|
 Printer-Friendly Version
Remarks Prepared for
U.S. Secretary of Labor Elaine L. Chao
Retirement Security for the 21st
Century
60 Cities/60 Days Tour
Dallas, Texas
Monday, April 4, 2005
Thank you, Tom [Baker, Chairman & CEO of TXU Electric Delivery].
I want to thank you, Pete Havel [Executive Director, SW Region, U.S.
Chamber of Commerce], the U.S. Chamber, the Financial Services Roundtable
and the Associated Builders and Contractors for providing this great forum
to talk about one of the most important challenges our nation faces today—ensuring
that all Americans can access a secure retirement.
I also want to recognize the distinguished members of Congress who are joining
us: Congressman Sam Johnson, Congressman Pete Sessions and Congressman Jeb
Hensarling. Thank you for everything you are doing to help people understand
why retirement security is such a critical issue for our nation.
The urgent need to address this issue was brought home to me during a recent
meeting of the Labor Ministers of the world's most developed countries. At
that summit, I found that aging populations and retirement security are widely
acknowledged to be among the top challenges that developed
countries face today.
Declining birth rates have left most developed countries without enough
younger workers to pay into the system that supports the retirement of older
workers. As a result, retirees in France, Germany, Italy, Japan and Russia
are facing the prospect of substantial benefit cuts. Workers in these countries
are facing the prospect of retiring later and making substantially larger
pension contributions. Their dilemma is a cautionary tale of what will happen
to us if we don't face up to the solvency problems of Social Security now—before there
is a crisis.
That's why President George W. Bush did the right thing in putting Social
Security reform at the top of his second-term agenda. He knows we need to
solve the financial problems of Social Security permanently, and
not just create a temporary Band-Aid solution.
As many of you may know, I'm part of a team that is going all around the
country, visiting 60 cities in 60 days, to talk about Social Security reform.
I'm so pleased to have a chance to travel to Dallas and share this Administration's
plan to strengthen retirement security with key business leaders in this
community. The President wants his fellow Texans to understand what is at
stake and why we have to act now.
The President has one goal in initiating a national dialogue on reforming
Social Security: to ensure that promises made by the government to
workers are kept. In talking about this issue, it's important to remind everyone
that Social Security is safe for today's seniors
and for those nearing retirement. For retirees currently getting Social Security
benefits—and everyone born before 1950—nothing will change. No one is going
to take away their checks.
But the system needs to be modernized. In 1950, there were 16 workers for
each beneficiary. Today, there are only 3.3 workers supporting every Social
Security beneficiary. And by the time today's youngest workers reach retirement,
there will only be 2 workers supporting each beneficiary.
That means the government has made promises it cannot keep. That's why we
must do something now to ensure that Social Security
is there for future generations.
In 2008, just three years from now, workers born
between 1946 and 1964 will begin to retire. These workers are part of a generation
that has benefited from the great advances of our era. They are living longer
and healthier lives than ever before. That means that more people will be
tapping Social Security for longer periods of time than ever before. And
benefits are scheduled to increase dramatically.
The result is that 13 years from now, Social Security will begin to pay
out more in benefits than it collects in payroll taxes. The shortfalls will
grow larger with each passing year. By 2041, when today's younger workers
begin to retire, the system will be insolvent.
The problem was reaffirmed last week by the report of the Social Security
Trustees, of which I am a member. In fact, the report's most realistic and
reliable assumptions noted that Social Security will actually go broke one
year earlier than previously expected.
That's why we need to come together to solve
this problem. The President has made it clear that all options are on the
table for strengthening Social Security, with the exception of raising the
payroll tax rate, which would dampen job creation. And he has pledged to
work with members of Congress from both parties. But he is clear about one
thing: we must do something, and we must do it now.
As business and community leaders, you know how difficult it is to get younger
workers to think about the long term future. And you know that an astonishing
number of employees do not take advantage of the defined contribution pension
plans that many private employers offer. That's why it's important, as we
have this national conversation about retirement security, to also talk about
promoting and protecting personal savings and private pensions.
$4.4 trillion of our nation's retirement assets reside in the pension plans
provided by private sector employers like you. Some of these assets are
in 401(k)s—an increasingly popular retirement instrument with our mobile
workforce. And $1.8 trillion are in traditional defined benefit plans that
cover about 34 million people.
As part of the effort to ensure that all Americans can access a secure retirement,
President Bush has proposed a comprehensive plan to strengthen single employer,
defined-benefit pension plans. Experts estimate that defined benefit plans
are underfunded by $450 billion. Nearly $100 million of that underfunding
is in plans sponsored by financially ailing companies. Recent terminations
of underfunded plans have resulted in a $23 billion deficit in the federal
insurance program that covers these plans.
That's why the President has proposed a plan to strengthen single employer,
defined benefit pension plans to ensure that the promises made to these workers
are kept. The President's plan is based on three main principles:
First, reform the funding rules to ensure that
employers fully fund their retirement promises.
Second, reform the premiums that private sector
employers pay to the federal insurance program to better reflect the real
risks and costs.
Third, increase disclosure to workers, investors
and regulators to ensure greater transparency and accountability. That includes
making timelier information about the financial health of pension plans more
widely available.
We also recognize that there are millions of Americans who are covered by
multiemployer pension plans. And we firmly believe that their retirement
security is equally important. This Administration wants to work together
with the Congress, in a bipartisan fashion, to ensure that multiemployer
plans are strengthened as well. I especially want to thank Congressman Sam
Johnson for his leadership on this important issue.
The goal of all these reforms is to better protect workers and retirees,
so they can be confident of the secure retirement they have worked for all
their lives. That's why the President has also launched this national dialogue
on Social Security and why I am here today.
We all know that fixing Social Security will not be easy. It's the third
rail of U.S. politics. But President George W. Bush, as you in Texas know
so well, is a leader who does not pass the buck
to the person who comes after him. He is committed to solving this problem
once and for all. Our children's retirement security is more important than
partisan politics.
As we fix Social Security, President Bush wants to make it a better deal
for younger workers. One way is to allow younger workers—on a completely
voluntary basis—to put a small part
of their payroll taxes in personal, voluntary retirement accounts.
Personal, voluntary accounts would belong to the individual owner. The government
could not take them away. The money in that account would belong entirely
to the worker. He or she could also pass it on to their loved ones. Those
are important attributes to consider.
Today, more Americans than ever before can afford the secure retirement
that was once available only to a few. We must work together to ensure
that the foundations of retirement security—Social Security, private pension
plans and personal savings—are strong, safe and secure. That's the best way
to guarantee that the promises made to every generation
of retirees are promises kept.
Thank you for inviting me to Dallas—it's a real treat to be in the President's
home state. And now I will take a few questions.
| 
