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Public Statements

McCain discusses Social Security

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Date:
Location: Sun City, AZ

Thank you for that very warm reception. I'm always cheered to be in Sun City, where I'm blessed to have many good friends. Your company evokes, as it always does, something more than the affection of friendship. Whenever I come here I am reminded of the proud American generation of which you are a part, the "Greatest Generation," - those who met and triumphed in the epic challenges of the 20th Century.

Yours was the generation that overcame the depression and defeated monstrous evil in World War II. Yours was the generation that answered the call to defend freedom and democracy across the globe. And yours was the generation that built America into the greatest force for good on earth.

Today, America enjoys unprecedented prosperity, and our political and economic ideals have triumphed in some of the darkest reaches of tyranny. This remarkable progress is based on the extraordinary accomplishments of your generation.

But you know, better than succeeding generations understand, that America's greatness is not measured in Dow Jones averages, but in the character of the people, and how faithfully our leaders and national institutions reflect your character. And I think many of you will agree that there is a sickness in American political life today.

We who are currently privileged to hold public office have ourselves to blame. It is we who have squandered the public trust; we, who have, time and again, placed our personal or partisan interest before the national interest, earning the public's contempt with our poll-driven policies, our phony posturing, the lies we call spin, and the damage control we substitute for progress.

We are a prosperous country, but how many Americans feel that despite our prosperity, something has gone wrong with the American way of life? Pervasive public cynicism is debilitating our democracy. Healthy skepticism about American political leadership now verges on outright alienation, especially among the young. It's time we did something about it.

I believe that just as your generation prevailed in the nation's great causes, America can rise to meet the next patriotic challenge—our first of the new Century. That challenge is nothing less than to defeat cynicism and renew trust in our national institutions and causes.

The renewal of trust, however, rests on the mantle of reform. I would like to talk to you today about how reform must commence on a subject that we usually associate with seniors, but is perhaps the single most important issue affecting the future of our children and grandchildren. I'm referring, of course, to our Social Security system—the national compact in which is vested the hopes and prospects of every American, young and old.

How political leaders handle the impending insolvency of Social Security, one of the most critical national problems of our time, may well define our ability to reclaim the public trust. But to save Social Security, we will have to stop playing politics with it. Democrats will have to stop using the issue to scare seniors into voting against Republicans. And Republicans will have to resist using Social Security revenues to balance the budget.

My friends, I didn't come here to warn you that your Social Security would stop coming. That's not going to happen. You will receive the benefits you have earned.

This issue is more about your children and grandchildren, but that doesn't diminish the urgency of the cause. It makes it greater.

We're all living longer, and with the approaching retirement of the baby boom generation, retirees will soon be a much larger share of the population. Fewer and fewer workers will be financing Social Security benefits for an ever-growing number of recipients. Americans currently pay 12.4% of their income into the Social Security Trust Fund. Unless we act immediately, we will soon be paying 18%.

Just as it would be unconscionable to break a sacred trust with you by confiscating your promised retirement benefits, it would be morally bankrupt to impose such an onerous burden on our progeny.

For reform to be successful, we all know it must bipartisan, fair and, above all, honest. All Americans have had their fill of politicians who will say anything to gain a partisan advantage. The President promised to use 60% of the federal budget surplus to save Social Security and challenged Republicans to do the same. Yet nowhere in his budgets over the next ten years, does the President spend one dime of the surplus for that purpose. The next President, whoever he or she may be, ought to keep the promise the President broke, and use at least 60% to help keep Social Security solvent.

Just before Memorial Day, Republicans and Democrats in the House of Representatives voted with great fanfare to put Social Security funds into a legislative "lockbox" where, presumably, your retirement money would be protected from big-spending legislators looking for every spare nickel to finance their pork barrel appetites. Of course, the bill's fine print contained an interesting loophole. It seems Social Security funds cannot be used for any other purpose unless - and this is an important exception - unless it is needed for an unspecified emergency spending bill.

A few days before the House passed the Social Security lockbox bill, the Congress sent an emergency spending bill to the President that included billions of dollars in pork barrel spending for such dire "emergencies" as subsidized reindeer ranches. Apparently, even Santa Clause has hired a Washington lobbyist. How did we pay for all this wasteful spending? With the money we were supposed to be using to save Social Security.

This is exactly the kind of Washington dishonesty that we must stop if our intentions to save Social Security are ever to be taken seriously by the American people. America deserves real reform. It's time to end the use the payroll taxes that fund the system to obscure the national debt, rationalizing new spending for purposes other than saving Social Security. Let's take the Social Security Trust Fund completely off budget, which is another way of saying that no politician can ever use it again for any purpose other than your retirement.

As you know, for over 10 years, I've fought to eliminate the abomination known as the Social Security "earnings test." It is an obscene penalty imposed on Americans between the ages of 65 and 70 for working and remaining productive in their retirement years. Under current law a senior loses $1 of Social Security benefits for every $3 they earn over a designated limit. This hits hardest and most cruelly at lower-income seniors, many of whom must work to pay for basic living expenses. It completely fails the fairness test.

Social Security reform that is fair must include the repeal of this discriminatory penalty that breaks faith with older Americans who should be encouraged and rewarded to remain in the work force, not taxed out of it.

My friends, there is only one solution if Social Security commitments are to be honored without breaking the backs of the next generation: bold reform, genuine reform that allows workers to invest some of their social security savings, privately, in higher yielding accounts. This isn't an exclusively Republican idea. Two well respected, thoughtful Democrats, Senators Bob Kerrey and Pat Moynihan, have endorsed the idea because they know it is the only way Social Security can be saved without raising taxes or cutting benefits.

Today, Social Security revenue can only be invested by government, in government securities that yield miserly returns. It's little better than burying your savings in a tin can until you retire. We can do much better than that.

By some estimates, a working family earning an average of $35,000 a year would receive benefits of $24,000 per year in Social Security benefits. Investing the same amount in a modest, diversified mutual fund would yield over $60,000. The difference is quite obvious, even for a poor math student like myself.

The President wants to make the federal government an institutional investor of Social Security money in the private sector. I don't. Do we really want the federal government to be the major stockholder in General Motors or Microsoft? Do we want Washington bureaucrats picking winners and losers in the economy? Of course not.

The only way to increase the yield of Social Security dollars is by allowing workers to make investment decisions for themselves; by empowering American families to invest, in more robust portfolios, a portion of their earnings for social security that they would otherwise pay in taxes to Social Security.

We must certainly have an informed national debate on the appropriate amount available for such personal investment. Credible experts have put forth a number of plans that merit our close scrutiny. But some level of personal investment choice is the only way we can meet our Social Security obligations

Would some Americans be left behind? Would lower-income Americans with less to invest do worse relative to the status quo? Absolutely not. The foundation of any reform program must be to guarantee every American worker the benefits they have been promised by law. But only by investing Social Security dollars more productively can we achieve that end.

The fact is that personal choice in investing social security dollars would most dramatically benefit lower and middle-income Americans. As we all know, much of America's wealth has been generated not by earned income but from investment income. That is the case historically, not just during episodic spikes in the stock market.

The American dream belongs to all of us. Promoting investment in America by every American worker would give lower-income Americans the ownership they deserve in the country we share, as well as grow their Social Security savings more rapidly. It is the same premise upon which the federal employee pension program and 401K retirement plans are based. It works.

Will reform be easy? No. Nothing worthwhile ever is. Your generation knows that better than any.

It will require sacrifice, but considerably less sacrifice than the train wreck that is the status quo.

Keeping the system solvent, even with comprehensive reform will require the infusion of additional money, outside the trust fund, to pay for promised benefits, while individual retirement investments mature. Projected budget surpluses provide a unique but perhaps short window of opportunity to shore-up the system. But if additional money is needed to fund the transition we should reprioritize the federal budget. Corporate welfare and pork barrel spending can be sacrificed for the sake of saving Social Security and investing in America's economic future. It's time our budgets and laws reflected that imperative.

At the end of the American century we face the task of rebuilding the fractured relationship between the American people and their government. We can take a long step toward that important goal by showing the American people that we are up to the huge task of reforming Social Security without resort to the smoke and mirrors and partisan scorekeeping that we often seek shelter behind.

Your generation showed that Americans are more than a match for the most daunting challenges; that the American spirit can prevail over any obstacle, no matter how formidable. I don't believe that American greatness will end with this century. But my optimism will prove to be wishful thinking if we who are privileged to lead the country today fail to restore the people's faith in our governing institutions by showing less courage and character than you showed when you saved America and the world. We will failed if we do not restore the people's faith in our institutions and leadership.

That is what I intend to do if given the chance. And I'll need your counsel and prayers to succeed.

Thank you for listening.

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