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Bush Social Security Plan Cuts Future Benefits

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In a prime-time news conference, President Bush for the first time proposes to cut Social Security benefits as part of his plan to overhaul the retirement system. We get reaction from Rep. Jim Moran (D-VA). [includes rush transcript]

During a nationally-televised press conference last night, President Bush proposed for the first time cutting Social Security benefits for future retirees. The proposal–which is part of his plan to overhaul the retirement system–would preserve benefits for low-income workers but cut benefits for everyone else.

The prime-time news conference was the first of Bus’s second term and just the fourth of his presidency. It comes at the end of a 60-day road show on Social Security in which the president argued that the retirement system is headed for financial trouble and should be overhauled to include private investment accounts.

The issue has turned out to be a politically divisive one in Washington over the past few months. Virtually every Democrat, as well as many Republicans, are opposed to the plan and a Washington Post-ABC News poll this week found 51 percent of Americans are against it.

In the hour-long news conference, Bush also acknowledged the high price of gasoline and called on the Senate to pass his energy program which includes drilling in a portion of the Arctic National Wildlife Refuge. He declined to offer a timetable for the withdrawal of American troops from Iraq and stood by his embattled nominee for United Nations ambassador, John Bolton.

But it was Social Security that topped the agenda last night. The president again outlined his plan to overhaul the system.

  • President Bush, news conference, April 28, 2005.

Joining us on the phone now from Washington is Democratic Congressmember Jim Moran of Virginia.

  • Rep. Jim Moran (D-VA)

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This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: But it was Social Security that topped the agenda last night. The President again outlining his plan to overhaul the system.

PRESIDENT GEORGE W. BUSH: When the baby boomers start retiring in three years, Social Security will start heading toward the red. In 2017, the system will start paying out more in benefits than it collects in payroll taxes. Every year after that, the shortfall will get worse, and by 2041, Social Security will be bankrupt. Franklin Roosevelt did a wonderful thing when he created Social Security. The system has meant a lot for a lot of people. Social Security has provided a safety net that has provided dignity and peace of mind for millions of Americans in their retirement. Yet there’s a hole in the safety net, because Congresses had made promises it cannot keep for a younger generation.

As we fix Social Security, some things won’t change. Seniors and people with disabilities will get their checks. All Americans born before 1950 will receive the full benefits. Our duty to save Social Security begins with making the system permanently solvent, but our duty does not end there. We also have a responsibility to improve Social Security by directing extra help to those most in need, and by making it a better deal for younger workers.

Now as Congress begins work on legislation, we must be guided by three goals. First, millions of Americans depend on Social Security checks as a primary source of retirement income, so we must keep this promise to future retirees, as well. As a matter of fairness, I propose that future generations receive benefits equal to or greater than the benefits today’s seniors get. Secondly, I believe a reform system should protect those who depend on Social Security the most. So, I propose a Social Security system in the future where benefits for low-income workers will grow faster than benefits for people who are better off. By providing more generous benefits for low-income retirees we’ll make this commitment. If you work hard and pay into Social Security your entire life you will not retire into poverty. This reform would solve most of the funding challenges facing Social Security. Variety of options are available to solve the rest of the problem, and I will work with Congress on any good faith proposal that does not raise the payroll tax rate or harm our economy. I know we can find a solution to the financial problems of Social Security that is sensible, permanent, and fair. Third, any reform of Social Security must replace the empty promises being made to younger workers with real assets, real money. I believe the best way to achieve this goal is to give younger workers the option, the opportunity if they so choose, of putting a portion of their payroll taxes into a voluntary personal retirement account. Because this money is saved and invested, younger workers will have the opportunity to receive a higher rate of return on their money than the current Social Security system can provide.

AMY GOODMAN: President Bush in his Prime-Time news conference last night. Joining us on the phone for reaction is Virginia Democratic Congress member, Jim Moran. Welcome to Democracy Now!

REP. JIM MORAN: Thank you. It’s an honor to be on the station.

AMY GOODMAN: Well, thanks very much. Can you respond to President Bush’s plans for Social Security?

REP. JIM MORAN: First of all, Social Security is a national insurance system. It’s not an investment account. It’s there in case the breadwinner of the household dies. Their survivors will have at least money to get by on, or if you become disabled, you can get those benefits. Or when you are so old that you can’t work any longer, there will be retirement money available for you. But it’s a minimum threshold. We have retirement accounts, 401(K)’s, I.R.A.s, your passbook savings account. We need a national insurance system. And I think what President Bush is going to do is to means test it, which on the face of it makes a lot of sense, except that it will lose the political support of the people who have the power and the influence in this country.

The reason Social Security is such a popular topic now is that everybody participates. If he cuts the benefits for the middle class and upper class by 40%, which is what this plan entails, fewer people will really care what happens to Social Security, and that’s not in anybody’s interests. Last night we passed a budget resolution that took billions out of the TANF program. Does anybody even know what TANF means? It’s the old welfare program. It’s assistance to needy families. But because there’s so little political support for it, it goes by without much discussion. The Medicaid program, we took $10 billion from that last night, supposedly so that we could afford the tax cuts of over $100 billion. But the only reason people talk about Medicaid is because the States are upset they might have to make up the money. It’s a 50% State matching program. What happens is that if you means test this, and it’s only the poorer people who have a vested interest in maintaining it, it won’t be maintained. And I think that’s what President Bush has in mind.

You know, the only thing that is really fiscally solvent of any size in this country is the Social Security Trust Fund. It’s not going bankrupt. Our country is going bankrupt. Last night, as part of the budget resolution, they increased the debt ceiling to over $8 trillion. We have a $10 trillion economy, but we have got debt of 80% of that economy. He doesn’t seem to be concerned about that. Our health care crisis is in bankruptcy, but here he has taken on Social Security, which has a $1.7 trillion surplus. We’re gaining surplus every year. And in 2018, we’ll have $4.5 trillion. Then from that time, for another approximately 35 to 40 years, there will be enough to pay out full benefits, and after that, about 80% of benefits. That’s not bankruptcy. And it’s wrong to be telling people the system is going bankrupt so that you can pass an ideologically motivated plan basically to dismantle the whole system.

JUAN GONZALEZ: Well, Congressman Moran, I’d like to ask you, you mentioned before that other Americans have a variety of retirement plans, like whether it’s 401(k)s or pensions but isn’t this reform occurring against a backdrop that many of the so-called classic pension plans, the defined benefit plans are also experiencing enormous financial problems, in the airline industry, in the automobile industry so that Social Security is becoming an even more important sort of final safety net for retired workers, because so many Americans now don’t have defined benefit pension plans, but are depending basically on 401(k)s or the stock market itself to assure their retirement income?

REP. JIM MORAN: Well, the answer, I think, is yes and no. Under his plan, if you earn over $25,000, your benefits are going to be reduced. If you are under $25,000, then you will keep the same benefits, and it will be based upon wage-based indexing. So, it goes up every year. But that’s not going to make up for the loss in pension. What we should be doing with regard to pensions is making sure that these corporate raiders can’t come in and buy up companies and take advantage of all of that cash. We should have better protections for pensions. We have some, but you know, increasingly, we are yielding to corporate profit over the pension guarantees. I think that this is all about dismantling a program that’s defining of what the Democratic Party was all about that was established by Franklin Roosevelt. It’s the one program that really is solvent, so why should we make it insolvent by taking approximately $2 trillion over the first ten years, $5 trillion over the next 20 years, and taking that money out of the fund, fencing it off, putting it in private accounts?

And these private accounts, you know, are not going to amount to much when people retire, because the Social Security system says it’s going to come back in and take out of those accounts the amount that Social Security would have earned otherwise. The Goldman-Sachs economist just estimated that Social Security will earn about 3.3%. It’s actually earning over 7% per year now, but it will earn about 3.3%, which is as much as they estimate the stock market is going to be earning on average over that period of time. So, they are going to be left with very little, but in the meantime, we will have borrowed trillions out of the trust funds, then out of the general fund to make it up to the trust fund. So, we’re creating a situation of fiscal insolvency in order to dismantle a program that is the last one we need to worry about right now. We need to be worrying about Medicare, we need to worrying about the federal budget and the hundreds of billions that our kids are going to have to pay in interest costs on that federal deficit. So, you know, I just think he has his priorities out of order. I think this is all about ideology rather than fiscal responsibility.

AMY GOODMAN: Congress member Jim Moran, I’m going to ask you to stay with us for a minute longer. I want to ask you about rendition, his response to that question, what some call kidnapping. Congress member Jim Moran is from Virginia. He is going to be holding a town hall meeting today on protecting Social Security in Falls Church, Virginia. And then we’re going to talk about Secretary of State Condoleezza Rice’s trip throughout Latin America.


AMY GOODMAN: During the Thursday night news conference, President Bush defended sending detainees to other countries for interrogation. Some call it kidnapping, others call it extraordinary rendition. Here is the reporter who asked the question.

REPORTER: Mr. President, under the law, how would you justify the practice of renditioning, where U.S. agents scoop up terror suspects abroad, taking them to a third country for interrogation? Would you stand for it if foreign agents did that to an American here?

PRESIDENT GEORGE W. BUSH: That’s a hypothetical, Mark. We operate within the law, and we send people to countries where they say they’re not going to torture the people. But let me say something. The United States government has an obligation to protect the American people. It’s in our country’s interest to find those who would do harm to us and get them out of harm’s way. And we will do so within the law, and we’ll do so in honoring our commitment not to torture people. And we expect the countries where we send somebody to not to torture, as well. But you bet, when we find somebody who might do harm to the American people, we will detain them and ask others from their country of origin to detain them. It makes sense. The American people expect us to do that. We — we still at war.

AMY GOODMAN: That’s President Bush answering a question on what is called rendition. Congress member Jim Moran, Democrat of Virginia, your response?

REP. JIM MORAN: Well, it’s only lawful because they make their own law. It’s wrong, and you know, if any of President Bush’s family, if either of his daughters were ever arrested in any of those countries, he would move heaven and earth to get them out of there, because he knows they do torture. Those prisons are inhumane hell holes. And it’s wrong to do that. And it’s particularly disturbing the character of people who say, “Oh, I wasn’t responsible,” when they are responsible for transporting them, knowing somebody else is going to carry out their dirty work. You know, we have had all of this rhetoric about how horrible these undemocratic countries are, but when we want to use them, we take advantage of the fact that they are undemocratic, that their people are powerless to express opposition to their policies, particularly their penal policies. I think that this is just more of the same, figuring they can get away with anything they want to because they have this supreme hubris, and I’m ashamed of my country that we would — when we send people to countries knowing they’re going to be tortured, because we don’t want to be responsible for the actions that ultimately we are responsible for. It’s wrong.

AMY GOODMAN: Congress member Jim Moran, I want to thank you for being with us, of Virginia, again, holding a public town hall meeting in Falls Church, Virginia, today, with the former acting Social Security Commissioner, Bill Halter.

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