Governor Bush believes Social Security is a defining American promise that must be kept. He will not change benefits in any way for current retirees or those near retirement. But to save Social Security for the next generation, he will lead a bipartisan effort to reform it by giving individuals the option of voluntarily investing a portion of their Social Security payroll taxes in personal retirement accounts. These accounts will earn higher rates of return and generate wealth that can be owned and passed on from parents to their children.
Governor Bush's Approach
Commitment: Governor Bush will honor and strengthen Social Security. He will protect all benefits for today’s seniors and ensure that Social Security is available for their grandchildren.
The Need to Save Social Security: The Clinton-Gore Administration has done nothing to save Social Security, even though the massive Baby-Boom generation will begin drawing benefits eight years from now. When Social Security first started, there were 42 workers to support each retiree; in a few decades there will be only 2 workers per retiree. As a result, Social Security benefits will exceed contributions beginning in 2015 and the system will go bankrupt in 2037.
Fresh Ideas: Without reform, Social Security benefits will have to be cut by 30 percent or Social Security taxes will have to be increased by 50 percent. The only alternative is to increase the rate of return workers receive on their payroll taxes. Workers already pay 12.4 percent of their income into Social Security. The real return people get on this investment is less than 2 percent a year. Over the long term, sound investments in a balanced portfolio of stocks and bonds yield about a 6 percent return after inflation. Even the safest government bonds yield 4 percent. Thanks to the magic of compound interest, investing that difference over a lifetime can show dramatic results.
Bipartisan Leadership: Governor Bush will reach across party lines to save Social Security. Numerous reform-minded Democrats have joined Republicans in an effort to save Social Security. These include Senators Moynihan (D-NY), Kerrey (D-NE), and Breaux (D-LA) and Congressman Stenholm (D-TX).
Governor Bush's Reform Proposal
Governor Bush will build a bipartisan consensus to save Social Security based on the following principles:
Absolutely no change in existing benefits for retirees or near-retirees.
The Social Security surplus must be locked away only for Social Security.
Social Security payroll taxes must not be increased.
The government itself must not invest Social Security funds in the market.
Modernization must preserve the disability and survivors components.
Modernization must include individually controlled, voluntary personal retirement accounts, which will augment the Social Security safety net. These accounts will earn higher rates of return, have parameters of safety and soundness, and help workers build wealth that can be passed on to their children.
Advantages of Governor Bush’s Personal Accounts
Unlike Vice President Gore’s retirement proposal, Governor Bush’s personal accounts are part of Social Security and strengthen the overall system. As a result:
Social Security contributions will earn a higher rate of return, allowing the system to survive without a massive tax hike.
Personal accounts will allow everyone to build assets and independence.
If a young worker earning $20,000 a year invested just one-sixth of her payroll taxes in a balanced fund of stocks and bonds, she would likely retire with over $100,000 after inflation. She would own these assets and could use them to supplement her retirement and pass them on to her children.
Fact Sheet: Building on the Promise of Social Security through Personal Accounts
Fact Sheet: Saving Social Security and Medicare
Fact Sheet: Social Security Presentation (warning: large file - 6784KB)
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Speech: A Defining American Promise
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The Texas Record
Governor Bush has a strong record of bipartisan leadership, uniting people behind common goals.
In Texas, he has successfully worked with a Democrat legislature to:
Pass the first overhaul of the Texas Education code in over a decade.
Cut taxes by $3 billion.
Significantly reform the civil justice system and the Juvenile Justice Code.
He will bring this same spirit of cooperation to saving Social Security.