniversary of Social Security, Frances Perkins looked ahead and said this, "We will go forward into the future a stronger nation because of the fact that we have this basic rock of security under all our people."

That foundation, that rock, was laid by Frances Perkins and Franklin Roosevelt. It is up to all of together, women and men, to make sure that rock will hold up all our people in the 21st century. Thank you very much. (Applause.)

Molly, why don't you go first? Tell us your story and your family's experience with Social Security.

MS. LOZOFF: Thank you, Mr. President.

Mr. President, Mr. Vice President and my fellow Americans, the month was October and the year was 1955. I was a happy 33-year-old mother of four wonderful children. I was a stay-at-home mother. My husband was a successful realtor until that fateful day, when he suffered a severe stroke that left him paralyzed an unable to express himself for the remaining 14 years of his life.

After the initial shock, I realized that I had to get busy and prepare myself for a career in order to be able to provide for my children and my disabled husband. It took about a year for me to become his legal guardian, handle his finances and earn my real estate license. During that time I learned of this new Social Security program, which started in 1956 -- fortunately for me -- that offered disability insurance for minor children of a disabled provider.

It was such a relief to know that my government was going to help me survive this crisis. I believe to this day that this assistance enabled my children to confront this severe family problem and allowed them to become the fine, successful, caring human beings they are today. Without this assistance I could not have fared as well. It gave me the solid base that I needed to build my family's future.

Many years have passed, and at this time in my life I find that I am once again turning to my government for help through the Social Security program. The amount that I receive every month enables me to provide for my basic living expenses. I know quite a few of my contemporaries in Florida who could not go on without their Social Security benefits. For some it's literally life-sustaining.

I'm so proud we have a President who feels a tug on his heart for our plight, the plight of the elderly. We should strongly support his efforts to use some of the budget surplus to ensure that the Social Security system will survive and continue to help those in need, well into the next millennium.

Thank you, Mr. President, we're so proud of you. (Applause.)

THE PRESIDENT: I'd just like to say -- I think I speak for everyone in this room, I guess some bad things happen to everybody in life and a lot of us were probably feeling nonetheless that we can't imagine how we would have dealt with what you have obviously dealt with so magnificently. And if Social Security helped, then I think we can all be grateful that it did. We thank you very much.

MS. LOZOFF: There are many people in my place, I know, today.

THE VICE PRESIDENT: Mr. President, I refer to Tyra Brown's story earlier. A lot of people commonly think of Social Security as a retirement program. And they don't stop to think that out of the 44 million Americans that receive Social Security, one-third of them are either survivors or disabled Americans. And a lot of them, some 3.8 million beneficiaries, are children; and almost 2 million of them are survivors of deceased parents.

Tyra, could you tell us your story, which represents a story that millions of others -- similar to that of millions of other children.

MS. BROWN: Thank you, Mr. President, thank you, Mr. Vice President, for inviting me here today. It's good to know that you both are working hard and using your leadership to help strengthen Social Security.

My name is Tyra Brown, and I'm from Oklahoma City, Oklahoma. I'm currently a junior here at Howard University, a historically black university, in Washington, D.C. While in school I'm working with AmeriCorps as a jump-start member, and I work in a Head Start center tutoring preschool children who are struggling with literacy skills and social development. I'm working toward the day when every child will enter prepared to succeed. After I earn my Bachelor's Degree at Howard I plan to go on to graduate school and become a child psychologist.

I enjoy working with children who need a helping hand, and I believe that as an American family, we all need to do what we can to help each other out. That is why I think Social Security is so important. It was there for me and I want it to be there in the future.

Most people think of Social Security as a retirement program, and it is. But what a lot of people don't know is that the Social Security system also helps out millions of people like myself who are not retired. When I was 15, I had a terrible experience -- I lost my mother to heart failure. And she worked very hard for me all of her life to provide for me, and after she passed my grandmother became my legal guardian. And we received Social Security survivors' benefits to help us with some of the expenses.

It wasn't easy, but the Social Security really helped, and we could count on that income to be there every month. And I don't think we could have made it otherwise without it. When my mom was alive she paid into the Social Security system, and although she wasn't able to get her retirement benefits, her Social Security contributions did help provide for me when I needed support. And I'm not alone. There are millions of other survivors out there who count on Social Security every month.

Now as I'm beginning to think about my own future, I think about that guarantee. As I pay into Social Security I want to be sure that it will be there for my retirement or in case of any other tragic circumstances, guaranteed. I know that Social Security needs to be strengthened and I know that there has to be a way to do it to preserve that vital guarantee.

That's why, Mr. President, I was very glad to hear your State of the Union address. We need to save Social Security first. It touches millions of lives in America. It has touched mine, and I hope it will be strong for generations to come.

Thank you. (Applause.)

THE PRESIDENT: We have heard from a student and a retiree. Now I'd like to call on someone who is working and planning for retirement. And I'd like to mention something that I mentioned in my opening remarks, to which the Vice President also referred, and that is that 60 percent of women workers, both part- and full-time, work at jobs that do not provide a pension. And as I said, we have worked very hard on this for the last six years and we've tried to come up with all kinds of proposals that would facilitate more employers providing pensions. And we will do more on that.

But meanwhile, we are where we are. Most Americans, even on Social Security, have some other source of income. But as you see from the chart, over half the women in this country who are retired would be in poverty but for Social Security.

So I'd like for Bernice Myer to talk a little bit about the challenges that she's facing and how she's trying to deal with the prospect of retirement in the job that she's in.


MS. MYER: Thank you, Mr. President and Mr. Vice President. I'm Bernice Myer. I'm a home care aide in Seattle, Washington. I'm 49 years old and have been working in service professions all of my life, all low paid. I feel that my work is very valuable to the people I serve and to society as a whole. I enjoy my work and have appreciated the opportunities I've had in each position.

One of my concerns as I grow older is where will -- a little anxiety as to whether or not I will have money available for my living. I have no pension plan currently and live basically paycheck to paycheck. So I'm very dependent upon what will happen. I'm a member of the Office and Professional Employees Union and am working to increase wages for home care aides. And we see some progress, but it's slow and I doubt that the progress I would like to see will happen in my lifetime. I think this important work and I hope that eventually pay received will match the value of the work.

I want to thank the President and the Vice President for this table conference, lifting up Social Security benefits. I'm depending on them being there when I retire. (Applause.)

THE PRESIDENT: One of the questions that we'll be asked to deal with, that most younger people who are interested in this will ask us to deal with, is the question of how much flexibility individual citizens should be given, and should there be alternative investment strategies for the Social Security fund. There will be a lot of these questions asked by young people, particularly.

And I think it is important to keep in mind that there is always a balance between greater flexibility with the prospects of greater return on the trust fund and rock solid certainty. And, ironically, to people in Bernice's position, she'd actually be better off with both, because if you don't have a pension you need a higher income out of Social Security, but if you don't have a pension you have very little room for risk.

And there are -- if you think about it, our society for decades, by and large, made a bargain with our critical service workers -- the people that pick up our trash every day, or the police that patrol our streets, or the teachers that teach our children -- we say, okay, we'll get you the best pay we can, but even though you'll never get rich, at least you'll have a pension as well as Social Security.

Now there's been an explosion, in the last 10 years especially, in America, of trying to provide more direct services to people in-home. And most everybody believes that's a good thing -- it promotes more independence, a greater sense of security of the people receiving the services. But there are huge numbers of Americans, like Bernice, out there who are performing critical services and taking our country in a direction most people who have studied this believe we need to do more of.

And one day eventually they'll all be covered by some kind of an organizational system that will give them a decent retirement plan. But, meanwhile, you've got people like Bernice that are out there doing things that we should have been doing as a society long before, that are making this a better place, that don't yet either have the bargaining power, the political support or whatever necessary to have the pensions that they need -- either that or the economics of reimbursing for the service are not sufficient to support a pension. It is wrong to let people like her do all this work for us and not at least be able to rely on an adequate Social Security system in retirement.

This is not an isolated story. This is a person who represents a growing number of Americans, not a shrinking number of Americans, doing something that most experts believe is making us a better society.

I didn't want to take so much time, but I just think it's very important that you understand we picked these people -- they're very compelling, I think, all of the panelists; but they're also representative, not isolated cases. And I think it's important to think about this when we make these plans for the future. (Applause.)

THE VICE PRESIDENT: And, Mr. President, women are more likely to be in that kind of situation. And I know you've been saying this for a long time, and Ben Cardin has been saying it for a long time, and others -- but I remember not too long back when I had the privilege of going to one of the forums on Social Security, this one at Rhode Island. Carolyn Lukensmeyer (phonetic) and her colleagues were hosting these events all over the country -- I think you went to two or three of them.

And before that event, the women members of the caucus in the House and Senate all wrote a letter the me saying, we see you're going up there to Rhode Island, here's some facts we want you to keep in mind. I knew a lot of them, but I must say, they brought out some facts that really deserve a lot more attention. Of course, all of them are on the table here today. But they have to do with the fact that women do live longer and pay in less for a lot of historical and life reasons.

Anyway, Wilma Haga here is representative of some people that we have with us today who can sort of tell us about what it would be like without it. I believe I mentioned she's from Bristol, Tennessee -- (laughter.)

MS. HAGA: You did.

THE VICE PRESIDENT: Wilma is 76 and her husband died eight years ago. And Social Security has made a great big difference. In our part of the country, Wilma, and all over the country, really, it used to be that older widows were very likely to be extremely poor. Many counties used to have what they called poorhouses -- before my time, but I've surely heard about them. And without Social Security they've estimated that more than 60 percent of all older widows would be living in poverty.

Now, in your life you have not had to face those circumstances mainly because of Social Security. Tell us about that.

MS. HAGA: Okay. Mr. President, Mr. Vice President, I'm so happy to be here, and thank you for inviting me. I just feel real honored and excited to be with you all today.

I am 76 years old and my husband, Alvin, and me had two sons -- Mike and Thomas. Al and I both had a high school education, but we weren't able to go to college. But we were absolutely determined that our two boys would go to college. For 28 years I worked in the school cafeteria, and every week I'd put my paycheck in the bank to take care of those boys' education. So my husband was an electrician, but he also worked three or four other jobs so that we could save all the money that we could for them.

I'm pleased that both of my sons did get a college education. Mike, in fact, is a seminary graduate. He works for you, Mr. President. (Laughter.) He works as an appointee at the Department of Agriculture and I'm so proud of him. And Thomas, my oldest son, has a very successful business in Texas, investment business. I'm proud of both of them.

As a widow on a modest income, I am keenly aware of the importance of Social Security. When I retired, after almost 28 years, I received a pension of only $200 a month from the school system. My monthly Social Security benefit totaled all of $300. Fortunately, my husband was still alive, and so I was not completely dependent on that $500 for all my income. I don't know how I would have survived with that money alone.

My husband died in 1991, Mr. President and Mr. Vice President. When that happened, my Social Security benefit was replaced by his. I got a raise of nearly $600 a month at a time that I really needed it. Now, between my monthly Social Security check of $915 and my pension, I can live very well. In fact, I'm proud that I can live independently and productively without any assistance from either one of my sons. There are millions of widows all over America just like me -- women who didn't earn all that much. But we now have the blessing of knowing that our years of hard work paid off, both in the success of our children and in having our government guarantee that we will have a secure old age. I owe it to my sons and my grandchildren to make sure that they have this same kind of security.

Again, Mr. President and Mr. Vice President, thank you so much for inviting me here today. Most importantly, thank you for providing the leadership needed and for making the future of Social Security a top priority. (Applause.)

THE PRESIDENT: We asked Lucy Sanchez to come here to talk about the Family and Medical Leave Act and its effect on her life, because I think it's important to point out that while both men and women are equally eligible for the Family and Medical Leave Act, women are far more likely to take advantage of it -- and they should not lose a year of eligibility, in terms of retirement vesting, when they do.

Keep in mind, if men and women all had retirement systems in addition to Social Security, and they were more or less equal, then our task of dealing with handling the baby boomers in the retirement system would be much, much easier. And so anything we can do now to equalize the impact of retirement earnings among similarly situated people 20 years from now will change and make less difficult the changes we are going to have to make anyway in the Social Security system.

I think it's very important for everybody to kind of keep that in mind. So when I announced earlier today, a few moments ago, that we wanted people not to lose credit in retirement vesting when they access the Family and Medical Leave Act. I think it's important -- we have an illustration of why it's important to have this law on the books and why it is inconsistent with being pro-work or pro-family to disallow retirement vesting just because people are taking advantage of the law.


MS. SANCHEZ: Thank you, Mr. President and Mr. Vice President, for inviting me to be here today. My experience is very recent. My husband went to walk the dogs one morning a year ago. Halfway home he suffered a dissection of his aorta -- that's a tear. He managed to make it home and climbed our front steps and opened the door. He collapsed against the door jam and called my name. Luckily, I was home.

He has a genetic condition called Marfan's Syndrome, which affects the body's connective tissue. The most serious problems associated with Marfan's Syndrome involve the cardiovascular system, and the aorta, which is the main artery carrying blood away from the heart, is wider and more fragile than normal.

So instead of driving to work together that morning we drove to the emergency room at the Washington Hospital Center here. We had the advantage of being pretty certain we knew what had happened, and we told the ER staff, and he was in surgery within an hour.

Meanwhile, I phoned his office and explained, and I phoned my office and explained. I didn't go back to work for 90 days. He actually had two surgeries that time and was in the intensive care unit for 11 days and in the hospital for three weeks. He came home sick, weak, confused, frightened, disoriented, unsteady. He didn't know when he was hungry. He didn't know when he needed to sleep. He didn't know what pills to take. So I could be there to take care of him. He recovered sufficiently to return to work in February.

Then it happened again in May. Both times he needed around-the-clock care from me. They say trouble comes in threes so in July, my 85-year-old mother landed in the hospital with major health problems. And I was able to fly to Kentucky to be with her, to bring her home, and to make more permanent arrangements.

All of this was in the last 12 months, and who else is there to care for your family but you. Because that's why we have families, that's why we're part of families. We care for each other. And it is because of the Family and Medical Leave Act that I could care for my mother and my husband three different times this year.

I was out of work for 90 days, but I was not out of a job. I knew my job would be there without having to ask my boss for special favors. I'm sure she would have given them, but I didn't have to resort to that. I knew my seniority wouldn't be affected, and the fact that there was a plan in place to take care of life's exigencies -- and life is nothing but unexpected -- was a great relief. When your life is in turmoil it is just enormously comforting to know that that is there.

I did wonder what would happen to employee pension plans that I participate in -- would they continue, would they be affected, would they -- when I was actually lucky enough to be on annual leave and sick leave, for most of the time my paycheck continued. But should I have had to take even more time, I didn't know whether that would negate the plan or interrupt it. I just didn't know what would have happened if I hadn't been vested.

I believe that the Family Medical Leave Act is one of the finest pieces of legislation, a real contribution to the well-being of the American family and especially women, because women are the care-givers, as we all know.

We don't anticipate personal disasters. We tend to think of all of us as invincible, especially our own families. But it isn't always that way. This act is important to anyone, but especially women. I don't believe that people who take family medical leave should suffer pension loss, so I'm very happy to hear of this new plan.

Women usually put their needs after everyone else's. They tell us not to, but we do it anyway. And pension loss would put women who don't have much saved for the future at an even greater disadvantage.

I want to thank you, Mr. President and Mr. Vice President, for your leadership in the enactment of Family Medical Leave. I'm fortunate enough to work for an employer, the National Association of Social Workers, who strongly advocated for the Family and Medical Leave Act. And as we all know, professional social workers routinely help people juggle family care and work issues. And may I also just add as an amendment that Frances Perkins was a social worker. (Laughter.)

Eventually, the pieces of my life came back together. Everyone is well. And I would hope that no one would ever have to use Family and Medical Leave Act as I did, but regrettably, I know better. Thank you. (Applause.)

THE PRESIDENT: Well, thank you for sharing your story with us. We can all see how recent it has been and how difficult it has been for you, and you were very brave to come here and talk with us today. And we thank you for that very much.

We believe -- the Vice President and I and our spouses -- that the Family Leave law ought to be expanded some. (Applause.) We've tried in two Congresses to do that and haven't gotten very far. But we'll keep plugging away at it, because I think unless people have been in this situation where they're afraid they're going to lose their job, or wreck their retirement because they're just doing what's necessary to hold their families together, they can't imagine it. And the law is actually a great -- it's actually good for businesses, too, because it doesn't put any employers at a competitive disadvantage if it applies to all employers equally. It tends to minimize the cost, the burden of risk, for that. And I thank you very much for what you said.

But I think if we can take this whole family leave issue out of the whole -- just eliminate it in terms of whether your retirement vests or not, I think it would be a good thing to do. Modest cost to the retirement systems, enormous benefit to the stability of families. So I thank you very, very much for that.

Well, I think our panelists have done a great job, and I want to thank them for that. (Applause.) Again, what we attempted to do today was to show that on the present facts that women have a disproportionate interest the stability of the Social Security system and in the adequacy of the benefit because they are disproportionately likely to need it and more likely to have other assets -- or less likely to have other assets.

We also wanted to emphasize the disability and child survivor benefits, which our panelists have so eloquently done. None of this, however, is an excuse to avoid making the hard decisions we have to make because of the demographic changes that are occurring. It is just that we have to be mindful of it.

And what I'm hoping we did today was not to confuse anyone, that we've still got hard decisions to make, but to say that we ought to be especially sensitive to how these decisions affect women -- number one. And number two, we ought to be steely in our determination not to let the surplus go until we figure how much cost is involved and how we're going to balance all the difficult choices that have to be made and the risks that will have to be taken because we've got to maintain the social cohesion that Social Security has given us.

Think about what we got out of Molly being able to live her life under the circumstances and raise her children. Think about what society got out of that. Think about what society is going to get out of Tyra Brown because she was not abandoned when her mother suddenly passed away at the age of 15. And we were all sitting there watching her talk, just feeling better being Americans, weren't we, every one of us. Don't you think it was worth it to take care of her -- help her grandmother take care of her for three years? We all got something out of that, and she's got 60 years or more of giving back to society, that we're all going to benefit from that.

So I think as we -- we identified, all of us, with each one of these panelists as they talked to us about their lives. And so I'll say again, none of this lets us off the hook for making the hard decisions, but it ought to make us determined to be more sensitive to how they affect women, number one; and determined not to let the surplus go, in case we need it to fill in the patches of the decisions to make sure that we can have more stories like this 10, 20, 30, 40 years from now.

Thank you very much. (Applause.)

22. Why President Clinton's "Save Social Security First" Position Is Right for America- October 30, 1998

THE WHITE HOUSE Office of the President

President Clinton and Vice President Gore Have Fixed Our Fiscal Deficit; Now We Must Fix Our Generational Deficit. In 1992, America's budget deficit was $290 billion : a record dollar high. This past year, we had a $70 billion budget surplus; the first budget surplus since 1969, the largest dollar surplus on record, and the largest as a share of the economy since the 1950s. The achievement of the first budget surplus in a generation provides a unique opportunity to save Social Security for the 21st century.

President Clinton's "Save Social Security First" Position Is Right For America. In the Fall of 1997, when the prospects for the first budget surplus in a generation emerged, many members of Congress rushed out with expensive new ways to spend that surplus, from new spending on government programs to costly tax plans. But in his State of the Union address last January, President Clinton put America's long-run economic interests ahead of short-run politics by demanding that we reserve every penny of the budget surplus until we have strengthened Social Security for the 21st century. President Clinton's commitment to "save Social Security first" is right for our economy and right for our future.

We Have Fixed Our Budget Deficit, Now We Must Fix Our Generational Deficit. Reserving budget surpluses until we save Social Security gives us an additional resource to meet the costs of comprehensive reform. That is why President Clinton resisted all such proposals this year, from the hundreds of billions of dollars on a transportation bill to a $700 billion tax-cut plan. If we relaxed that fiscal discipline before we save Social Security, we could have found ourselves on a slippery slope and ended up squandering the surplus and weakening the prospects for bipartisan Social Security reform.

The Budget Surplus Is Fundamentally a Social Security Surplus. Over the next 10 years, surpluses in the Social Security Trust Fund account for 98 percent of our overall projected surpluses. Since nearly all the surplus comes from Social Security, it makes sense to save the surplus until we know how much is needed to save Social Security.

Preserving the Surplus Helps Create a Strong Incentive for Actually Getting Social Security Reform Done. It is normally impossible for any democracy to tackle long-term problems while the crisis is still only on the horizon. Putting the surplus off-limits until we address saving Social Security provides a strong impetus for all of us to do something to solve a fiscal challenge early so we can prevent a crisis later. If we eliminated this incentive, we may have jeopardized Social Security reform itself.

We Should Not Deviate from Our Successful Three-Part Economic Growth Strategy. In 1993, President Clinton and Vice President Gore put in place a three-part economic strategy to cut the deficit to help reduce interest rates and spur business investment; to invest in education, health care, and technology so that America was prepared to meet the challenges of the 21st century; and to open markets abroad and lead the world economy so that American workers would have a fair chance to compete and win across the globe. This morning, we learned that the economy is growing at a solid and strong 3.3 percent rate, and since President Clinton took office, the private sector has expanded at a nearly 4 percent rate. With unemployment the lowest in 28 years, the core inflation the lowest in more than 30 years, and the highest homeownership rate on record, it is clear that the President's economic growth strategy is working -- we should not deviate from it.


Woodside, New York
1:43 P.M. EST

THE PRESIDENT: Thank you very much for the warm welcome. Thank you, Monseigneur Finnerty, for greeting me when I came through the door of St. Sebastian. Thank you, my longtime friend Claire Shulman (phonetic), for being here. Thank you, Joe Crowley, for presenting yourself as a candidate for Congress.

He got good marks from Chuck Schumer as an athlete, and you must have noticed that he's quite a large man. I told him that next January I'd like him to be one of the whips in the Congress to get the votes gathered up, because I think people would be reluctant to say no to him. (Applause.)

I love coming to Queens. I never will forget the first time I came out here when I was running for President in 1992, and Harold Ickes was helping me. And he said, we're going to go out to Queens and we're going to meet with the Queens County Democratic Committee. And Congressman Tom Manton is the chairman of the committee. And he said, I think we can get them to be for you.

I said, now, why in the world would they endorse me? Most of those people have probably never thought about Arkansas, much less been there. And he said, yes, but they're a lot like you out there in Queens. You'll be right at home. You'll like that.

So we got on the subway and there was a television camera or two with me. And no one in New York knew who I was at the time, so they probably thought we were filming a commercial or something. We were on the subway banging everybody around, and then we got off and took a beautiful walk to the place where we had the committee meeting. And Tom had already convened the committee, and I walked up the stairs, and at length they introduced me.

And it was a setting sort of like this, and I was coming in from the back and we walked down the middle of the aisle. And I got about halfway down the aisle and there was this real tall African American man standing there on the aisle, a member of the Democratic Committee in this county. And he put his arm around me and he said, hey, Governor. He said, don't worry about this. He said, I was born in Hope, Arkansas, too. You're going to be just fine. (Laughter and applause.)

Tom Manton has been taking care of me ever since. And I want you to know that he has done a wonderful job in Congress and I appreciate what he did for you and for New York and for our country. And I will miss him very much. Thank you, friend. Thank you. (Applause.)

You know, on the way out here we were standing out in the hall and I first met Gert and we started laughing about John Glenn going up in space yesterday. And she said she thought that was a fine thing for a young man like him to be doing. (Laughter.) I want you to hold that thought, because I'm coming back to it. (Laughter.) There's a real reason why we're here today.

And finally let me thank Chuck and Iris Schumer for their friendship to me. I was in their home in 1992 over in Brooklyn. And I met their friends and relatives and the people with whom they worship. It was quite an exciting day for me. I have been proud of the campaign that they have made together with their family and friends -- starting out against overwhelming odds, bravely soldiering on, and, I'd say, doing right well on this eve of another election.

I'd like to ask all of you to think about something as New Yorkers, as well as Americans. New York at extraordinary times has given this country extraordinary leadership in the United States Senate. New York gave the American people Robert Wagner and Herbert Layman (phonetic) and Jacob Javitz and Pat Moynihan in the United States Senate. New York gave the American people Robert Kennedy in the United States Senate.

And once Robert Kennedy said, and I quote: "There is no basic inconsistency between ideals and realistic possibilities." I've worked with Chuck Schumer a lot. He's an idealist who is always struggling to get something done. And the longer I serve as your President, believe it or not, and in spite of everything, the more idealistic I am about America, what it stands for, what it means, and what it can do; but the more determined I am that every day should be used to turn ideals into action. (Applause.)

When it comes to education or Social Security or health care, when it comes to all those ideas, I can think of no person with whom I have worked in these last six years in the entire Congress who I think has more ability to turn ideals into action than Chuck Schumer. And that is one reason I am very proud to be here by his side and in support of him today.

Now, let me say also to all of you, this is not an ordinary election. I want you to go vote Tuesday, even if you are not going to cast your ballot the way I want you to. I hope you will, however. But I want you to go, because in this election we're going to choose the Congress of the 21st century. Really, the decisions that will be made, a lot of them in the next couple of years, will shape the way we as a people will live for far more than the next two years.

For six years, since the people of New York gave the Vice President and me and Hillary and our whole team a chance to serve, we've turned the country's economic policy around. We've changed our social policy. We have essentially tried to make America work again so that we could take advantage of these incredible changes that are going on in the world and have a very strong economy, but make sure we kept a human face on it -- that we gave everybody a chance to benefit from his or her labors, and that we took care of those who through no fault of their own needed a little help to get by, and that we tried to bring the country together instead of driving it apart.

And after six years, we saw again today that our economy grew at 3.3 percent in the last quarter. We've had the lowest unemployment rate in 28 years, nearly 17 million new jobs, the lowest percentage of Americans on welfare in 29 years, the first balanced budget, as you heard Chuck say, in 29 years, and a surplus. For the first time in history, last week, thanks in part to the heroic efforts of New York's Secretary of Housing and Urban Development, Andrew Cuomo, we announced a year and a half ahead of time that we had met our goal. Now over two-thirds of the American people live in their own homes for the first time in the history of the United States. So we are moving in the right direction. That is a good thing. (Applause.)

And as I told somebody, we had also reduced the size of the federal bureaucracy so that the federal government is now the smallest it was since the last time John Glenn went around the Earth.

Now, I thank Tom for what he said. Our administration has tried to be a force for peace and freedom around the world. We've worked hard to help the Irish reconcile with one another. We're working hard to promote peace in the Middle East, and we had a big breakthrough there last week on this day -- we announced it on this day last week. If I seem a little slow of speech today, you'll have to forgive me, but on that last day I was up 39 hours without sleep. And the real way we made the agreement was I was the last one standing -- (laughter) -- and so they finally agreed so they could go to bed. (Laughter.)

I say that because America has unique responsibilities and unique opportunities. Today I announced a program that I believe will help us to keep the world economy growing and to roll back some of the financial turmoil you read about that's engulfing the rest of the world. Now, that's a big deal because a quarter of our growth in the last six years has come from our ability to sell what we have to sell to other people. So that more and more, the success of every American business -- even small businesses here in Queens -- will be indirectly affected, at least, by the success of our friends and neighbors throughout the world.

Now, against that background, at this golden moment for our country, I think we have to look ahead to the future and say, well, what are we going to do with the first surplus in 29 years? What are we going to do with the lowest unemployment rate in 29 years? What are we going to do with this time when we seem to be doing pretty well, but a lot of our friends are in trouble around the world. What are we going to do with all those neighborhoods in New York City and elsewhere which haven't yet felt the economic recovery of the last six years?

Shall we just sort of relax and enjoy it, which means that at midterm elections half the people just stay home? Or shall we instead look ahead to the future and say, you know, times like this don't come along very often. Those of you out here who've seen a lot of years, how many periods in American history have we had like this? Not many in your lifetime. Not many. And nothing lasts forever. So that when you have these times like this, it is terribly important that we as Americans look to the future and take on our real challenges.

To me, that's the most important decision the American people have to make. Do you want to think big, think about what America should be like for your children, your grandchildren, your great grandchildren. What can we do now when we are strong to give that kind of America to the Americans of the 21st century.

That's what this whole saving Social Security issue is about. When I heard Gert talking about it, I thought, you know, Social Security for us has become even more than a check in the mail -- even though fully one-half the seniors in America would be in poverty today without it. Even though most people have some other source of income in addition to their Social Security, nonetheless, if there were no Social Security, half the seniors in the country would be in poverty without it -- instead of the 11 percent, which is the actual rate today. It's a huge deal. We're talking about untold millions of lives changed.

But in addition to the money, it is the symbol of our determination to honor family, to honor the contributions of those who went before us, to honor the proposition that in America we want to reward people who are good at what they're doing. We don't begrudge the athletes their success, the businesspeople their success. But we know that a country is great because of the great mass of people who get up every day, work their hearts out, obey the law, pay their taxes, raise their kids, and build up neighborhoods. And they should be a part of our prosperity. We don't believe in leaving people behind who do their part for America. And Social Security symbolizes that.

Now, what's the issue here? Why is Social Security in trouble? First of all, if you're getting a check now, relax, you're going to be fine. That's not the issue. The issue is this: we are living longer. The baby boomers are coming up for retirement, and those of you who gave birth to baby boomers know that until this crowd started school last year -- this crowd of children in school -- the baby boomers were the largest American generation ever, and larger than our children.

So that when we retire, the baby boomers, there will only be about two people working for every one person drawing Social Security. To give you an idea, today there are more than three people working -- about three and a half people working for every one person drawing Social Security. In addition to that, there will be more and more and more women retiring and living on Social Security because women, on balance, have a longer life expectancy. And they are less likely to have pensions or personal savings. For 25 percent of the women on Social Security, it's the only income they receive.

Now, when the 75 million baby boomers retire and when there are only two people on Social Security for every one person --two people working for every one person drawing -- we will in about 20 years start having to pay out of the Social Security trust fund, as provided by law, benefits, because the annual income won't be enough to cover the annual outgo. Then in about 34 years, even the trust fund won't be enough to cover the benefit.

Here's what this is all about. If we start now and make some modest changes now that don't have to affect people on Social Security at all, and if we use this money that we have in the surplus -- which I think I should add was produced entirely by the Social Security tax itself -- then we can make modest changes and preserve Social Security in the 21st century in a way that will accommodate the changing population patterns and still make sure it's there for the people who need it.

If we do not do that, if we say, well, heck, we waited 29 years for this surplus, let's take the money and run, let's have a little fun, give me a tax cut, give me a new program, give me this, give me that -- before we know whether we need this money to save Social Security -- and keep in mind it was produced by the Social Security tax -- and we miss this opportunity, then what's going to happen? Sooner or later, within a few years -- keep in mind, every year that goes by the problem is only going to get tougher, it's not going to get easier, because you have less time to fix a big problem -- then sooner or later we'll be forced with the choice of either saying, well, I'm sorry, we can't do this so we're just going to have to cut benefits 22 percent, in which case a lot of seniors will be in deep trouble. Or we'll say, our conscience won't let us live with ourselves so we're going to raise the taxes 22 percent -- and that's a whopping tax increase -- and keep in mind the payroll taxes paid by small businesses in years where they make money and years when they don't make any money. The payroll taxes paid by people on modest incomes as well as by wealthy people.

And if we did that, we'd be saying, okay, we didn't fix this when we had a chance back in 1999, and because we didn't do it now we're going to have to lower the standard of living of our children and their ability to raise our grandchildren because we didn't do the right thing.

Now, the generation that got us through World War II and built the greatest middle class in history and was educated by the GI Bill knows that America should do right by the future. This is a huge issue.

For a long time I thought that this would be a completely bipartisan issue. All year long we had forums around the country, Democrats and Republicans together, talking about these ideas, honestly debating what the options were. But then the leadership in the House of the other party wanted to have a huge and permanent tax cut right before the election -- disproportionately benefitting upper income people like me -- before we did anything to fix Social Security and before we knew what it would cost.

Well, we beat that. Thanks to Chuck Schumer and Tom Manton and a lot of other people, we rolled that back. But just the other day they reaffirmed their desire to do that, to deplete this surplus before we know how much we need for Social Security. And the Majority Leader in the Senate said that he might not even want to work with me on fixing Social Security.

So I say to you, I did not come here to trouble you about your Social Security. Your Social Security is okay. If we don't do anything, you'll be fine. But if you believe it's been a good thing and if you want it there for the baby boomers, for your children, and if you want your children to be able to retire without having to undermine the incomes and the standard of living of your grandchildren, then I implore you to speak with a loud and clear voice and say, look, we have lived a long life and sometimes you can't do the easy thing. We shouldn't take the money and run. We should save the money, save the surplus, and fix Social Security. If there's anything left over, then we can talk about what to do about it. But we cannot endanger this fundamental compact between the generations that has helped to make America what it is today. Save Social Security first. (Applause.)

That's the big reason I wanted to come here, the big reason I'm proud to stand with Chuck Schumer. There are other things. You heard -- I think it was Tom who said we voted in this budget -- we got one of our most important ideas in this budget: to hire 100,000 teachers to take class size down to an average of 18 in the early grades. But if you go around New York, you will see a lot of school buildings with rooms that can't be used. If you go to Florida, where I was yesterday -- I went to a little town in Florida not very long ago, a small town. I went to one elementary school, there were 12 trailers out back -- one school, 12 trailers to accommodate all the extra kids.

So one of the things we didn't succeed in doing in this election -- and again I ask you to think about your grandchildren and your great-grandchildren -- if we're going to have more teachers and smaller classes, they have to have someplace to teach. That means we have to build schools where we need them and we have to repair schools where we have them.

We have school buildings in the cities of this country -- like New York and Philadelphia and Chicago -- that are priceless buildings. No one could afford to build such buildings today. They're great buildings, but they've been allowed to fall into such disrepair that they can't even be hooked up to the Internet. And all this work we're doing to bring our kids into the modern age is not possible.

So that's another big issue that I think is important. And I thank Chuck Schumer and Tom Manton for their support for building and repairing 5,000 schools. And we need to do that next year.

We've tried to get a patients' bill of rights passed for a year, and the health insurance companies persuaded the majority in Congress to beat us. But, you know, Chuck talked about Medicare. We have the same challenges in Medicare, by the way, we do in Social Security. But one of the things that bothers me is more and more Americans are in managed care plans and HMOs. Now, that can be good if they just save money that would have otherwise have been wasted. Don't forget, six years ago inflation in health care costs was going up at three times the rate of inflation. And for elderly people that was a really troubling thing, since you use more health care. It was going to bankrupt the country.

So to manage the system better is a good thing. But to manage the system only to save money without regard to whether it's good for health care is not a good thing. Doctors, not accountants, should ultimately make health care decisions. (Applause.)

We're trying to pass this patients' bill of rights that simply says, look, we believe very strongly that we should have a law which says every person should have a right to see a specialist if his or her doctor recommends it; that every person in an accident should have a right to go to the nearest emergency room, not one halfway across New York City just because that's the one that's covered by the plan; that if a person is in a treatment -- a chemotherapy treatment or a young woman being by an obstetrician, who's pregnant, and their employer changes health care plans, well, you ought to be able to keep the doctor you're dealing with until the treatment is over, until the baby is born; and that your medical records ought to be private.

Now, this is something that affects Americans of all ages, but disproportionately seniors who are in managed care plans. A lot of seniors want to go into managed care plans -- Medicaid, Medicare -- because they give prescription drugs which otherwise aren't covered. There are a lot of good things. But in the end everybody ought to have those rights, those basic rights. And that's a big issue in this election that affects you and your children and your grandchildren.

So finally let me just say that there are a lot of things out here that you have to think about. And I've been urging the American people to vote and hoping we can get a little more balance in this Congress so that we can have people like Chuck Schumer who will put Social Security first, who will pass a patients' bill of rights, who will make it possible for us to modernize and build our schools; in short, who will be thinking about the long term.

The temptation is great for people just to pass -- they say, gosh, things are going so well, why is the President so agitated? Because my job is to think for all the American people about next year and five years and 10 years and 20 years down the road. And I would argue that those of you who are senior citizens, your job is to think for all the American people about next year and 10 years and 20 years down the road.

We were sitting here talking about John Glenn going up 36 years ago, and Tom Manton said, I remember when he went the first time and it seems like it was yesterday. Doesn't it to you, the ones that remember it? It seems like it was yesterday.

I remember once I met a man who is a friend of mine, who was 76 at the time, at an airport in Little Rock, and he looked terribly sad. And I said, why are you so sad? He said, well, my sister just died and I'm here to meet some family members. And he said, when you came up to me, Bill -- he said, I was thinking about when we were five years old. He was 75. And he put his hand on my shoulder and he said, let me tell you something, it doesn't take long to live a life.

And all of you know that. We all are given our share of time here. We all try to make the best we can. We all try to build our families and build our lives, enjoy our friends, pursue our faiths. America is the greatest country in the world for giving us that chance.

All we all owe back to America is good citizenship. So I ask you, please, at this golden moment for our country, stand up for the proposition that we should save the Social Security system before we throw this money that we've worked six years to build up; stand up for the proposition that every person ought to have decent integrity in their health care system; stand up for the proposition that children you and I may never know should have a world-class education in the 21st century.

I ask you for that and for your help for this good man, Chuck Schumer, and for all people who are always thinking about America's tomorrows.

Thank you and God bless you. (Applause.)

The Cabinet Room
1:15 P.M. EST

THE PRESIDENT: Good afternoon. Now that the election is over, it is time to put politics aside and once again focus clearly on the people's business. In yesterday's election I think the message the American people sent was loud and clear: We want progress over partisanship, and unity over division. We should address our country's great challenges. Above all, now we must address the challenge to save Social Security for the 21st century.

We have work to do in other areas as well. We should move forward to pass a patients' bill of rights. We should strengthen our schools by finishing the job of hiring 100,000 teachers and then passing the school modernization initiative, to give us 5,000 remodeled or new schools. We should increase the minimum wage. We should pass campaign finance reform. We must maintain our fiscal discipline to strengthen our own economy and maintain our efforts to stabilize the global economy.

But above all now, we have to seize this opportunity to save Social Security. And we're about to have another meeting here, one of many, in anticipation of the White House conference. I have spoken tonight and today with Senator Lott and Speaker Gingrich, with Senator Daschle and Mr. Gephardt, to ask them to join with me in this effort. On December 8th and 9th we will hold the first ever White House Conference on Social Security, bringing together people from Congress and the administration, from the public and experts of all persuasions. We will only be able to do this if we reach across party lines, reach across generational lines, indeed reach across philosophical lines, to forge a true national consensus.

I believe we can do it. I believe we must do it. Yesterday's election makes it clear that the American people expect us to do it.

Q To what do you attribute, Mr. President, the Democratic gains? I mean, was there one factor that you think was really the motivation?

THE PRESIDENT: Well, let me say I'm very proud of what our party did yesterday in the face of the tide of history and an enormous financial disadvantage. I think it's clear what happened. I think that they stayed together; they had a message that was about the American people, their needs, their opportunities, and their future. I think that they won because they had a clear message that was about America -- about saving Social Security, and improving education, and passing the patients' bill of rights, and raising the minimum wage and those other things. I think that's why they won. And they were able to get an enormous outpouring of support in all quarters of the country. And I'm very proud of what they did. But I think they did it by putting progress over partisanship.

Q Mr. President, do you think the election results will have an impact, or should have an impact on the impeachment inquiry?

THE PRESIDENT: That's in the hands of Congress and the American people. I've said that before; I'll say it again. I have nothing else to say about that.

Q Mr. President, the Republicans have made no secret of the fact that they intend to look at these elections and draw a lessons in terms of how they conduct an impeachment inquiry. What lesson would you hope they draw from these elections on that point?

THE PRESIDENT: That's a decision for them to make. I'm not involved in that and I'm not going to comment on it. I think that the lesson all people should draw is that the people who were rewarded were rewarded because they wanted to do something for the American people. They wanted to do something to pull this country together and to move this country forward.

If you look at all the results, they're clear and unambiguous. The American people want their business, their concerns, their children, their families, their future addressed here. That's what the message of the election was. And because the Democrats were able to do that in a unified fashion, even while being badly outspent and while running against a tide of history that goes back to, really to 1822, they were able to have an astonishing result. And I'm grateful for that.

But I think that people of both parties who care about these issues and want to pull the country together should now put the election behind us, put Social Security reform and education and health care reform before us, and go forward. That's what I want to do.

Q -- the outcome is a vindication of your policies?

THE PRESIDENT: I think it is a vindication of the policies and of the general policy of putting partisanship behind progress and of putting people before politics, and of trying to find ways to bring people together instead of to divide them. It was clearly a vindication of the message that the Democrats put out there on education, health care, Social Security and the minimum wage, campaign finance reform, the environment, a number of other things.

A lot of people worked very hard in this election -- the Vice President did, the First Lady did, a lot of people did -- but I think the American people basically said to all of us -- all of us -- we sent you there to work for us and we want you to find a way to do it, to address the challenges we face and to bring this country together and move this country forward. I think that was the loud, clear, completely unambiguous message of the election.

Q -- the election of Ventura in Minnesota --

THE PRESIDENT: I don't know. I think that you're going to have a lot of politicians spending time in gyms now. (Laughter.)

END 1:20 P.M. EST


Room 450
Old Executive Office Building 12:50 P.M. EST

THE PRESIDENT: Thank you. I would like to welcome you all here today and thank Margaret Dixon for those fine remarks. I thank Deborah Briceland-Betts for representing the Older Women's League so well, and Nancy Ann Min-Deparle for the great job she does as our HCFA Administrator. I welcome our friend, George Korpius and representatives from the National Council of Senior Citizens.

And I want to say a special word of appreciation to Senator Tom Harkin, who has been on top of this issue for a very, very long time, and has long needed more support from administrations. And we certainly tried to give him ours, but he has been a real trailblazer and we thank him.

I'd like to also thank, as others have, the HHS and especially June Gibbs Brown, the Inspector General; and Mike Mangano, the Deputy Inspector General, who is here today.

I'd also like to say one other word about Senator Gore, Sr., who was mentioned by Nancy Ann. Al Gore, Sr. was a leader in the development and the passage of the original Medicare bill over 30 years ago. And that is one of the many, many things we remember him for at this time of his passing.

For more than 30 years now, Medicare has been more than a government program. It has been a way that we could honor our obligations to our parents and our grandparents; an expression of the old profound American belief that the bonds of mutual love and support among the generations must remain strong. Any threat, therefore, to the integrity of Medicare is a threat to these bonds. And that is one of the main reasons that our administration has worked so hard to strengthen Medicare.

The balanced budget bill I signed last year extended the life of the Medicare Trust Fund for a decade. We also established a commission currently working to help Medicare meet the needs of the baby boom generation and the rising costs that inevitably come as we all live longer and longer and require more health care.

It is a troubling financial problem, but as a social matter it is a happy challenge. It is what I would call a high-class problem that we are all living longer and longer. But it does present us with certain real challenges which we have to face, and I look forward to getting the report from Senator Breaux and the Medicare Commission, and the working on a bipartisan basis with the next Congress to resolve this important matter.

Today, I'm announcing additional steps to strengthen Medicare by fighting the threat of Medicare fraud. Every year, Medicare is cheated out of billions of dollars, money that translates into higher taxes on working Americans, higher copayments in premiums for elderly Medicare recipients. This has become, as I said, especially significant as we grow older and more and more of us become eligible for Medicare.

I'm proud of what we have already done to fight fraud and abuse and waste. Since 1993, we've assigned more federal prosecutors and FBI agents to fight health care fraud. We've increased prosecutions by over 60 percent, convictions by 240 percent, saved $20 billion in health care claims. Money that would have lined the pockets of scam artists now is helping to preserve the Medicare Trust Fund and to provide high-quality, affordable health care.

But there is still more we can do. The private sector health care contractors that are responsible for fighting waste, fraud and abuse too often are not living up to their responsibilities. We recently learned that one-fourth of those contractors have never reported a single case of fraud, even though the Inspector General is quite certain that fraud is pervasive in this area.

Therefore, we are using new authority we fought for to create new weapons in the fight against fraud. Beginning this spring we will empower new, specialized contractors, Medicare fraud hunters, who will focus on waste, fraud and abuse. These new fraud hunters, by tracking down scams and waste, can bring real savings to Medicare and strengthen the system for the 21st century.

I'm also requiring all Medicare contractors to notify the government immediately when they learn of any evidence of fraud, so that we can detect patterns of fraud quickly and take swift action to stop them. And I'm asking HCFA to report back to me early next year with a comprehensive plan to fight waste, fraud and abuse further in the Medicare program.

In the fight against Medicare fraud, Congress must also do its part. And I am encouraged by the bipartisan oversight hearings being held in Chicago this week by Senators Collins and Durbin. When it returns next year I'll ask Congress to pass legislation that can save Medicare another $2 billion over the next five years. First, legislation that will allow us to empower our new fraud hunters to spot overpayments and keep crooked medical service providers from getting into the Medicare system to start with.

Second, the legislation will allow Medicare to pay much lower rates for prescription medications. Under current law Medicare loses hundreds of millions of dollars each year by paying as much as 10 times more than the private sector does for certain drugs. It's just wrong.

Third, the legislation will force private insurers to pay claims that they are legally responsible for, so that Medicare does not get stuck with the bill. This happens more often than you would think.

Fourth, legislation will allow us to crack down on medical providers, particularly those claiming to deliver mental health care who bill for services they never, in fact, provide, a large and, unfortunately, growing problem, according to our recent reports.

By passing these common-sense measures to fight Medicare waste and fraud, Congress can do more than help save taxpayers' money. It can demonstrate a bipartisan desire to preserve and strengthen Medicare for the future. If we took these actions now, we can help to assure that the system that has served our parents and grandparents so well will be there to serve our children and grandchildren well into the 21st century.

Thanks to the advocates who are here -- Senator Harkin and others -- I'm confident that is exactly what we will do next year.

Thank you very much, and happy holidays. (Applause.)


(President's Letter to Conference participants -- in Adobe PDF format)

Marriott Wardman Park Hotel
Washington. D.C.

8:50 A.M. EST

THE PRESIDENT: Good morning, ladies and gentlemen. Let me begin by welcoming all of you and acknowledging Senators Daschle and Santorum, Congressman Gephardt and Congressman Shaw, who will speak, and the very, very large delegation we have from the United States Congress, members of both parties right out here to my left. I thank you all for coming.

I think the fact that we have such a large representation from the Congress, as well as leaders of various organizations of people throughout the United States and people concerned about the Social Security issue, is a testament to the profound importance of this issue and the commitment of the American people to do something about it.

I thank Secretary Rubin, Secretary Herman, Secretary Daley, and Gene Sperling, Jack Lew, Ken Apfel, and John Podesta, representing the administration, for their presence here.

This is the first ever White House Conference on Social Security. There are all of you here in Washington, plus thousands of people watching at 60 satellite sites in all 50 states.

I'd also like to apologize for my early departure. I had hoped to be here for as much of this conference as I could, but, as all of you know, there is a service in Tennessee today for the father of our Vice President, former United States Senator Albert Gore, Sr., who was a true, great public servant. He and his generation built the entire postwar order from Medicare to the interstate highway system, both of which he himself had a personal role in creating. They were civic institutions that have helped save our nation and our world in the half-century since.

Now it is our turn to be builders, to renew the institutions that have made America strong. In this time, America faces no more important challenge than the need to save Social Security for the 21st century. Social Security is and must remain a rock-solid guarantee. It is a sacred trust among the generations, between parents and children, grandparents and grandchildren; between those in retirement and those at work, between the able-bodied and the disabled. It embodies our obligations to one another and our deepest values as Americans.

This year, I and a lot of people in this room, a lot of members of Congress, have spent a lot of time listening to the American people and speaking with them about Social Security. This White House Conference, a gathering of lawmakers, experts, Americans from all walks of life, marks an important step in the direction of saving Social Security for the 21st century.

We'll hear a lot of ideas expressed about what course we should take. Let me shock you by saying I think there will be some differences of opinion expressed in this room. But we should begin this process on common ground, agreeing above all on the importance of acting and acting now, while we can, during prosperous and productive times that Americans have worked so hard to achieve.

Our economy is indeed a powerful engine of prosperity. In its wide wake it creates something every bit as important as jobs and growth -- the opportunity to do something meaningful for America's future and the confidence that we can actually do it -- an opportunity to save Social Security for the 21st century. I hope history will record that we seized this opportunity.

Earlier this year I said we should reserve any surplus until we save Social Security first. We have done so. We should take the next step and act now. It is more than an opportunity; it is a solemn responsibility -- to take the achievement of past generations, the Americans who, according to President Roosevelt, had a rendezvous with destiny, and to renew the social contract for a new era.

Through war and peace, from recession to expansion, our nation has fulfilled its obligation to older Americans. It is hard, thankfully, to remember the time when growing old often meant growing poor. It seems impossible to believe, but in many cases, retirement meant being relegated to a rest home and the degradation of dependence. The normal aches and pains were accompanied by the unbearable pain of becoming a burden to one's children.

That's why Social Security continues to offer much hope, much confidence, much peace of mind. It is one of the most important and ambitious undertakings in our nation's entire lifetime.

President Roosevelt said, there is no tragedy in growing old, but there is tragedy in growing old without means of support. Soon we will face a rising challenge in providing that support, as every one of you knows. Before too long, there will only be about two people working for every one person eligible to draw Social Security. As our panelists will discuss, we are actually going to have many, many older Americans.

Just last night Hillary and I were discussing a recent health report that infant mortality last year dropped to an all-time low and the life expectancy of Americans rose to an all-time high, over 76 years. Some would argue that this problem we have with Social Security is, therefore, a high-class problem. I know that the older I get, the more high-class the problem looks to me.

It is, nonetheless, a significant challenge: 75 million baby boomers retiring during the next two decades. By 2013, what Social Security takes in will no longer be enough to fund what it pays out. That's just 15 years away. Then we'll have to use the proceeds from the trust fund. By 2032, just 34 years away, the money Social Security takes in will only be enough to pay 72 percent of benefits.

Now, there are many ways to deal with this, but there is only one way to get it done. Let me say to all the people on all sides of this debate, the only way we can save Social Security and avoid what I think is a result that none of us want, which is either a dramatic cut in the standard of living of retirees in America, a dramatic increase in the taxes on working Americans and the lowering of the standard of living of the children and grandchildren of the baby boomers -- the only way we can avoid that is by working together, putting progress ahead of partisanship, placing the long-term interest of the nation first.

Already some are predicting that we are simply incapable of doing this in Washington. I am determined to prove them wrong. I hope everyone of you are determined to do so as well. (Applause.)

What does this mean? It means, first of all, not that we should forget about what we think is right. It means each of us should articulate what we think is right, and those who believe they disagree should listen to them. We should all listen to people who have different opinions; they might be right and we might be wrong.

Secondly, it means that our differences cannot take the form of personal attacks. This is a complex issue and I have found that on this issue most people believe what they really believe -- we do not need to let our differences disintegrate into personal attacks.

Third, in the end all of us in some sense will have to sacrifice our sense of the perfect to work together for the common good. There is in this process no room for rancor. The stakes are too high, the issues far too important. It's not about politics, it's about doing right by young Americans and older Americans and the future of America.

The whole point of this conference is to open honest debate and to build consensus, not to shoot down ideas or insist that one side or the other has to go first. Secretary Riley, our Secretary of Education, said that one of his greatest lessons from South Carolina politics was the old saying that I'm for change and you are, too; you go first. (Laughter.)

I'm prepared to do whatever it takes to move us forward. But let's agree, we have to march together. That's the only path to the finish line. Our ears, our minds must remain open to any good idea and to any person of goodwill.

In judging any proposal I believe we should be guided by five principles. First, as I have said, we must strengthen and protect the guarantee of Social Security for the 21st century. Second, we must maintain universality and fairness. Later panelists will discuss the impact of reform on different groups. The First Lady was scheduled to discuss the special impact on women, who on average live longer than men, so depend on Social Security more.

Now, keep in mind that only 4.6 percent of elderly married women are living in poverty. For elderly single women, the number is about 20 percent. Those who think we can wait should never forget that fact either. When we judge any plan to save Social Security we need to ask whether it cuts the poverty rate among single elderly women and other groups in our population that are still at significant risk. (Applause.)

I must say, I have been quite impressed that proposals that span the conventional ideological spectrum have shown a sensitivity to this and to taking vulnerable people out of poverty and giving them the secure retirement they deserve.

Third, I believe we must construct a system where Social Security can be counted on regardless of the ups and downs of the economy or the markets. Fourth, Social Security must continue to provide financial security for disabled and low income beneficiaries. One in three Social Security beneficiaries are not retirees, and we must never forget that.

And fifth, any proposal must maintain our hard-won fiscal discipline. It has helped to fuel the prosperity Americans enjoy today. That is, after all, what gives us the chance to do this in at least a less painful manner.

I look forward to transforming these ideas into action. Let us begin firm in our faith that Social Security can bind our people not only across generational divides, but across party lines.

Let me say, too, in that regard, I am grateful for the presence here of Senator Santorum and Congressman Shaw from the Republican majority, and the Minority Leader, Senator Daschle; and Congressman Gephardt. I thank you very much for your presence here. And now I'd like to turn it over to them to make some opening remarks so we can get on with the work of this conference.

Let me say this before I sit down. You have to decide that we are going to do this. You have to tell these members of Congress that you will support them if they act. If you come here representing a particular point of view and you know these members of Congress agree with you, you should ask them to defend your point of view, but to be willing in the end to make a decision that will deal with the problem. This will only get harder, every single year we avoid resolving this it will get harder and harder and harder. And everybody's favorite idea will have a less beneficial impact the longer we wait. Now is the time to do this.

Thank you very much. (Applause.)


Room 450 -- Old Executive Office Building

10:35 A.M. EST

THE PRESIDENT: Let me say, one of the things that she might have told you is that before she volunteered for the National Council of Senior Citizens for 20 years, she was an employee until 1972, when she retired, of the Bureau of Engraving and Printing. Therefore, she worked for the Treasury Department. And on New Year's Eve, she will be 90 years old. (Applause.)

Ladies and gentlemen, before I get into my remarks, because this is the only opportunity I will have to appear before the press today, I think I should say a few words about an incident early this morning over the skies of Iraq, where American and British air crews were enforcing a no-fly zone in Northern Iraq. They were fired on by Iraq surface-to-air missiles. They took evasive action, returned fire on the missile site, and returned safely to their base in Turkey.

We enforce two no-fly zones in Iraq, one in the North, established in 1991; another in the South, established in 1992, which now stretches from the southern suburbs of Baghdad down to the Kuwaiti border. The no-fly zones have been and will remain an important part of our containment policy. Because we effectively control the skies over much of Iraq, Saddam has been unable to use air power to repress his own people or to lash out again at his neighbors. Our pilots have the authority to protect themselves if they're threatened or attacked. They took appropriate action today in responding to Iraq's actions.

Once again, I want to tell you I am very proud of the work they do, the risks they take, the skill and the professionalism with which they do it. They attacked because they were attacked. And they did the appropriate thing. We will continue to enforce the no-fly zones.

Now, let me say, this is a very happy announcement today. And I want to thank Secretary Rubin -- who most people associate with saving the economy, not saving Social Security, but that's an important part of his job, too. I want to thank Kathy Adams, who is one of the those people in the government that makes it go and never gets enough credit for it. So I'm delighted to see her up here and through her, all the other people who work every day to make America work.

I've already told you about Pauline Johnson Jones. And I want to say, too, I have been very moved by how passionate Ken Apfel has been about making sure that this problem got solved, and today we saw that he has a vested interest in it -- (laughter.) He doesn't want his father to cut him out of his will -- (laughter) -- and everybody always needs to be in better stead with their in-laws. (Laughter.)

You know, this Y2K problem is a stunning problem -- oh, one other thing. I want to acknowledge the presence here in the audience of the member of Congress from Guam, Congressman Robert Underwood, his wife and their five children. They're here; we're delighted to see all of them. We're delighted that they're here with us in this cold weather, instead of on warm and sunny Guam today.

We just heard that the new millennium is only 368 days away. And we want it to be a carefree celebration. The reason we're here today is to announce that on New Year's Day 2000, and on every day that follows, people like Pauline can rest easy because the millennium bug will not delay the payment of Social Security checks by a single day.

The Social Security system is now 100 percent compliant with our standards and safeguards for the year 2000. To make absolutely certain, the system has been tested and validated by a panel of independent experts; the system works, it is secure. And therefore, older Americans can feel more secure.

I thank all those who are responsible. This is a good day for America. Thank you very much. (Applause.)

The Social Security Administration and the Financial Management Service can be proud. The Social Security Agency was the very first one to start work on the Y2K problem; it's been a leader and a model ever since. They couldn't have done it, these two agencies, if they hadn't worked as a team. Social Security generates the Social Security payments; the Financial Management Services issues those payments. They are in this together.

Indeed, we're all in this together. This involves not just federal agencies, but every one who depends upon a computer, which is every one directly or indirectly. Federal and state governments and local governments, businesses large and small, the year 2000 problem reveals the connections between all of us.

We also, I want to point out, have been working very hard with other countries -- Sally Katzen just told me that there was a meeting at the United Nations recently where we met with representatives of 120 other countries who are all now working together to solve this, because, as all of you know, a lot of our economy is tied up with economic endeavors throughout the world, so even a problem a long way from our shores can have ramifications within our borders. And of course, we don't want any of our friends and neighbors hurt by this change, either.

People are meeting this challenge, but I think a lot of people can still hardly imagine what caused this. I mean, computers, after all, are supposed to save us time, right? And I was describing this Y2K problem to Hillary, and she got so technophobic that I gave her a little digital alarm clock for Christmas and she gave it back to me after I talked to her about it, and she said, why don't you just go get me one that winds up that I can change in my hand. (Laughter.)

It happened, you know, because in the older computers the memory put on the chip was precious and much more limited than the phenomenal capacity of computer chips today, so that, in effect, they were all programmed, these older computers, just to change the last two digits on the four numbers of any date. And so what would happen is, when you get to the year 2000, it would show 1900 instead of 2000, because there is no provision for the 19 to go to 20, because of the limitations of memory in the older computer chips. The problem is, obviously, that a lot of new computers are also interconnected with older computers and a lot of people can't even be sure what chips are in what computers and what links are there. That's what makes this labor-saving device of the computer present the most labor-intensive problem imaginable. Retired people have had to come back -- people with skills in working with the old computers have had to come back to help all kinds of businesses figure out how to unravel this problem. It sounds so simple, but it is so mammoth because you have to identify what computers and what chips are where and what the interconnections are.

And so it's an enormous, enormous effort, and we really, all of us, are so indebted to these people who have been recognized today with these two agencies, and to others all across the country who are working on this problem in the public and in the private sectors.

I say again, the American people don't know who -- or didn't before today -- know who Kathy Adams was. They don't know any of the people who are working with her. But when they get the checks for the first Social Security payment in the new millennium, it will be because of them. And I would just ask the American people today to be very sensitive, because there are people like Kathy Adams working in all these agencies, in state and local government and all these businesses throughout the country, and they need to be encouraged. And those who have not yet undertaken this task need to get on it and get on it now because we just have a little more than a year to get the job done.

Now, we have made sure that Social Security checks will keep coming in the year 2000. I'd also like to say that after we got the computer problem behind us, we have to continue to focus on the larger issue, the policy issue, which is to make sure the Social Security checks keep coming throughout the 21st century. All of you know that at present rates of contribution and payment, present rates of retirement, present rates of aging and birth and immigration, we estimate that the Social Security trust fund will be exhausted in about 34 years. We have typically tried to keep the life of the trust fund at about 75 years to make sure it was absolutely stable. Thirty-four years seems like a long time away -- I suppose the younger you are, the further away it seems. It doesn't seem so far to me now, because things that happened 34 years ago are implanted in my mind as if they occurred only yesterday.

But we are going to face early next year a great challenge of fashioning a bipartisan solution to save Social Security for the 21st century. I tell everybody it is a formidable problem, but it will only get worse if we delay it. And it is a high-class problem -- we have this problem because we're living longer. The average life expectancy of the American people, as reported just a few weeks ago, exceeds 76 years. And that is a high-class problem. We should be grateful for this problem.

When Social Security was established and there was no early retirement at 62, and you couldn't draw until '65, the average male life expectancy in America was 56 -- in the 1930s. So we've gone from 56 to over 76, and of course, for women it's a couple of years higher. And as Pauline says, women are especially dependent on Social Security for reasons that I think would be obvious to anyone, and therefore, have a particularly large stake in our resolving this problem in a prompt and appropriate way.

Now, in the last year -- in this year, 1998 -- I have gone around the country and held these bipartisan forums. Members of Congress in both Houses and both parties have taken a special interest and have been very good to attend these forums. Just a few days ago, we had a two-day first White House Conference on Social Security. The second day I went over to Blair House and met with nearly 50 members of Congress from both parties and both Houses. It was an astonishing outpouring of genuine interest.

Now, I don't want to minimize the problems, and they're different from the Y2K problem. The Y2K problem, you know what to do to fix it once you identify it. Here we've identified it and there are obvious differences about what should be done to fix Social Security for the 21st century. But we all know that there are basically only three options: We can raise taxes again, which no one wants to do because the payroll tax is regressive. Over half the American people who are working pay more payroll tax than income tax today. We can cut benefits and it might be all right for someone like me who has a good retirement plan, but it's not a very good idea for someone like Pauline. Or we can work together to try to find some way to increase the rate of return. And there are a number of options that we are discussing.

The point I want to make to all of you is that we have the same obligation to fix the system in policy terms for the 21st century that these fine people we honor today have discharged in fixing the Y2K problem. And if we approach it with the same can-do attitude and the same determination to reach a result, we can achieve that.

So today we celebrate and I hope the celebration that we have today will steel our determination to make sure that people like Pauline can be making this speech 50 years from now.

Thank you very much, and happy New Year. (Applause.)