THE WHITE HOUSE
Office of the Press Secretary ________________________________________________________________________ For Immediate Release October 23, 1999
THE PRESIDENT ANNOUNCES THE TRANSMITTAL
OF HIS SOCIAL SECURITY LOCKBOX PLAN TO CONGRESS:
A FISCALLY DISCIPLINED WAY TO EXTEND THE LIFE
OF SOCIAL SECURITY AND PAY OFF THE DEBT
October 23, 1999
In His Radio Address, President Clinton Will Announce That He Is Transmitting His Social Security Lockbox Legislation To Congress Next Week. The President's plan will:
- Pay off the debt held by the public by 2015 - Extend the solvency of Social Security until the middle of the next century
SOCIAL SECURITY: IMPACT ON AMERICA AND FUTURE CHALLENGES
Social Security Is the Cornerstone of Our Retirement System.
- Social Security is the principal source of retirement income for two-thirds of the elderly. - In 1959, the poverty rate for senior citizens was 35.2 percent. In 1998, it was 10.5 percent -- the lowest on record. Last year, Social Security benefits lifted roughly 15 million senior citizens out of poverty. At the same time, poverty remains high for widows and other groups. - Social Security is more than just a retirement program. One in five beneficiaries is under the age of 62, receiving either disability benefits or survivors benefits.
Social Security Is Projected To Become Insolvent By 2034 As a Result of the Demographic Pressures It Faces.
- Currently, Social Security takes in more payroll taxes than it pays in benefits, and is building up its trust fund to pay future beneficiaries. - As the baby boomers retire and life expectancies continue to rise, the number of people age 65 and over is projected to grow -- from 35 million in 1998 to 72 million in 2035. - In 1960, there were 5.1 covered workers for every Social Security beneficiary. In 1998 there were only 3.4 workers for every beneficiary. By 2035, there are projected to be only 2.0 workers for every beneficiary.
THE PRESIDENT'S SOCIAL SECURITY LOCKBOX ENSURES THAT ANOTHER GENERATION CAN RECEIVE THE BENEFITS OF SOCIAL SECURITY
- The President's Plan Locks Away Social Security Surpluses for Debt Reduction. The President's lockbox devotes the entire Social Security surplus to paying down the debt held by the public. This will reduce the debt held by the public by $3.1 trillion over the next 15 years.
- Using Social Security Surpluses For Debt Reduction Produces Interest Savings. If the Social Security surpluses were entirely spent, interest payments on debt held by the public would be $163 billion in 2011. Devoting a decade of Social Security surpluses to debt reduction slashes the debt by $2.1 trillion, cutting interest payments to $56 billion. This represents a $107 billion savings for the government in 2011 alone.
- The President Devotes These Interest Savings To Extending the Life of Social Security. While the so-called lockboxes proposed by Republicans would have used any interest savings to pay for an exploding tax cut, the President proposes to devote the entire interest savings to extending the life of Social Security.
- The President's Plan Transfers the Interest Savings to the Social Security Trust Fund From 2011 to 2044. The Social Security actuaries project that the interest savings generated by the President's proposal would lead to transfers of $107 billion in 2011 and growing amounts through 2016. Transfers would stay at the 2016 level through 2044.
- The President's Plan Extends Solvency to 2050. The Social Security trust fund is currently expected to be unable to pay benefits in full on a timely basis starting in 2034. According to preliminary estimates by the Social Security Administration's Office of the Actuary, the President's proposal would extend solvency until 2050. This is an extra 16 years added to the life of the trust fund. If the President's lockbox were complemented by a progressive, higher-return investment strategy for the Social Security transfers, the life of the Social Security Trust Fund would be extended still further.
- The President's Plan Provides a Basis to Build On. The President remains committed to working together with Congress on a bipartisan basis to enact reforms that make Social Security solvent for at least 75 years.
THE REPUBLICAN LOCKBOXES WOULD NOT ADD A SINGLE DAY TO THE SOLVENCY OF SOCIAL SECURITY
- The Republican Lockboxes Do Not Add a Single Day to Social Security Solvency. Even if the Republican lockboxes lived up to their pledge to dedicate all of the Social Security surpluses for debt reduction, they still would not add a penny to the trust fund or a single day to the solvency of Social Security.
- But the Republicans Do Not Live Up To Their Lockbox Pledge. Even the Congressional Budget Office Says the Republican Appropriations Bills Spend the Social Security Surplus in FY 2000. The Director of the Congressional Budget Office sent a letter to Congressman Spratt on September 29 showing the House appropriations bills would use $18 billion of the Social Security surplus (this estimate assumed appropriations bills as already enacted or according to their then-current status in the House of Representative, plus enacted emergencies). Since September 29, the use of the Social Security surplus has grown.
###