President Bush on Tuesday used a four-drawer filing cabinet stuffed with paper representing government IOUs that he said symbolized the Social Security trust fund’s bleak outlook for meeting Americans’ future retirement needs.
“A lot of people in America think there is a trust — that we take your money in payroll taxes and then we hold it for you and then when you retire, we give it back to you,” Bush said in a speech at the University of West Virginia at Parkersburg.
“But that’s not the way it works,” Bush said. “There is no trust ‘fund’ — just IOUs that I saw firsthand,” Bush said.
Earlier, Susan Chapman of the Office of Public Debt Accounting had shown Bush an ivory four-drawer filing cabinet with numeric locks. “This is it,” she said.
“This is what exists,” Bush said, illustrating his point that the promise of future Social Security benefits are simply stashed in a file.
Chapman opened the second drawer and pulled out a white notebook filled with pseudo Treasury securities — pieces of paper that offer physical evidence of $1.7 trillion in treasury bonds that make up the trust fund.
Bush is facing an uphill battle in his effort to persuade the public that Social Security reform is needed and that private retirement accounts should be part of the solution.
Democrats argue that the administration is proposing to drastically alter the system when more modest changes would ensure the system’s future solvency.
The pieces of paper he saw are not real Treasury securities. In today’s computer age, investors no longer get honest-to-goodness Treasury bonds they can hold in their hands. But, by law, the bureau creates paper bonds to put in the file cabinet just in case anybody, like Bush, wants to see the trust fund.
“Imagine,” Bush said in his speech. “The retirement security for future generations is sitting in a filing cabinet. It’s time to strengthen and modernize Social Security for future generations with growing assets that you can control that you call your own — assets that the government can’t take away.”
Democrats: Debt will increase with Bush's plan
Democrats said the Bureau of Public Debt — the latest stop on Bush’s nationwide Social Security road tour — was a fitting location because they contend that the president’s plan will weigh the nation down in debt.
“The public debt would be greatly increased if Bush’s privatization scheme were to be enacted — adding nearly $5 trillion in additional debt, all of which will have to be paid back with interest by future generations,” a statement released by House Democratic Leader Nancy Pelosi said.
The most recent government forecast says that in 2017, Social Security trust funds will begin paying out more in benefits than it takes in. In 2041, the trust funds will be empty, and benefits will have to be cut.
Neither Bush nor congressional leaders have put forth a bill to reform Social Security, but two Democrats and two Republicans plan to square off Tuesday night in a mock debate on the Senate floor, arguing whether — and how, if necessary — the government retirement insurance program should be altered.
Bush has proposed transforming the Depression-era program by allowing younger workers to divert income equivalent to 4 percentage points of the 12.4 percent payroll tax that funds Social Security into a personal investment account.
The administration argues such accounts have the potential to offer greater payments to retirees, plus offer an inheritable asset should a worker or retiree die. Critics say the effort to create the accounts is a veiled attempt to kill Social Security by starving it of the money needed to provide traditional benefit checks.