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President Discusses Social Security for Future Generations in Virginia

James Lee Community Center

Falls Church, Virginia

President's Remarks

view In Focus: Social Security for Future Generations

10:29 A.M. EDT THE PRESIDENT: Thank you all, very much. Thanks for the warmwelcome. Thanks for coming today. I want to thank the NorthernVirginia Technology Council for hosting this event. (Applause.)Sudhaker Shenoy is the Chairman. Thank you, Sudhaker, I appreciate it,very much. (Applause.) Bobby Kilberg is the President. (Applause.)Obviously, you've stacked the audience with -- (laughter.) Iappreciate you coming. We're here to talk about an important subject, and that's going tobe the future of -- what the future holds for younger Americans, youknow, is whether or not we've got the will and courage to make sure theSocial Security system works for a younger generation. Before we get there, I do want to say a couple of things. One, I'msorry Laura is not with me. She is -- she's doing a fabulous job asthe First Lady. I'm proud of her. I love her dearly. (Applause.) I appreciate Bill Howell, who is the Speaker of the House from thegreat Commonwealth of Virginia. Mr. Speaker, thank you for coming. Iappreciate you being here. (Applause.) Where's the Speaker? There heis. Thanks for coming, Speaker. Appreciate you serving. I want to thank Tony Griffin, the Fairfax County Executive. I'mhonored you're here, Tony. Thank you for coming. I want to thank thelocal and state officials who are here. I appreciate you're willing toserve your community and your state. I want to thank the Department ofCommunity and Recreation Services, Pat Franckewitz and Joyce White, foropening up this beautiful facility. (Applause.) And I want to thankour panelists for joining us here to have a discussion about SocialSecurity. Look, I -- a lot of people have said, why did you bring this up,you know? Why do you want to talk about the issue of Social Securitywhen you don't have to. After all, the problem is down the road. Ithink the job of a President is to recognize reality, and if aPresident sees a problem, have the willingness to step up in front ofthe American people and say, we have a problem, explain the problem,and then go to the United States Congress and say, let's work togetherto fix the problem. The job of the President is to confront problems.(Applause.) I think the American people -- I know the American people expectthose of us who have been elected to hold office to have set asideparty politics and focus on solutions to problems confronting ourcountry. That's what I know they expect. And that's the spirit inwhich I enter this debate. On one hand, my job is to confrontproblems, on the other hand, it's to call people together to solvethem. And here's the problem with Social Security. First, I want to praise one of my predecessors, Franklin DelanoRoosevelt. He did a very smart thing when it came to creating aretirement system to help people have dignity in their final years oflife. And Social Security has worked for a lot of folks. The problem is the math is changing on Social Security. And thereason the math is changing is because there are a bunch of babyboomers, like me, getting ready to retire. I reach retirement age infour years. That's a convenient time. (Laughter.) Do you realizetoday there are 40 million retirees, and when the baby boomers fullyretire, there's going to be 72 million retirees. In other words,there's a baby boomer bulge. And the groups of folks here, very soon,will be getting ready to count on a younger generation to pay itsbenefits that we've been promised. The problem is, the benefits we've been promised are greater thanthe benefits promised to a previous generation, and those benefits risefaster than the rate of inflation. And to compound the problem is,we're going to live longer. You got a lot of people, living longer,getting greater benefits. I'm sitting up here with some folks who are going to be paying intothe system. What has changed about the payers into the system is thatthe number of payers are shrinking relative to those who are going toreceive benefits. In 1950, 16 workers were paying into the system forevery beneficiary. In other words, the load was pretty light. Today,there are 3.3 workers per beneficiary. Soon there's going to be twoworkers per beneficiary. Fewer workers, paying greater benefits tomore people living longer -- that's the change in the math, that iswhat has changed from the time Franklin Roosevelt set up the program. And what it means in terms of budgetary terms is that in 2017 thepay-as-you-go system goes into the red. Pay-as-you-go means, by theway, money comes in and it goes out; you pay, and we go ahead andspend. And we spend not only on retiree benefits, but we spend onevery other program. And all that's left is file cabinets full ofIOUs. You know, people think, well, the government has collected ourmoney and they're going to hold it for us, and then when we retire,we'll give it back to you. That's just not the way it works. It is apay-as-you-go system. And therefore, when you have a lot of babyboomers living longer, getting greater benefits, in a pay-as-you-go --and more and more of us are getting what the government said, thesystem goes into the red, because you've got fewer payers. In 2027 the obligations of the federal government to retirees willbe $200 billion greater than the payroll tax receipts. See, startingin 2017, the system goes into the red, and it gets worse every year --2027, $200 billion; about 2030-something it's $300 billion, andeventually 2041 it's broke. And the temptation, by the way, in Washington is to say, well,gosh, that seems like a long way down the road. But 2017 is not veryfar down the road. And if you're a younger worker, and you startpaying into the payroll system today, and 2041 is about the time youstart retiring, I'm telling you, the system is going to be bankruptunless we do something about it. In other words, you're working allyour life, you're putting money in, and by the time it comes for you toget ready to retire, there's nothing there. That's a problem, folks,and it requires a solution, requires people to come together to makethis work. And so my strategy has been, one, travel around the country,explain to the American people we have a problem. And they nowunderstand we have a problem. The debate in Washington has shifted, bythe way. Early on this year, people were saying, it's not really aproblem. You know, we don't have a problem in America. I don't thinkyou hear that anymore. Oh, there may be a few isolated voices saying,it's not a problem. Most people now understand we've got a problem. My mission early on in this -- in the debate was to make it clearto seniors, you're going to get your check. There are a lot of peoplein this country counting on their Social Security check. And a lot ofpeople are saying -- as a matter of fact, I went to the computer classand a lady said, you make sure I get my check. She's counting on it.And I recognize there's been a lot of propaganda. There's beenpropaganda in political campaigns saying, if, oh, so and so is elected,you're not going to get your check. And I'm sure there's somepropaganda out there working its way through the system now, trying tofrighten seniors. But our seniors have got to understand the system is solvent forthem. Nothing changes for people who were born prior to 1950. It'sthose born after 1950 that need to ask our elected representatives,there is a problem, and what you going to do about it? I want to tell you what I think we ought to do about it. I thinkwe ought to come together in good faith and discuss good ideas. I laidout some ideas -- I have been laying out ideas about what I think weought to do. First, I know that we ought to be able to say in a newsystem, as we fix the safety net for future generations, that you mustreceive benefits equal to or greater than the benefits enjoyed bytoday's seniors. In other words, any reform has got to say that tothose who are paying into the system. Secondly, I think the country needs to set this goal for futuregenerations: that if you've worked all your life and paid in theSocial Security system, you will not retire into poverty. And there'sa way to make that happen, and that is to have the benefits forlow-income workers in a future system grow faster than benefits forthose who are better off. If Congress were to enact that, that would go a long way towardmaking the system solvent for a younger generation of Americans. Ihave a duty to put ideas on the table -- I'm putting them on thetable. And I expect Republicans and Democrats to do the same kind ofthing, and so do the American people. The American people expect us in Washington, D.C. to do our dutyand not play politics as usual with an issue as important as SocialSecurity. When Congress comes together to discuss this issue, it'simportant for us to permanently fix Social Security. The reason I saythat is because some of us were around in 1983 when Ronald Reagancalled Tip O'Neill and said, we got a problem, and they came togetherand put together a 75-year fix. That's what they said. We got us a75-year fix. The problem is 25 years -- or 22 years after 1983, we're stilltalking about it. The 75-year fix lasted about 22 years. And so nowis the time to permanently fix Social Security. Any solution thatcomes forth out of Congress must permanently fix it. As we permanently fix it, we have a great opportunity to make thesystem a better deal for younger workers. And here's how: Youngerworkers should be allowed to take some of their own money, some oftheir own payroll taxes they pay into the system, and set it aside in apersonal savings account. Now, this isn't the government telling youwhat to do, the government saying you must set aside a personal savingsaccount. This is the government saying, you should have the option, ifyou so choose, to take some of your own money, some of the money thatyou've earned, and put it aside in a personal savings account. And here's the benefit from such an idea. One, the government doesnot -- doesn't get a very good return on your money when we take itfrom you. If you were to put your money in a conservative mix ofstocks and bonds, you would get a better rate of return. And that rateof return over time will make an enormous difference to somebody whowants to build a nest egg. Do you realize that stock investments havereturned about 9 percent more than inflation per year since 1983, whilethe Social Security real return is only about 2 percent. That means ifyou were to invest a dollar in the market in '83, it would be worth $11today, while your dollar in Social Security is worth $3. Think aboutwhat that means if you put a fair amount of money aside over time. Itmeans your own money would grow better than that which the governmentcan make it grow. And that's important. It's an important part of being a part of a vibrant -- a retirementsystem. You're going to get a check from the government. The questionis how big. If you're allowed to take some of your own money and watchit grow faster than the rate at which government can grow it, it meansyou've got a bigger nest egg. Secondly, I like the idea of people owning something. We want morepeople owning their assets in America. There's kind of a conceptaround that says maybe only a certain kind of people should own assets,an investor class, maybe only the rich. I firmly reject that idea.That's not how I view America. I want more people owning things,owning their own home, owning their own business, owning their ownretirement account, owning assets that they can pass one from onegeneration to the next. The more people that are able to do that, thebetter off America is. Thirdly, the system today is patently unfair for families if aspouse is to die earlier than expected. Think about this kind ofsystem we have today. You work all your life, your husband or wifeworks all their life, and one of you dies before 62 years old, or after62 -- if they die before 62, you get no survivor benefits, you get alittle stipend to help bury your spouse, period. All the money goesin, waits until you reach retirement age. When you reach retirementage, if you have worked, as well, you get either your spouse's benefitsor your benefits, which are ever higher, but not both. So if one of the two of you have worked all your life, or workedyour life and put money in, you don't get anything as result of yourlabor. I think it will make sense to allow people to set aside some oftheir own money in a personal account so they have their own assets,and if they happen to die early, they can pass it on to their wife orhusband. In other words, your assets just don't disappear like thecurrent system encourages. But you've got something you call your own, finally. I like anidea -- remember, this is a pay-as-you-go system. People are going tobe counting on future Congresses to make decisions what to do with yourmoney. I like the idea of you being able to have an asset base thatthe Congress can't take away. The Congress doesn't get to spend onyour behalf, because it's your asset. You own it. It is your nestegg. Personal -- personal savings accounts make a lot of sense to me.They also make a lot of sense to a generation of Americans that areused to investing. I was telling the folks up here that when I was inthe 20s, I don't remember spending a lot of time thinking about my401(k). It's because they didn't exist. Think about what's happenedin our society. A lot of people are becoming accustomed to watchingtheir money grow. There's a new and -- a group of investors from allwalks of life that are comfortable with watching their assets grow andexpect to be able to manage their own assets. The culture has changedwhen it comes to investing. Now, people often ask me, you know, can I -- are there going to bewise ways to set up these savings accounts? Of course there will be.I'm not going to say, you can -- we want you to have a retirement fund;you can take your money and put it in the lottery. In other words,there's a conservative mix of bonds and stocks that will be available.If you're risk adverse, you can buy Treasury bonds, as far as I'mconcerned. You know, people say, well, you know, what happens if I'm gettingclose to retirement and there's a market swing? Well, when you getclose to retirement, there are ways to diversify out of a mix of bondsand stocks and get into -- get into strictly bonds -- government-backedbonds. People can manage your money in smart ways. And the role of --it seems like to me a proper role for the government is to say, hereare the guidelines in which you can -- should be allowed to invest, butthere's a lot of flexibility so you can choose how best to manage yourown assets. So this makes sense, and Congress needs to hear the voices ofpeople who believe it is right and fair to give them the option towatch their own money grow. And we've got some people up here todaythat have got a pretty good idea about what they want to do with theirown money. Oh, by the way, just as an aside, I think it'll interest you toknow that this isn't a new idea I'm discussing. As a matter of fact,Congress has given themselves the same opportunity that I think oughtto be available for younger workers. There's what they call a thriftsavings plan in Washington, D.C. It's available for federal workers.It says if you're unhappy with the government's rate of return, youought to be able to set aside some of your own money -- manage your ownmoney in a retirement account. Seems like to me that if a member ofthe United States Congress thinks it's okay to manage his or her money,that same privilege and opportunity ought to be extended to workers allacross America. What's good for the Congress ought to be good for theworking people in the United States. (Applause.) Doctor Olivia Mitchell is with us. She's an expert on thesubject. PhD? DR. MITCHELL: Yes, sir. THE PRESIDENT: For those of you who are younger, I just want youto look at the examples being set here. Olivia is a PhD. I was a Cstudent. (Laughter.) Olivia is the expert. I'm the President.(Laughter.) Anyway, thanks for coming. (Applause.) A couple of B's,a couple of B's, yes. (Laughter.) Tell us what you do, Olivia. DR. MITCHELL: Yes, sir, thank you. It's a great pleasure to behere with you today. I teach pensions in Social Security at theWharton School at the University of Pennsylvania. I've been teachingin this area for 25 years, and the one thing that I've noticed is thisyear the students are paying attention, finally, and I thank you forthat. You're a great educator. (Applause.) THE PRESIDENT: They ought to be paying attention. The SocialSecurity trustees estimate that for every year we wait it costs another$600 billion. It is conceivable that if we do nothing, that thepayroll tax will get up to 18 percent for younger Americans. Anyway, go ahead. DR. MITCHELL: So it's absolutely correct: the system is runninginto trouble. Within 13 years the payroll tax coming in will not besufficient to pay benefits. * * * * * DR. MITCHELL: As a former member of your Commission to StrengthenSocial Security, I watched with great attention to the press conferencelast night, and I was very encouraged, because I heard several things-- one, that you're going to try to reduce the rate of growth ofbenefits to restore solvency, that's essential. Two, that benefitswill never fall below today's benefits. I think that's key. Andthird, the thing you've spent a lot of effort focusing on, personalretirement accounts. Those, to my mind, are a central element --diversified, low cost, and offer people the opportunity to manage theirmoney. So I congratulate you for it. THE PRESIDENT: Yes, I asked Olivia to join a council headed byDaniel Patrick Moynihan. Unfortunately, he has gone on. But he ran abipartisan commission in 2001. DR. MITCHELL: He and Dick Parsons. THE PRESIDENT: Yes, Dick Parsons. And they took a look at this ina very sober way, in a nonpolitical way and came up with some seriousrecommendations, many of which are now being discussed in Congress.And I want to thank you for serving on that. The commission shows what is possible when people set asidepartisan politics and focus on solving America's problems. And that'swhat we need to do in Washington. There's too much kind of "gotcha"politics -- we can't work here because somebody may look good. Buteventually what's going to happen in this debate is that if -- thosewho block meaningful reform are going to be held to account in thepolls. See, the more people understand the problem, the more youngpeople who understand inaction by this government is going to saddlethem with enormous taxes -- will be going to the polls, they're goingto be saying to the people running for office, how come you didn't doanything about it? Where were you when it came time to come up withfair reform that take care of the poor, that make sure that youngerworkers have got a better deal. And so I want to thank you for yourhard work on that issue, Olivia. And thank you for joining me again. Kristin Seitz is with us. Kristin welcome? MS. SEITZ: Thank you. THE PRESIDENT: Do you make a living? MS. SEITZ: I do. My name is Kristin Seitz. I'm 23-years- old,and I'm actually the executive coordinator at the Northern VirginiaTechnology Council. THE PRESIDENT: Good. MS. SEITZ: I graduated in 2004 from the Ohio State University, andNVTC is my first job since graduating. THE PRESIDENT: Great, yes. Are you concerned about the fact thatthe mighty Texas Longhorns will be playing at Ohio State this year?(Laughter.) MS. SEITZ: I actually got my alumni tickets yesterday in themail. THE PRESIDENT: You did, good. MS. SEITZ: And unfortunately, I will not be at the Texas game,which is a real shame. THE PRESIDENT: Anyway -- (laughter) -- back to the subject athand. You told me that you contribute to a 401(k)? MS. SEITZ: I do. I contribute up to 3 percent. We get matched atNVTC -- THE PRESIDENT: Right. MS. SEITZ: -- for up to 3 percent. I actually invest up to 4percent. THE PRESIDENT: Good. MS. SEITZ: I'm also looking at -- THE PRESIDENT: Why are you doing that? Why did you decide to domore? MS. SEITZ: Because I like the idea that I'm able to grow my money,I can invest it, and the faster it grows, the more money I'm going tohave, the better I'm going to be in the future. THE PRESIDENT: Yes. And at age 23, that seems like an awfullyyoung age for people to be investing. Investing is kind of a powerfulword for a lot of people in America. They wonder, can I possiblyfigure out how to invest? And I'm just curious, have you found it tobe a burdensome experience -- MS. SEITZ: I have not. THE PRESIDENT: -- a nerve-wracking experience, an easyexperience? MS. SEITZ: I very much enjoy it. I like being able to go throughand see what is doing well, what is not. My boyfriend, George, who isactually from Texas -- THE PRESIDENT: Boyfriend, George? MS. SEITZ: My boyfriend, George, who is from Texas -- (laughter.) THE PRESIDENT: Where is he? Big George? Where is George from inTexas, do you know? MS. SEITZ: He's in San Antonio. THE PRESIDENT: San Antonio. Awesome, George. You got a littlenotoriety here. (Laughter.) Maybe the folks back home are watchingC-SPAN, you never know. (Laughter.) MS. SEITZ: He just started a career recently in personal financeand sells mutual funds --so I was looking into investing in a mutualfund, as well. THE PRESIDENT: Yes, good. But you're paying attention to it.It's a subject that is -- you're comfortable in talking aboutinvestment, which is an important thing for people to understand.Sometimes you hear what these personal accounts -- I mean, askingpeople to do something they're not capable of doing. Frankly, it'skind of an elitist point of view, isn't it? Plenty of people arecapable of learning how to watch their money, particularly since it'stheir money. Give me your views on Social Security. Have you got any thoughtson that? MS. SEITZ: I have noticed, since this is my first full-time jobout of college, how much money is taken out of my paycheck each payperiod for Social Security that I may not see when it comes to myretirement. THE PRESIDENT: Yes, see, it's interesting, it's the biggest tax alot of people pay. And younger Americans are saying, I'm not so sureI'm going to see it. The benefits of putting into it -- and Iappreciate that. A lot of -- I like to quote the -- some youngstertold me about the survey that said, many young people are -- think it'smore likely they're going to see a UFO than get a Social Securitycheck. (Laughter.) I don't know if you're one or not. (Laughter.) But it's an interesting dynamic, isn't it? A lot of young peopleare beginning to say, it's taking a big bite out of my check, and I'mputting into a system I'm not sure I'm going to see anything back from,which says to me that people who have been elected to office better bewary of not taking care of the system, because when a lot of youngpeople -- see, when their grandparents realize they're going to get thecheck, nothing changes, and a lot of young people are starting to say,I'm putting something into the system that may not be around when Iretire, it creates an interesting set of dynamics, doesn't it. A lotof young people are beginning to pay attention to the issue, a lot ofyoung people are comfortable with investing. Do you get a -- how do you pay attention to what you invest in? MS. SEITZ: I can go online and check my -- what each of myinvestments are doing and I can change them at that time if I feel it'snecessary. THE PRESIDENT: Yes. It's great, isn't it? It's an interestingsystem, it's an interesting cultural change, people going online towatch her investments grow. And if she doesn't like what's happening,she can change. And, to me, I like the idea of Americans opening up astatement on a regular basis, watching their assets. It may makepeople pay attention closer to tax policy in Washington, D.C., forexample, or decisions made by elected officials. Thanks for coming. Well done. Good job on hanging out with aTexan. (Laughter.) Yuctan Hodge. MR. HODGE: Good morning, Mr. President. THE PRESIDENT: Yuctan -- it's a really interesting first name. MR. HODGE: Yes, it is. My dad is Anguillan. It's a small VirginIsland off the coast of St. Martin. And the name means "foreveryoung." THE PRESIDENT: Forever young? Yuctan, I've got bad news for you.(Laughter.) MR. HODGE: In spirit, sir, in spirit. THE PRESIDENT: Yes, in spirit. That's good. If you can stayforever young, the Social Security issue wouldn't matter. (Laughter.) MR. HODGE: Not at all. THE PRESIDENT: Someday, you're going to be counting on the check.Tell me what you do. MR. HODGE: I started a web-development company in 2000 while I wasundergrad at the University of Virginia, studying economics. THE PRESIDENT: How about that? Entrepreneur, somebody who istaking risk, somebody in college. It's fantastic. (Applause.) How'sit doing? MR. HODGE: It's doing very well. I'm actually getting ready to --I actually closed it down because in the fall, I'll be returning to UVAto attend the Darden MBA program. THE PRESIDENT: Fabulous. Congratulations. MR. HODGE: I'm very excited. THE PRESIDENT: Yes, you ought to be. You ought to be. It sayshere, like, you're about to get married. You're going to go back toschool and get married. MR. HODGE: I have a very busy summer coming up. I'm gettingmarried in July. My fianc is here in the audience. THE PRESIDENT: Oh, there she is. Fantastic. Congratulations.When -- what's the date? MR. HODGE: July 3rd. THE PRESIDENT: Tied up, but -- (laughter.) MR. HODGE: Well, it's here in the city if you can make it. THE PRESIDENT: It is, well -- (laughter.) Send me an invitation,at least you'll get a gift. (Laughter.) Give me your thoughts oninvestments. Obviously, you're a smart guy, started your own businessprior to graduating from college. You've got ambitions, dreams,hopes. MR. HODGE: Well, the same year I started my company, I also openeda Roth IRA with Fidelity and started capping it out each year because Irealized -- THE PRESIDENT: Tell people what a Roth IRA is. Some peoplelistening may not understand what a Roth IRA is. MR. HODGE: It's basically another retirement account that you canset aside. I believe it's your $3,500 a year tax-free. And you couldreturn that money to you at around 55, I believe. THE PRESIDENT: Right. In other words it's a savings account.It's a way for an individual to set aside some of his own money in thiscase, and watch it grow. MR. HODGE: Definitely. THE PRESIDENT: Yes. MR. HODGE: And again, I check it online and get monthly statementsso I always know what's going on with my money. THE PRESIDENT: So you're paying attention. Sure. MR. HODGE: I'm definitely paying attention. THE PRESIDENT: Yes. Don't you like the idea of people payingattention to their assets and watching them grow? I think it's anincredibly fantastic opportunity to spread that opportunity throughoutour entire society. So Social Security, yes, this is the subjecthere. (Laughter.) MR. HODGE: Well, I know that Social Security won't be around, andyet your plan for personalized accounts takes advantage of one of theprinciples I learned in economics, was compound interest andamortization, the fact that I could have an account that I have controlover that makes -- turns my money and allows it to make more money isfar better than any alternative. THE PRESIDENT: Yes, compound interest for some may be a conceptthey're not familiar with. Money grows exponentially? MR. HODGE: That's correct. THE PRESIDENT: How would you describe compound interest? MR. HODGE: Your money grows depending on how you have it quarterlyor yearly. And every year -- THE PRESIDENT: Tends to accumulate and get bigger and bigger andbigger. MR. HODGE: Definitely. THE PRESIDENT: Do you realize that if you're a person who's made$35,000 over your lifetime, and the government allowed you to take athird of your payroll taxes over that period of time and set it asidein a conservative mix of stocks and bonds, that over time, when it cametime to retire, that money you set aside would grow to be $250,000.That's the compounding rate -- that's what, when you keep investingyour money, keep reinvesting and interest -- the compounding rate ofinterest allows for that kind of growth. Think about that. A person who has made $35,000 over their lifeallowed to take a third of the payroll taxes, set it aside in thepersonal savings account they call their own. That person has got anest egg, tangible assets that they can then pass on to whomever theychoose. That's the power of compound -- of compounding interest. Wedon't have that power if we hold your money in government to the extentthat you can have if you hold it yourself. And that's what -- that'swhat Yuctan is talking about. He said -- I think he's saying, justgive me the chance. He wants -- Some people may not choose, by the way, to set aside their money.That's okay. The great thing about America is we ought to be givingpeople the opportunity to make that decision. Government ought not tomake it for people, particularly since -- the interesting thing isthat, as I said earlier, Congress has already made that decision forthemselves. Don't you find that ironic? MR. HODGE: I do. THE PRESIDENT: Yes. (Laughter.) It's called leading thewitness. (Laughter.) Good luck on the wedding, July 3rd, gosh, you'reawesome. MR. HODGE: Thank you very much. THE PRESIDENT: Yes. And I'm looking forward to meeting the fiancafter the event. MR. HODGE: And the in-laws are here, too. (Laughter.) Mymother-in-law and two sisters-in-law. THE PRESIDENT: Yes, that's a smart move -- (laughter) -- a reallysmart move. MR. HODGE: Thank you, Mr. President. (Applause.) THE PRESIDENT: Didn't need an MBA to figure that out. That'sgood. (Laughter.) Colleen and Justin Rummel, welcome. MS. RUMMEL: Good morning. THE PRESIDENT: Thanks for coming. What do you all do? MS. RUMMEL: My name is Colleen Rummel and I graduated from BallState in 2000. And we came out here and began working at Verizon rightaway. And I'm an analyst there. THE PRESIDENT: You two work together? MS. RUMMEL: Yes, we do, two floors apart. (Laughter.) THE PRESIDENT: Really, interesting. MS. RUMMEL: Yes, it's interesting. It's fun, and it's -- it'snice to be able to see him all the time. THE PRESIDENT: Yes. (Laughter.) MS. RUMMEL: We do drive separately, though. THE PRESIDENT: The definition of a newlywed. That's great. Howis work? MS. RUMMEL: It's good. I have actually contributed to the 401(k)right away -- THE PRESIDENT: Got a 401(k)? MS. RUMMEL: Yes, yes, and they have a great matching program, sowe take advantage of that because we wanted to make sure that we hadsomething, because I've never felt that Social Security really would beavailable for us. THE PRESIDENT: Isn't that interesting? A lot of people feel thatway your age? MS. RUMMEL: Seems like it. THE PRESIDENT: Yes. Well, I'm going to keep talking about it.See, I think it's really important for people your age to understandthe truth. The best thing the President can do is just out lay thetruth. Just put the facts out there. People can make up their ownmind about whether or not they feel comfortable about Social Security.You're -- I guess, you're getting the message. 401(k)s, again, so people fully understand what that is? MS. RUMMEL: We get to set aside up to a certain percentage of ourpaycheck pre-tax, per pay period. And some companies offer a matchingprogram where they will match up to the next percentage to help affectyour growth -- THE PRESIDENT: Right. MRS. RUMMEL: -- and grow your investment. THE PRESIDENT: You and old Justin there, figure out what you'regoing to invest in. MRS. RUMMEL: Actually, our son. We have an almost 11-month-oldson, and once he was born, we realized with all the costs that comewith raising children, just child care and braces and college, andgosh, he just started almost walking, so now we're thinking, oh mygosh, he's just going to get into everything in. THE PRESIDENT: She is, yes. MRS. RUMMEL: We realized that we need the -- we need to make surewe have some money set aside so that way, you know, if somethinghappens to us, he's taken care of besides -- especially if he's abovethe age of getting death benefits from the parents. THE PRESIDENT: Yes, I appreciate that. Justin, you got anythingto add to that? Mom's doing a heck of a job. (Laughter.) MR. RUMMEL: She's talking for me, as usual. The program isactually set aside mainly for our son, Gavin. He's the main focus withthat, the idea of being able to take money, set it aside, and alsobring it back, is definitely a key factor. But along with that --alongside of that, the idea that Social Security won't be there for uswhen we retire and we're taking the steps for it, what I'm reallyconcerned about is what's going to happen to him and what he's going tohave to deal with at the point where Social Security becomes bankrupt. THE PRESIDENT: That's a great question. First of all, I've alwayssaid Social Security is a generational issue. Once the grandparentshere in America understand they're going to get their check, then theystart saying, what about my grandkids. Here you've got young parentswondering about their child -- their child, Gavin. And it's a naturalquestion for people from one generation to ask. You know, we -- those of us who are baby boomers were veryfortunate to have a generation before us make huge sacrifices for thecountry. They confronted problems. They confronted big problems.It's now our obligation to confront the same problems so that the nextgeneration coming up will say, thankfully, thankfully the generationahead of us did the right thing. There's a lot of parents, you know, beginning to -- when theyfigure out what's going on, are beginning to say, gosh, we've got aserious problem for my child and I expect the government to dosomething about it. Here we've got a young couple, used to managing their own money.Mom says she's not sure her Social Security is going to be there. Dadsaid, if it's not there for us, it's definitely going to be a burdenfor my kid. See, the issue here is, once you see the problem, whether or notwe've got the political will to deal with it, otherwise we strap a --younger generations with enormous financial burdens. And I appreciateyou worrying about your kid, you need to worry about yourself, too,because you're going to be paying into a system that is bankrupt in2041. Thanks for coming. Good luck. MRS. RUMMEL: Thank you. MR. RUMMEL: Thank you. THE PRESIDENT: Good. I appreciate you being here. Paul Sanchez. MR. SANCHEZ: How are you doing? THE PRESIDENT: Pretty cool. (Laughter.) So, so. (Laughter.)Feeling great, thank you. How are you doing? (Laughter.) MR. SANCHEZ: I'm doing great. THE PRESIDENT: You're looking good. MR. SANCHEZ: This is fun. This is new for me. THE PRESIDENT: Well, welcome. Are you employed? MR. SANCHEZ: Yes, sir, I am. I'm a certified financial planner.I work for Sullivan, Bruyette, Speros, and Blayney in Tyson's Corner,Virginia. THE PRESIDENT: Yes, here's your chance. Looking for somecustomers? MR. SANCHEZ: Absolutely. (Laughter.) Can never have too many ofthose, right? THE PRESIDENT: That's right. Where were you raised? MR. SANCHEZ: San Antonio, Texas. (Laughter.) THE PRESIDENT: Did you know George? (Laughter.) MR. SANCHEZ: No, I don't. THE PRESIDENT: High school? Yes, where did you go to highschool? MR. SANCHEZ: John Jay High School in San Antonio. THE PRESIDENT: John Jay, very good. MR. SANCHEZ: You know that school? THE PRESIDENT: Yes, of course. I was, remember, the governor.(Laughter and applause.) How quickly they forget. MR. SANCHEZ: I could really test you and ask if you know themascot, but I won't do that. THE PRESIDENT: No. (Laughter.) So, like, why did you sign up forthis panel, just out of curiosity? * * * * * THE PRESIDENT: Isn't it interesting to hear people sit up here andsay, I'm not so sure Social Security is going to be there for me. Idon't remember saying that when I was 20-years-old. As a matter offact, I was pretty confident that when I thought about it, the promisegovernment had made -- had made to me and others would be kept. Andhere, we've got citizens sitting up here saying, I don't think thesystem is going to be there for me. It's an interesting dynamic thatpeople in Washington must pay attention to. In other words, they'resaying, we've got a problem. And the sad thing is, we've got folks who are just beginning to payinto the system. It must be a little discouraging to be paying into asystem that you're not sure is going to be there. MR. SANCHEZ: Well, I try to put a positive spin on it. My dad is60, so he's counting down the days to where he gets it, so I figure,he'll get some of what I'm paying in. THE PRESIDENT: No, that's -- I appreciate that. And -- MR. SANCHEZ: He does, too. THE PRESIDENT: Yes, that's right. (Laughter.) No, I'm supposedto be the funny guy. (Laughter and applause.) MR. SANCHEZ: I figured I was from Texas, we could share a littlebit. THE PRESIDENT: Compadre. (Laughter.) You know, you -- first ofall, you hear these stories about people saying, gosh, well, if I werein the stock market and the market declined, I'd lose everything. Givepeople a sense, as a planner, of how you help people at the end oftheir life prepare for a different risk portfolio. MR. SANCHEZ: When I started investing, it was in 1997, right outof college. So I've seen two extremes. I've seen a bull market thathas just taken off, and I've seen a bear market just go way down. Butwhat that brings you back to is fundamentals. When you see extremes,you've got to go back to fundamentals. When you look long-term --we're always showing clients the power of investing over 20, 25, 30years, and there's a lot of power there. So you've just got to pick astrategy, be disciplined with it, understand your risk tolerance, andlike you're saying, you can go to Treasury bonds if you're so riskadverse. But if you're someone like myself, who is willing to take alittle risk, put half or 70 percent in stocks, and watch it grow andwork for you. THE PRESIDENT: I suspect your risk portfolio will change as youget a little older, don't you? MR. SANCHEZ: Absolutely, it will change. But for now, I'm stillpretty -- THE PRESIDENT: And that's important for people to understand. Inother words, there's flexibility, where you can decide to match your --you put your money where you're comfortable. As you get older, you cantransfer from, say, a mix of bonds and stocks to only bonds, relativelyrisk-free bonds, so that there's more security the closer you come toretirement. You're not stuck in one type of investment vehicle. Secondly, one of the things that you hear about -- well, you know,Wall Street is going to gouge these people. Do you realize, there's alot of folks around the country who work for local governments thatenable their -- local governments enable their people to invest inprivate accounts, put their own money in a personal savings account.That happens a lot. I was in Galveston, Texas. That happens inGalveston. Yes, it's hard to believe -- (laughter) -- but it happensin Ohio, it happens in the state of Ohio. And people need to know thatfees can be managed properly, so you're not gouged. The government isgoing to make sure you're not gouged. If we're wise enough to createthese accounts for people, there's going to be government oversight tomake sure that people are treated fairly. And that's what you've gotto know. MR. SANCHEZ: Index, index funds. THE PRESIDENT: Yes, see, index funds. Whatever the heck thatmeans. (Laughter.) No, just kidding. (Laughter.) I do want to thank you all for coming. I hope you have found thisto be an interesting dialogue. Most particularly, I hope you have --if you're a younger American, I hope you pay attention to this issuelike these good folks have done. There's a lot at stake for you. Itmay not seem like it now -- 22-years-old, got a lot of life ahead ofme. I'm telling you, if the government doesn't act, you're going to besaddled with a big burden. When you get old enough, you're going to besaying, how come they didn't act? How come the United States Congressis so focused on their parties, political parties, that they didn'thave the courage to make sure the system was solvent for me. TheSocial Security system is solvent for people who were born prior to1950. You don't have a thing to worry about. But if you've got achild or a grandchild coming up, and working hard, you'd better beworried about whether or not this Congress can do its duty. I'm confident we're going to get something done. I believe themore the people understand the nature of the problem, the more they'regoing to speak out to their elected representatives. The more theyunderstand the nature of the problem, the more they're going to besaying to those of us who are serving, go get it fixed. And I'm fullyprepared to help in the process. I put forth ideas to move the processalong; anybody who has got a good idea, bring it forward. And thenwe'll be able to say, when we solve it, we did our duty for ageneration of Americans coming up. Thanks for giving us a chance to visit with you. God bless.(Applause.) END 11:13 A.M. EDT Printer-Friendly Version Email this page to a friend IssuesBudget ManagementEducationEnergyHealth CareHomeland SecurityHurricanesImmigrationJobs & EconomyMedicareNational SecurityPandemic FluPatriot ActRenewal in IraqSocial SecurityMore Issues 006ab0faaa