Vice President's Remarks and Q&A at a Town Hall Meeting on Strengthening Social SecurityCampbell High SchoolSmyrna, Georgia 10:52 A.M. EDT CONGRESSMAN GINGREY: Thank you very much. Great to seeeverybody. Great to be here at Campbell High School in Smyrna,Georgia, one my favorite parts of this great 11th congressionaldistrict. I would like to extend a warm welcome to our community leaders,local members, leaders, students, friends, and especially to SenatorJohnny Isakson, my colleague in the House -- (applause) -- and mycolleague in the House of Representatives, Tom Price, Dr. Tom Price.(Applause.) It's an honor and a privilege for me to welcome the Vice Presidentof the United States, Mr. Dick Cheney. He has graciously joined us tospeak about the importance of strengthening Social Security. Since the 2000, election we've seen the strong, effective and moralleadership that President Bush and Vice President Cheney have broughtto our country. From his dedicated leadership in the aftermath ofSeptember 11th, to his commitment to bring meaningful tax relief tohard working Americans, Vice President Cheney -- now, I knew I shouldhave committed all this to memory because I don't turn pages very well-- Vice President Cheney served our nation with distinction and duty tothe American people. We are very fortunate to have such an experienced and knowledgeableman serving as our Vice President. Mr. Cheney has served fourPresidents, including former Presidents Nixon, Ford, and George H.W.Bush. In 1978, the people of Wyoming elected him to Congress where heserved in the House leadership. Vice President Cheney understands theimportance of protecting and defending America. He served as theSecretary of Defense under President George H.W. Bush, and he directedthe highly successful operation, Desert Storm, in the Middle East. Since his return to the White House in the current Bushadministration, he has served the American people with unwaveringleadership and a moral fortitude that I deeply respect. It is an honorfor Vice President Cheney to join us in Smyrna today. And I knoweveryone is eager to hear his thoughts on strengthening one of our mostimportant federal programs, Social Security. Ladies and gentlemen, the Vice President of the United States.(Applause.) THE VICE PRESIDENT: Well, thank you. Thank you all very much.Sit down, please. Well, thank you very much. Thanks, Phil, for welcoming to yourdistrict. I'm delighted to be here in Smyrna this morning and join ourcolleagues Tom Price, and of course, Johnny Isakson. They're doing agreat job for Georgia and the United States Congress. I get to workwith them on regular basis. And of course, some of you may not know, I actually -- as Philmentioned -- served 10 years in the House of Representatives. So Icare a lot about the Congress and I got to be a judge of congressionalhorseflesh while I was there. I was the congressman from Wyoming.Wyoming only has one congressman. It was a small delegation.(Laughter.) But it was quality. (Laughter.) And I'm delighted --(Applause.) I'm always pleased, though, to spend some time with peoplelike Phil and Tom and Johnny because they do do a superb job. I alsounderstand my old friend Ralph Reed is here this morning. I've knownRalph for many years. (Applause.) So I thought what we'd do today -- the purpose of these meetings,we've done a few of them now around the country. The President hasbeen in some 22 or 23 states. I haven't been in quite that many, butI've been on the road a fair amount myself -- and that's to focus onSocial Security. We've been -- the first four years we were there was really aremarkable time. We ended up having to deal with issues that we neverdreamed up when we were sworn in, in the aftermath of 9/11, when welost 3,000 Americans to terrorists that morning. And that has occupieda good part of our time. And we've had some, I think, significantsuccess in no small part due to the leadership of our President, butalso to the enormous effectiveness of the men and women of the UnitedStates military. They've done a superb job for us. (Applause.) We'll continue, obviously, to spend a lot of time and energy goingforward because the war on terror is with us for the foreseeablefuture. We've been fortunate that we have not been struck again now onsome 44 months. But you can never let your guard down, and we have tokeep at it, make certain that we get things right not only in terms ofdefending the nation here at home, but also aggressively going afterthe terrorists wherever they organize and plan and train because we'reall going to be a lot safer and more secure if we go fight the battleon their turn, instead of here in the United States. We're also, obviously, focused on the economy. And we think we'vehad some considerable success there. We've added about 3 million jobsin the last two years. The economic growth continues apace and inreasonably good shape. And we think that there's a bright future aheadof us, but it requires constant tending, obviously. We need to doeverything we can to control federal spending, to keep the size of thedeficit down, and continue to support pro-growth, pro-job,pro-entrepreneur kinds of policies that will guarantee that theopportunities are going to be there for our young people, as well. But what I wanted to focus on this morning is a program thateverybody is familiar with, that a lot of folks used to call the thirdrail of American politics. You touch it and you die. That was theadvice given to most politicians. And we got folks out there saying,why do Bush and Cheney want to be talking about Social Security. Well, folks, it's our job. We get paid by all of you to go toWashington and try to address problems and try to address them in atimely fashion. And this is a problem. Social Security has been agreat program now for 70 years. We've got millions of Americans whohave depended on it. My parents, I'm sure a lot of family members haveover the years paid into the Social Security system throughout theirentire careers and then retired and drawn benefits from it. And that'sas it should be. The problem we have is that the American population profile, if youwill, looks dramatically different today than it did 70 years ago whenwe created Social Security. Back in the 1930s, average life expectancywas 62. A majority of Americans didn't live long enough to draw fullretirement benefits when you had to get to be 65 to draw benefits.Now, today average life expectancy is 77 to 78. Every American onaverage lives 16 years longer today than we did 70 years, thanks to thewonders of modern medicine and so forth. But that means that anybody who does retire and starts to drawbenefits out of the system draws them for 16 years longer on averagethan was true when the program was established. We've also got thebaby boom generation coming along. Those people born in 1946 andafter. President Bush was born in 1946. He's part of the problem.(Laughter.) Don't tell him I said that. But the fact is that that population boom that came with theaftermath of World War II will soon be reaching retirement age. And in2008, they will hit 62, that first wave, that front end, if you will,of that population bulge. And we know from experience that a majorityof Americans these days are taking early retirement under SocialSecurity, retiring at age 62. So all of a sudden we're going to havethis surge into the retired community of a lot of new people. Today we've got about 40 million people drawing retirementbenefits. Over the next 20 years or so, we'll see that expand whereit's almost 75 million people drawing retirement benefits, as that babyboom generation reaches retirement age. So bottom line, we're going tohave a lot more people retired, living a lot longer than was truebefore, and as a result, drawing a lot more out of the Social Securityprogram than was ever true before. And we have promised benefits down the road to future retirees thatwe've never funded. And the fact of the matter is there's a gap, ifyou will, between the promised level of benefits and what we can expectto collect in revenues from the existing system. If you look at thechart over here on my left, and you see all that red ink, that's thedifference between what's been promised -- that's the flat line at thetop -- and the declining line on the right, and it's where the revenuesare going to take it. There are several different ways to describe what's happeningthere. Obviously, when we're in the black we're still collectingbenefits. But in about 2017, where the black and the red areas meet,we start paying out more than we're taking in, in terms of the SocialSecurity system -- the payroll tax. And those out-year deficits overthe next 75 years, 70 years or so amount to upwards of well over $3trillion. And if you take the total unfunded liability, that is money-- benefits we've committed to, if we leave the program as is, but thatwe're just not going to pay for it, or haven't figured out how to payfor it yet over the total life of the system is over $11 trillion.That's the amount of red ink that's there. Another way to think about it is every year that goes by that wedon't address this problem adds $600 billion to the cost, ultimately,of solving the problem. So there is a problem there. Now, it's not a problem for anybodywho is currently retired. If you're already drawing benefits, thisisn't about you. The money is in the system to pay those benefits. Weknow how many people are in that age group. We know how long they'relikely to live. We know what the formulas say it's going to cost us tosupport them. And if you're already retired, relax. Nobody involvedin this Social Security debate is talking about changing the programfrom your perspective, in terms of your benefits and what kind ofretirement you're going to have going forward. We're also focused and understand that we have an obligation tothose that have been paying into the system for a long time and aregetting near retirement to preserve the program for them, as well,too. The way to think about this debate is to remind yourselves thatwe're talking about people born after 1950 being affected by theproposals that are being looked at today. If you were born before1950, the chances are none of this is going to affect your retirement,your benefits, or have any impact at all upon the retirement you'veplanned for, earned over the years because you've paid into the system,and so forth. We're talking about future generations. We're talking about mykids. I've got two daughters in their 30s. We're talking about yourkids and grandkids, and what kind of program is going to be there forthem. And that's what we need to address, and that's why we need tofind ways, basically, to shore up the system, if you will, or reform itso that those benefits will be there in the future. If we don't doanything at all, if we just stay where a lot of people have said weought to stay -- there are a number of members of Congress of the otherfaith who have said that we don't need to do anything -- well, if youdon't do anything, the net result will be, for somebody today, say, intheir 30s, by the time they get to retirement age, their benefit levelsare going to be cut some 26 percent or 27 percent. Automatic, that'swhat will happen with today's existing law. Another way to think about the problem is to realize that SocialSecurity is what we call a pay-as-you-go system. A lot of people areof the opinion that what happens is you work all your life, you payinto Social Security; the government takes that money, puts it in abank, sits on it, and when you retire, they send it back to you. No,that's not how it works. The way it works is, the money we take intoday in payroll taxes from today's worker goes out tomorrow to pay theretired benefits of those already drawing benefits. And when there's asurplus, as there currently is in the system, that extra money alsogets spent by the federal government on various other programs. Inreturn for that, there's an IOU that goes into a file cabinet over inWest Virginia where we keep track of these transactions. But there'snot a pile of cash sitting out there that represents what everybody haspaid into the system, because it is a pay-as-you-go system, money inone day and out the next. But that means also the solvency of the system is dependent in parton how many people we've got paid into it and, obviously, the ratesthey're paying at, too, what the tax rates are. The fact is when weset up the program back in the '30s, we had about 40 workers workingfor every one retiree. In 1950, we had 16 workers for every oneretiree. Today we've got about 3 workers for every one retiree, and afew years down the road it will be down to just 2 workers working,paying in to pay the benefits for each retiree drawing funds out of thesystem. Another way to look at it that describes that or represents it,over here on the right. You can see that if you go back to 1950, whenwe had 16 workers -- and let's assume you had the average benefit,what's being paid today to the average retiree of $14,200 a year --when you had 16 workers paying in, and each of them paid $900 apiece,then that would support one retiree drawing $14,200 in benefits comingout. If you move over to today, where you've got 3 workers, the middlebar, for every retiree, each worker has to pay $4,700, in effect, in sothat you get to the point where the 3 workers can support one retireeat $14,0200 a year. And when you get out to 2040 -- that's the columnon the right, the red one -- that's where we're down to just 2 workersfor each retiree, each worker would have to contribute $7,100 a year tosupport that retiree at $14,200 a year. So you begin to see the nature of the demographic problem we'rehaving to deal with here. Now, there can't be any argument about thefacts. We know how many people are alive today. We know how manypeople we can expect to be born tomorrow. We know how long they'relikely to live. We can make very sound estimates on what the programis going to cost, depending on the promised level of benefits and howmuch revenue we're going to take in, depending on the level oftaxation, as well. So those facts are not in dispute. And I thinkanybody who sits down realistically and looks at it will conclude, asthe President has, that we've got an obligation as public officials --the President, Vice President, members of Congress -- to say to theAmerican people, those are the facts, that's what the system is set upfor. And if we're going to avoid a train wreck down the road, we needto make changes now and reforms now because we've got the advantage oftime now, because we have the opportunity, if we make the adjustmentsnow, to make them in such a way that the ultimate impact in terms ofindividuals and their ability to adjust, as well, with respect to theirown planning will be enhanced by the fact that they're going to haveseveral years to work at it. So we have, in the course of the debate this year, said, look,let's come together as a nation on a bipartisan basis, Republican andDemocrat alike, let's have this debate, let's start putting ideas onthe table and see what various options and possibilities might be --and there are a whole, wide range of options out there -- and let'sengage in a national dialogue, and let's solve this problem. And sothat's what we're all about. And we're interested and eager to moveforward. We don't think you can sit down and say, look, it has to bethis way, it's my way or the highway. We know that won't work. Weknow it does have to be bipartisan. The last time we had a problem in Social Security was back in 1983,when I was a member of the House, and we set up a commission headed byAlan Greenspan, who was then a private economist, but now Chairman ofthe Federal Reserve Board, and Ronald Reagan and Tip O'Neill,Republican President and Democratic Speaker of the House, cametogether, worked on a bipartisan basis, and we got a package puttogether that we got through, and saved the Social Security system in1983, when it was about to go belly up, because it was actually runningout of money in those days. But we need to do that again. We need tocome together as a nation and solve this problem. Now, there are a couple of ideas on the table, and let me mentiontwo of those, and then I'll stop and we'll have an opportunity torespond to questions or comments from all of you. One of the thingsthe President and I think makes sense is the idea of personalretirement accounts. (Applause.) Now, what do we mean by personal retirement accounts? Well, thiswould be a modification in the existing program. Today the taxes thatare paid into the system constitute about 12.4 percent of payroll.That is, the individual worker pays 6.2 percent into the system, theemployer pays 6.2 percent, for a total of 12.4 percent contribution foreach worker, on the first $90,000 of income. And that upper cap isadjusted for inflation. But that system, we think, could be modifiedby taking 4 percent out of -- taking 12 percent -- or taking 4 percentout of the 12.4 percent, and allowing individuals to invest that intowhat's called a personal retirement account. What do we mean by that? Well, we mean you'd be able to take outan amount that would go into -- be invested in one of four or fivedifferent options that would be created by the federal government thatwould involve investing a portion of your payroll tax into thataccount, that would be invested in stocks and bonds or some combinationthereof. If you wanted a very conservative option, you could invest itin U.S. Treasuries. And that money would be yours; it would earninterest over time. And we've got a lot of recent experience to give you a pretty goodguideline of how that would function, because the federal governmenthas a thing called the Thrift Savings Plan for federal employees, andmembers of Congress, that allow them to put a portion of their pay intothe Thrift Savings Plan every month. And that's been operating sincethe mid '80s. And so we've got a lot of experience there. And there's five different plans, or options, that are available toyou, some more conservative than others. But those plans haveproduced, on average, over the last 10 years -- the one that grew themost slowly, if you will, the most conservative, has gone up about 4percent per year. The most -- the one that's earned the highest rateof return is almost 11 percent a year over that period of time. Now tocompare that to the rate of return that you, in effect, get on yourSocial Security when you pay into the regular Social Security trustfund, that's less than 2 percent. Now it doesn't take a genius to figure out that 5 percent or 6percent or 7 percent is better than 2 percent, especially when you addthe compound rate of interest over time. If you are, say, today starting out, a worker under this system weproposed, earning an average annual income of about $35,000 a year, bythe time you reach retirement age, you'd have a nest egg of a quarterof a million dollars in your account. That would be there tosupplement your Social Security. And it would be, net, a better dealthan if you'd taken that same 4 percent and put it in at about 1.8percent into the Social Security trust fund. So it's a better deal forthe worker who has got the time and can take advantage of time value ofmoney, in other words, the growth of that investment, if you will, overtime. We think that's a good way to go. We think it makes sense notonly because it would provide a better return for the individualworker, but it also, obviously, involves the element of ownership --you own it, it's yours, nobody can take it away from you. If you think about the way Social Security works today, let'sassume you've got a man and wife working, both of them work, both ofthem pay into Social Security throughout their careers, and then theyget ready to hit retirement age, and one of them dies. What happens tothe money that's been paid into the system over that period of time?The surviving spouse doesn't get it, they get to choose. They can takethe survivor's benefits that they would earn as a spouse of somebodywho paid into the system, or what they earn themselves, but they don'tget both. And whatever you have paid into the system, if you're unfortunateenough to pass on, about the time you hit retirement age, you'd havepaid in your entire career and you get nothing back -- nothing you canleave your kids, there's no survivable assets, if you will, there's noownership of an asset the way there would be with respect to ourpersonal retirement accounts. It's available for your family. Itcould be passed on to your kids. It's yours. You own it, just likeyou own a piece of your house or whatever other asset it is you'veacquired. We think that's an important concept, as well, too, and fairer,long-term, to a majority of Americans than the way the system workstoday. So that's another reason why we think it's important, and webelieve deeply, given where we come from, in the whole principle ofownership. We want to see people own their own businesses, own theirown homes, be able to own and have some control over more aspects oftheir lives, by, for example, giving them control and ownership over aportion of their retirement. So there are, we think, positive values that would flow from thatapproach, in addition to the fact that it would be a better deal foryounger workers, who otherwise are looking at a system where they'reconvinced there won't be anything there for them when they reachretirement. Now, there are other ideas floating around out there, lots of goodideas that have been kicked around in recent years. We had acommission headed up a few years ago, 2001, by Pat Moynihan. Pat,unfortunately, has passed on. He was a Democratic Senator from NewYork. I knew him when he was our Ambassador to the United Nations,back during the Ford administration. But he chaired a commission that coughed up a number of goodideas. We've had another commission working recently. The notionsthat are out there, by way of trying to close this gap, if you will,between what the revenue forecast is and what the benefit levelspromised are, can involve such things as raising the retirement age.We did that in 1983. We phased-in gradually over time, you'll notice,that full retirement -- we've added about one month every two years towhat the retirement age will be. It makes sense because we're allliving longer. So that's one possibility. Another is to index to survivability, if you will, another way todescribe it. Early retirement, so it doesn't come at 62, but maybe itought to come at 63. Those are possibilities that are being talkedabout. We've seen, as well, proposals to raise taxes, to put more revenueinto the Social Security system. Frankly, we're a little nervous aboutthat one, because you've got to look at what that does to the economy.In other words, whatever we do in the Social Security arena has to bejudged against what its overall impact is likely to be on the economy.We're already to the point where the payroll tax is the biggest tax fora lot of working Americans -- not income taxes, because we'vesignificantly reduced the income tax burden on folks at the bottom halfof the income level. And the bottom 50 percent of American wageearners pay only about 5 percent of the total income taxes paid in thiscountry, because we've got a very progressive income tax system, whichis good, but the payroll tax has become, as I say, for many folks, thebiggest tax they pay. There's a limit to how much you can ratchet up those rates beforeyou begin to have a detrimental impact on the economy, and also adisincentive, if you will, to the creation of more jobs. Becauseremember, most of the jobs -- new jobs in America are created by smallbusinesses, not the big corporations. It's the small businesses, theentrepreneurs, the start-ups that go out and create new jobs, wheremost of our job growth comes from. And for those small businesses, especially, they've got to pay 12.4percent in effective payroll, the net result, for every new job theycreate. And if we're going to increase those rates, say up to 15percent, where you have, say, 7.5 percent rate on the employee, 7.5percent on the employer, or for the self-employed, the smallbusinessman or woman just starting their own account, that's 15 percentthey have to pay themselves, right out of their own pocket. So westart to build in a disincentive for the kind of job creation we'd liketo see in a strong, healthy, vital economy. So you've got to becareful what you do on the tax side, although that's an area that somefolks are focusing on, as well, too. One of the ideas the President talked about the other night -- I'llmention this, and then I'll stop and respond to questions -- is an ideathat's been put forward by a guy named Pozen. Robert Pozen, he's aneconomist. He was part of the Social Security Commission. The way thesystem works now, with respect to Social Security, is that the paymentsare indexed, and they're indexed, in effect, on both the prices and thewages. Everybody understands, I think, the notion that we wantsomebody who is retired, drawing benefits to be able to keep pace withinflation. So some years ago, we indexed those retirements so that wemake an annual adjustment to your Social Security check that accountsfor whatever inflation has occurred over the prior year. It's a goodidea, sound concept. But we also -- in terms of computing future benefits, we also indexto wages, and wages rise faster than prices over time; so that anotherway to think about is that if you are, say, 20 years old today, whenyou retire under Social Security, the way the law is currently writtenand set up, by the time you retire, your benefit will be 40 percenthigher than the benefit of today's retiree after we account forinflation -- after we account for inflation. That is to say, it's a good deal, obviously, if you're in your 20stoday and you're going to be retiring 40 years down the road. But theway the formula works is, not only do we adjust for inflation, but weadjust for inflation plus wages -- and wages have been rising, onaverage, about 1 percent more per year than prices have. That doesn't sound much, but when you -- sound like much, but whenyou compute it over a 30 or 40 year span of time, compounded on anannual basis, that 1 percent gets to be significant. And the netresult is that today's 20 year old, under that formula, let's say, willretire with benefits 40 percent higher than today's retiree, even afteryou adjust for inflation. So Pozen's idea is that we need to modify the formula. And whathe's suggested is a sliding scale, in effect, at the bottom end --folks at the lower end of the income levels who are going to be moredependent on Social Security than anybody else, would still get thesame adjustment, that is, inflation plus the index to wages, in termsof computing their benefit. But at the upper end of the scale we wouldadjust only for inflation; there wouldn't be that extra kicker, thatextra 1 percent over 30 or 40 years that gives you a significantlyhigher level of benefit. And then we'd have some sliding combinationof both between the upper end and the lower end -- a progressive way toindex benefit levels going forward. By progressive, we mean it willprovide more for folks at the bottom end of the scale than the top endof the scale, people who have got other means and so forth. The President suggested the other night in his press conferencethat that's something we need to look at. But if we did that, one ofthe outcomes would be that we could promise everybody who's going toretire in the future that their benefits would not go below what'sbeing paid to retirees today, adjusted for inflation. And for thosefolks at the bottom end of the scale, they'd be able to retire --because of that indexing to wages, they'd be able to retire at a levelthat would guarantee they don't fall below the poverty line. That'sone possibility; in effect, progressive indexing, if you will, of theSocial Security benefit. So if we get good people together, working hard, thinkingcreatively about what kind of obligations we have out there and how wefulfill them, then we can do what needs to be done here. As I say,what needs to be done is for us to come together as a nation and geteverybody to step up and put their ideas on the table, not attackanybody because they were courageous enough to put an idea on thetable, and sit down and get the job done. And, again, this isn't about people like me -- I'm 64. When I gotmy Social Security notice the other day -- you know, every year theysend you a sheet from the Social Security Administration saying this iswhat you paid in and this is what you'll get at retirement; there wasanother notice there that says, remember, 90 days before your nextbirthday you have to register for Medicare. That was a bummer. Iwasn't quite ready for that yet. (Laughter.) But people my age are not going to be affected by this debated.The folks that are going to be affected are our kids and ourgrandkids. I've got four grandchildren, two daughters and they deservefor us to be responsible, to sit down and figure this out and figureout how we are going to deal with it going forward so that, in fact,they know there will be something there for them when they get ready toretire, that will provide that basic floor, if you will, thatsupplement, that add-on that guarantees that they'll be able to liveand enjoy retirement and not suffer what so many Americans suffered inthat period before there was a Social Security system. So it's a worthy cause, something that needs to be done. It'ssomething the President believes very deeply in; he gets a lot ofadvice, from a lot of quarters, saying, oh, why did you bring it up;you know, nobody out there is ready to stand up and salute. Well, webrought it up because we think it's important. We think it's ourobligation, our solemn responsibility as President and Vice Presidentof the United States, to say, here's a problem, folks, we need to fixit; here are some ideas, let's get started, let's have the debate. Anddoing the right thing, being Americans, believing in the future,believing in our obligation to future generations, there's no reason inthe world we can't deal with this. So I'm here today to urge all of you to do so. And with that, I'mhappy to stop and take questions or comments or advice -- I can take itright straight to the top. (Applause.) We've got folks in these attractive yellow jerseys out here withmicrophones, and if you'll catch their attention, I'll get to as manyas I can. Number one. Q Good morning, Mr. President [sic]. And as -- from a youngergeneration, sir, I'm just kind of curious, will Social Security survivetill I need it? (Laughter.) THE VICE PRESIDENT: I think it will. I've got -- I guess I've gota lot of confidence in the American people, and I know this President-- he's stubborn. (Laughter and applause.) He doesn't take no for ananswer. I turned him down when he tried to make me Vice President --look where I ended up. (Laughter.) He -- and he believes very deeply that we do have an obligation toproceed, and he's bound and determined, as he's told members ofCongress and just about everybody else who will listen, that he went toWashington to deal with big issues, not to play small ball, is the wayhe describes it, and this is a big issue. And I say, as I get outaround the country, I find that there is great receptivity out there onthe part of Americans from every walk of life, all across the country,nod their heads and say, yes, this makes sense, it's something we oughtto do. They don't necessarily buy a particular option or they've gottheir ideas, but this exactly the kind of thing we ought to be doingwith good, strong, effective government, and it's our job to addressit, and I'm an optimist. Otherwise, I wouldn't be in this business. Number eight. Q Mr. Vice President, thank you for coming to Smyrna. We'rehonored to have you. My question is aimed towards that blasted babyboomer group. All the proposals I've heard have talked about raisingour retirement age. And my concern is, if we are going to haveindividual accounts, or private accounts, which I strongly support, isthere a possibility to index the contribution for the baby group thathas a few more years to work but aren't yet protected by that65-year-old retirement plan you talk about? THE VICE PRESIDENT: What do you mean index? You mean -- Q Is it possible for us to increase our private contributionsinto the account -- THE VICE PRESIDENT: Oh, allow you to -- Q -- as opposed to a younger group? THE VICE PRESIDENT: Sure. That's certainly something that can bedebated. The way we've thought about it, and there's nothing hard andfast in the proposal we're looking at. I say, we've been focused onbasically saying everybody 55 or over would continue under the existingsystem. You need to draw the cutoff someplace. But I'm sure there are various possibilities that we can thinkabout. Some people want to go more than 4 percent; we've talked about4 percent instead of 5 percent. But maybe you'd go higher than that,perhaps, for a group and a window in there, a 5- or 10-year windowbecause they wouldn't have as much time, but they'd be able to putaside more if they wanted to. I mean, all kinds of possibilities ought to be looked at, andthat's certainly one of them. I've had people complain because wedidn't allow them; they were over 55 and they wanted in. And the waythe program has been designed at this point, we hadn't made provisionfor that. But I -- all of these kinds of possibilities need to be debated anddiscussed. Nothing's locked in concrete at this point. Yes, number seven. Q Mr. Vice President, under the private accounts plan, wherewill the revenue come from to support the current beneficiaries ofSocial Security? THE VICE PRESIDENT: In effect, what you're doing here -- one wayto think about how you would fund this, remember that $11 trillion Imentioned out there early on, that's what we call the unfundedliability in the program. It's an obligation the federal governmenthas. It's money that's owed under the current law. One way to thinkabout what we're trying to do here is to bring forward and pay now whatis obligated to be paid later on, the funds that would be required, ineffect, to set up the private accounts. In other words, we'd have theexisting Social Security system out there cranking away as it is today,but we'd go ahead and borrow the money, in effect, to put into thoseaccounts. But it's a debt we already owe. And you may think about it. It'slike advancing the house payments on your mortgage, that you're goingto bring it forward and pay it now instead of paying it later. Itdoesn't actually increase the net indebtedness of the federalgovernment compared to what it is today, but what you are doing isyou're taking that obligation that is out there in future years,bringing it forward, paying it now and putting it on the books now.Right now, it's so-called "off-the-budget" but it's money we owenonetheless. You bring it forward and pay it now as a way to get thoseaccounts started. That's one option, one possibility. People have looked at other possibilities. One is to raise the capon the amount of the payroll, of your earnings that's eligible to betaxed. I mentioned it's capped at $90,000. There are proposals aroundto do that. Some people object to that on the grounds of what itsimpact would be on the marginal tax rate of certain people in ourincome stream. But there are different possibilities for coming upwith a way to fund it. But I think probably the best way, from my standpoint, to thinkabout it is, it's money we owe, you're going to have to pay it sooneror later, it's an obligation of the federal government. Let's pull itforward and pay it now and let people begin to earn interest on that,on those personal retirement accounts, while we still cover theobligations we've got to those who are already retired drawingbenefits. Over here. Number six. Q Mr. Vice President, thank you for coming to Georgia, and thankyou and the President for your leadership in the war on terror.Millions of Americans appreciate that. My question is, I watched the press conference the other night withthe President, and it seems like when the two of you come up withserious ideas that those from the other faith, in the other party, allthey do is demonize and, in many cases, just lie and try to divide theolder generation, our grandparents from us, those in our 30s. THE VICE PRESIDENT: I've noticed that. (Laughter.) Q And just from -- my question is, what are you going to do froma political nature to stop them from just lying and trying to divideus, and protect those of us who really are depending on you guys savingthis and protecting this? It seems like their message to ourgeneration is they just don't care if we get it or not. That's what Ihear from those that are constantly criticizing, is they don't careabout us. And what's your message to them? THE VICE PRESIDENT: Well, I do think -- I'm trying hard to benonpartisan in my conduct. There are a number of members on the otherside of the aisle that have quietly, in private moments, indicated awillingness to engage in debate, or a hope that at some point, it willbe possible for them to come to the table. And the problem we've hadis that so far the leadership on the Democratic side, both in the Houseand Senate, have basically said, absolutely not, we're not going toparticipate in this enterprise. I think that's a mistake on theirpart. And as I say, I want to emphasize, there are good folks on theother side who do have an interest in getting this resolved, and Ithink eventually will be part of a national dialogue and debate to doexactly that. We just have to keep working at it and pointing out thefact that there is a problem here, that we are putting ideas on thetable, that we do want others to come to the table and participate, aswell, too. And I think eventually, the American people will recognize thatthere is a problem here and that those of us in public service have anobligation to try to solve it, that the group or the party or theorganization that stands aside and says there's no problem whenobviously there is, or refuses to participate, I think over time losesthe support of the American people. They didn't send us back there to go to cocktail parties on CapitolHill and go on recess. They expect us to earn our pay. There areissues that need to be addressed. And so I think there's -- asignificant penalty, I think, will ultimately be paid if they refuse toengage and participate in this process. Number five. Q Thank you, Mr. Vice President, for being here in Georgia. Asimple question kind of dovetailing off of his, the regulatory part ofthis -- I think some of the fears that people have, after the recentburst of the bubble and everything, with the stock market and all, howcan we assure our kids and grandkids that that money is going to bethere? And who, in fact, is going to be watching over that for us?And I think that's probably one of the concerns I hear. THE VICE PRESIDENT: Well, I think the best model to follow is theone I mentioned of the Thrift Savings Plan that the federal governmentoperates today. And there -- I believe, there are five options and youcan choose any one of those five options. Some are slightly more riskythan others, but the greater the risk, the greater the opportunity forreturn. If you're primarily concerned about security, or if you'regetting relatively close to retirement age, you're not going to havethe advantage of 30 or 40 years. Because over 30 or 40 years, anybodywho looks at it, obviously, it's paid in huge dividends to have beeninvested, for example, in the U.S. economy, which is what we're talkingabout here, or in some combination of stocks and bonds, if you want tobe a little more conservative, or maybe shaded over more to the bondside of -- or even all the way to U.S. Treasuries, which are about assecure as you can get. And so people would be able the make those choices. They'rerestricted, obviously, but they would be able, in fact, to choose amongthose possibilities. And the government, basically, would oversee theoperation, so it would be tightly regulated. You're not talking abouta heavy fund or fee that has to be paid to some stock broker on WallStreet. This is not about lining the pockets of anybody up in thatpart of the world. And this is not -- I want to emphasize -- this is not a foreignconcept. There are a lot of places around the country where state andlocal employees have operated under this kind of a system for severalyears. Back in the '80s, early '80s, several of them had theopportunity to opt out. So if you go to California today, or Texas,for example, the state employee programs there, they've been on thiskind of a system for a long time, instead of Social Security. Andthey've done very well by it. And you can go look at it. There aretrack records there; the evidence is there. We know it works. We knowwith the right kind of management and choices made by the individuals,you're not going to have somebody lose their nest egg. Today, as I say, if you pay into the system your entire workinglife and have the misfortune to die at age 62 or 63, nobody in yourfamily is going to see those benefits. They're all going to go backinto the system, because you don't own the asset the way you wouldhere, where there's a personal account that is all yours, nobody canever take it away from you. Yes, number four? Q Mr. Vice President, thank you for coming Smyrna. And onething that I am curious about is, when you're talking about thesepersonal savings accounts -- several things -- one is it changes thefundamental focus of the program from being a social insurance to arate of return. And if you read the last trustees' report, one areathat they talked a lot about was the increase of disability coverage,that that's an area that really is moving within the program. As the President has been traveling around the country, he hasn'treally addressed the other areas that Social Security covers. How areyou going to address that, the increase in disability? And finally,what is your legislative calendar, where are you looking atimplementing these changes? Because as you know this window ofopportunity is slowly closing. And you need to get something donebefore you all leave office and move on to other things. Thank you. THE VICE PRESIDENT: Okay. (Laughter.) Sounded like a challengeto me. (Laughter.) No, we have not at this stage addressed thedisability issues. That is, we haven't proposed any change in thedisability programs at this point. It may well be that it needs to beaddressed or looked at, and that's entirely possible. But what we'reproposing so far doesn't relate to, or address those issues at all. In terms of timetable, the Senate Finance Committee has already hada week of hearings. The House Ways and Means Committee begins, Ibelieve this week, with hearings. So both committees now -- ChuckGrassley, Chairman of the Senate, and Bill Thomas, Chairman of theHouse, are moving forward, bringing in experts, starting thelegislative process. And out of that we would hope we can, workingwith them -- we obviously spend a lot of time there, too -- we'll havewitnesses testifying, and work closely with the committees goingforward to try to craft a bill that we can get out of committee and getto the floor. We'd like to get it done this year. We think thesooner, the better. And we think it's going to be easier to dosomething this year than it is if we wait until we get in the middle ofa campaign cycle next year. So we're pushing hard to move it asquickly as we can. But as the President said the other day, he said, I'm not backingoff, and if I'm still hammering away at this my last day in office, I'mstill going to be hammering away at this, because we've got to get itdone. Yes, back here, number three you got somebody. Q Good morning, Vice President Cheney. I'd like to ask aquestion. This morning you've really delineated very well a lot ofpoints in the program and what you and the President want to do. Couldyou delineate for us, because I think we have a little bit of an easyaudience this morning on convincing us of this program -- could youdelineate out a few other points from the other side, or the otherfaith, differences maybe in what you're saying this morning, and maybewhat they're saying or not saying? THE VICE PRESIDENT: So I get a chance to speak for the Democratsnow. (Laughter.) My Dad, who was a lifelong Democrat, would be proudof me at this moment. (Laughter.) Probably wouldn't agree with me,but he'd be proud of me. Basically, what we've seen, I think, on the other side -- theyhaven't really put forward any ideas by way of solving the problem.They have argued two points of view, I think: number one is, there'sno crisis here, we don't have to address it now, the system is going tobe okay for the next few years here, so we shouldn't address it. Wejust disagree with that. We think the time -- there's just afundamental difference of opinion. We think now is the time to do itbecause we can do it and take the advantage of time. And the more youwait, the more abrupt the changes are going to have to be, and the morepain is likely to be imposed then. The second option is, they've said they're opposed to personalretirement accounts and we've had -- it's interesting that they'reoperating on that basis. But Harry Reid, who is now the Democraticleader in the Senate, in 1999 was for personal retirement accounts,made a speech on the subject. So they've changed their position,partly I suppose, because now we're for personal retirement accountsand they're not. I guess the important thing I focus on when I try to address theirposition is what if we do nothing, what happens? It is not a situationin which there won't be problems or penalty. In fact, if we donothing, there's either going to have to be down the road, when thesystem goes belly up, because you've got all that red ink up there --and you can see, as we get more and more people drawing more and morebenefits for a longer period of time, sooner or later, there's going tobe a train wreck. And at that point, the adjustments will behorrendous, because you'll either have a 27-percent immediate cut inbenefits, or a massive tax increase that would do enormous damage tothe economy. And I think for them to argue the position they're arguing today isthey're refusing to recognize that what they're advocating is ado-nothing policy is that train wreck that will occur down the roadwhen the system goes belly-up. Do I see Bill Usery out there in the audience? Bill? I don't knowhow many of you know Bill Usery -- Bill and I were colleagues in theFord administration, when he was Secretary of Labor. It's good to seeyou here this morning, Bill. (Applause.) Number four, you got somebody back there? Q Mr. Vice President, it's a privilege to have you here today.My question is I do want to say that our group of Republican women thatare here believe that Republicans rock. (Laughter and applause.) Andmy question is, since we've got a Republican President, a RepublicanSenate, and a Republican House, why do we not have more strong supportin the House and the Senate? Present company excepted. We knowthey're strong for it. Why do we not have more -- more people that arebehind this, Republicans behind it because it's such a solid program? THE VICE PRESIDENT: Well, I think we've got good support on theRepublican side of the aisle. I think there are a number of folks --and I don't challenge their motives at all -- who have got goodquestions, tough questions. If this were easy to do, it would havebeen done a long time ago. It is hard to do. And I think a lot of members have taken the attitude, which isperfectly appropriate, that they want to go home. They want to talk totheir folks. They want to get a chance to go out and travel theirdistricts and hold town meetings like this one, and have theopportunity to hear what people are saying. A lot of them have said tothe President, look, Mr. President, you've got to go out because you'vegot the bully pulpit. You have the opportunity with the loudestmegaphone to help educate folks to make them understand there is aproblem here, and that it's partly our responsibility -- which we'reperfectly happy to accept -- to sort of lay the groundwork, if youwill, out there, create the conditions where members can step forwardand sign on and be a part of this process. And that's what we're doing. But I also think -- and a lot of usfeel strongly about this. This isn't just a Republican program, or aRepublican problem. This is something that all of us need to work onjointly, as Americans. And that involves Republicans and Democrats andindependents because we've all got a stake in this system. It's goingto affect us. It's going to affect our families and our kids, and thatif we were just sort of a jam-down approach where Republicans come inand we stuff it, if you will, I think ultimately that's not going tohave as much support as it will if we've got a broad base, a bipartisanbasis for going forward. As I say, the last time we had one of these debates, 1983, that'sexactly what happened. And initially, we had a lot of people reluctantto do anything. What really precipitated action in those days was thatwe got to the point where we weren't going to be able to send out anySocial Security checks because the system was literally going bellyup. That's when we came together on a national basis and solved theproblem. And that's what we need to do now. CONGRESSMAN GINGREY: Mr. Vice President, I think we have time forone last question. THE VICE PRESIDENT: Okay, number two. Q Good morning, Mr. Vice President. THE VICE PRESIDENT: Morning. Q First I'd like to thank you for coming to Campbell HighSchool. I teach science here, and I'm sure the entire school is veryhappy to have you here. So we appreciate your visit. (Applause.) My question, though, being in Atlanta, you know you're in NealBoortz territory. And I heard you speaking with him -- I believe itwas a few weeks ago about -- this issue. And then one of the proposalsthat he's brought up is John Linder's fair tax plan, where the IRS iseliminated, where payroll tax would be eliminated, and the governmentcould be funded through the 17 percent to 25 percent sales tax, Ibelieve. I know you've said that you had been discussing this issue.The President has. How seriously is that something that theadministration, the House, the Senate is ready to take and kind of pushor look at? And if that was adopted, wouldn't that solve the solvencyissue for Social Security, making the debate that we have now kind ofmoot, to where it would be funded? We wouldn't need to worry about anybig changes at this time? THE VICE PRESIDENT: Well, the -- I am familiar with John Linder'sproposal. I sat down just in the last couple of months. There's a manfrom Texas whose name I'll think of in a minute. It starts with an L.And I had him in the office. I sat down and went through this wholething with him. I've talked with him a couple of times. It's aninteresting, fascinating idea. And we've got the commission that thePresident established on tax reform that's now working that will reportlater this year, that's chaired by John Breaux, the former Democraticsenator from Louisiana, and Connie Mack, the former Republican senatorfrom Florida, both now retired. But they're chairing a commissionspecifically to look at this whole question of reform of the income taxcode. And the President talked about it in his State of the Unionspeech. It's something we think is important. And certainly, we needto look at the Linder proposal for a flat tax. That makes a lot ofsense. But it's also a very complex, complicated set of issues. The concern, I guess, I have that a lot of people have, and thatthe President has is that we consume enormous amounts of energy in thiscountry just trying to figure out what our taxes are and pay thosetaxes. We've got an army of tax preparers out there. And I don't meanto be critical of them. I love them. I can't figure out my taxes.I've got to have help. It's unfortunate we're at the point, though,that we've got more people preparing taxes than we've got in the UnitedStates Army. And it's a less productive enterprise in many respects.That's a lot of energy that goes into complying with an extraordinarilycomplex tax code. And we need to look for ways to simplify it andreform it. And that's one of the ideas that will be discussed. I think we're generally reluctant, or at least I haven't seen a lotof argument on this point to have this substitute, as well, for thepayroll tax that finances Social Security. Social Security hasoperated on the basis that it will be funded by the payroll tax.That's a fund -- a tax that's collected for a dedicate purpose, tosupport Social Security. And that's worked pretty well. And we'rereluctant to get into the business of tapping general revenues tofinance Social Security. The concept of the trust fund, although it's basically IOUs from abookkeeping standpoint, but I think also from a philosophicalstandpoint, I think we'd want to preserve that, although I'd be willingto listen to arguments. Right now we've got our hands full trying to solve the SocialSecurity problem. Once we get that done then we can move onto the taxcode. But let me thank all of you for being here this morning.Especially, let me thank my friend Phil Gingrey for hosting this, andfor being willing to get involved and engage in the debate and also TomPrice and Johnny Isakson, the great work they do. Saxby Chambliss isanother great senator from Georgia, and my quail hunting buddy.(Applause.) And when I leave here, I'm going on to the Federal Law EnforcementTraining Center down in Brunswick, I guess, and spend part of the daydown there with Mike Chertoff, our new Department of Homeland SecuritySecretary. But we really appreciate your willingness to come today.This is an important issue, so I appreciate your understanding. And asI say encourage your friends and family. Get involved in the debate.You got ideas, or you've heard ideas you like or don't like, don't bebashful about letting us know about it because it is important. As Isay it's something we've got an obligation to do for our kids andgrandkids. Thank you all very much. (Applause.) END 11:45 A.M. EDT Printer-Friendly Version Email this page to a friend IssuesBudget Management
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