THE WHITE HOUSE
Office of the Press Secretary
|For Immediate Release|| ||June 4, 1998|
REMARKS BY THE PRESIDENT
TO SAVER SUMMIT
Hyatt Regency Hotel
12:15 P.M. EDT
THE PRESIDENT: First let me say a special word ofthanks to the members of Congress who are here and especially thosewho sponsored the legislation which created this summit. I thankGovernor Allen and Secretary Herman for doing their sort ofbipartisan introduction thing. I couldn't help wondering what all ofus looked like up here to all of you. (Laughter.) I bet we looklike a bunch of school boys in the spelling bee dying for the recessbell. (Laughter.) But this has actually been better -- it's beenenlightening for me.
The most encouraging thing of all that was said to me,from a purely selfish point of view was when the speaker said, if Igot to be 50 I could look forward to living another 30 years.Yesterday I was in Cleveland and I went to an elementary school tosee some work that some of the AmeriCorps volunteers are doing, and Iwas shaking hands with all these little kids. And it really is truethat they say the darndest things. And this young boy was six orseven years old, maybe, a little bitty boy, and he said, "Are you thereal President?" And I said, yes. And he said, "And you're not deadyet?" (Laughter.) And I realized -- I didn't know what he meant.First I thought he'd been reading the local newspaper here.(Laughter.) And then I realized that to him the President was GeorgeWashington or Abraham Lincoln and he actually thought it was aqualification of the job that you had to be deceased to hold it.(Laughter.) It was an amazing encounter. (Laughter.) But now, I'vebeen reminded of the actuarial tables and I'm ready to go back towork. (Laughter.)
Let me say just a couple of words by way ofintroduction. Most of what should be said has already been said, andvery eloquently. And I thank all the previous speakers. But I wouldlike to make one point that has been alluded to, but I want to try todrive it home.
We're living in a time where we have the lowestunemployment rate in 28 years, the lowest welfare roles in 27 years,the lowest crime rates in 25 years, the lowest inflation rate in 32years, the smallest government in 35 years, and the highest homeownership in history. And we're about to have a balanced budget anda surplus for the first time in 29 years. This has given thiscountry enormous self-confidence. We know that when we work togetherwe do get things done. We do not know when we'll have a time likethis again.
All of our reading of human history teaches us thatnothing ever stays the same forever. If we can't deal with thisissue now, when will we ever deal with it? We have an obligation todeal with this challenge, and deal with it now. And we have anopportunity to do so. (Applause.)
The balanced budget has freed up capital. It's led toan increase in -- the efforts in fiscal responsibility have led to asignificant increase in our national savings rate, even as individual
savings have gone down. And that's been very good to this pointbecause it's enabled us to have lower interest rates, higherinvestment, and higher growth. And you see here the relationshipbetween savings and investment and growth, which has already beenalluded to. So we've had an increase in net national savings and adecline in the budget rate and it's led to more growth.
But the problem is that we have to have more personalsavings as well. And we have to deal with the problems presentedespecially by Social Security and with the fact that there are 50million Americans without private pensions, and by the fact that veryfew people are doing any savings above Social Security in whateverpension they have or don't have for their own retirement. So this isa deeply personal issue that Senator Lott, I thought, grippinglydiscussed, and it's also a big issue for our country.
We have the opportunity and the obligation, I believe,to deal with a lot of our other long-term challenges, but a lot ofour other long-term challenges affect our children and affectchildren who have a poverty rate much higher, almost twice as high,as senior citizens. Unless we deal with this issue, unless we naildown Social Security for the 21st century and stabilize it, andunless we deal with the need for more private pension coverage, andunless we deal with the need for more savings, it will also -- makeno mistake about it -- it will impair in a direct financial way ourability to fulfill our responsibilities to our children who areliving in difficult circumstances and now we can help to chart adifferent future, and eventually it will undermine theself-confidence we're now enjoying and it will make people veryshort-sighted again when we could be dealing with these issues thatwill shape the future 10, 20, 30, 50 years from now. So I think it'sa very, very important thing.
And the answer to Senator Lott's question, let's beginwith Social Security. And I want to thank him for what he said andfor what he said to me in private, and to both the Speaker andSenator Lott and the other Democratic leaders of the Congress. Ibelieve, while I think this savers summit should keep meeting, Idon't believe we should wait until all of your meetings here inadvance to deal with the Social Security issue. The demographics aretoo clear.
We now have until 2032 before it starts to run adeficit, but that's very misleading. With modest changes now, we canhave huge impacts later. If you wait, the closer you wait, the moredramatic the changes you have to make just to pay the bills. So myview is that we should continue to have these forums around thecountry, these bipartisan forums; we should continue to solicitadvice; but our goal ought to be to have the Congress take up SocialSecurity reform as the first order of business early next year andfinish in the first half of 1999, saving Social Security for the 21stcentury, so that we baby boomers do not bankrupt our children intheir ability to raise our grandchildren. And my commitment is totry to get that done on that timetable. (Applause.)
In order to do it, I have to say I still believe that wehave to resist two temptations with the budget surplus. The firsttemptation is to say, well, it's large and projected to be growing --and maybe I've just been in executive positions too long in publiclife, but those projections don't mean a lot because sometimes theydon't pan out.
Now, we've been real lucky for the last five years, allour projects have been too conservative and we've done better thanwe've projected. But I think the first thing we have to do is toresist the tendency to spend the surplus on spending our tax cutsuntil we have dealt with the Social Security issue. The second thingI think we have to do is to resist the temptation to take one thing,even it seems like a very good thing to a large number of people,like the individual accounts, and deal with that without knowing howyou're going to deal with the whole system. So what my view is --that we ought to say that we're going to pass comprehensive reform.And I don't rule in or out any ideas here on that. That's not mypurpose. And I solicit all of your ideas.
But I just think it would be a big mistake, knowing whatthe magnitude of the money we're talking about is, to miss thischance to say we're going to hold on to this surplus until we passcomprehensive reform. Then if there is money over and above thatafter we do this -- I hope in early 1999 -- we can have a wonderful,old-fashioned American political debate about what the best way toproceed is -- whether we should cut taxes, invest the money, pay downthe debt -- we can have that debate. But I think we should commitourselves again to the idea that saving Social Security first is theright policy for America and the right thing for the 21st century.And I hope we will do that. (Applause.)
Now, let me say, in addition to that, we have some veryspecific proposals which I think respond at least in part to theconcerns which were raised by earlier speakers on pension matters.The Vice President mentioned the Retirement Protection Act, whichpassed, I believe, with an almost unanimous vote in Congress in late1994, to protect the pension benefits of more than 41 millionworkers. But I want to build on that.
In the balanced budget proposal that I have presented toCongress, I proposed to offer tax credits to small businesses whostart pension plans to help them deal with the problems, the coststhat you mentioned of starting the programs up and getting theadvice. It could worth, I think, in the first year, about $1,000 forsmall business, which should cover the costs involved in thestart-up.
It would encourage employers who don't provide pensionplans to give workers the option of contributing to IRAs throughpayroll deductions, the budget would. The budget also cuts thevesting period for 401(k)s from five years to three years.Eventually -- I'll make a prediction -- it may not happen in our timehere, but eventually we will have to figure out how to have peoplepaying, investing continuously, no matter how frequently they changejobs, because, if you look at all modern advanced societies, you havea higher and higher percentage of people doing part-time work, youhave a higher and higher percentage of people doing more than onejob, and you have more rapid turnover. You have a very high rate ofvitality and activity in the business community. It means a lot ofplaces being started, but the more businesses that start, the moreyou're going to have that also won't go on, that won't make it.
And in the increasingly churning, dynamic world, we aregoing to have to focus very carefully on that. This is something Ibelieve, by the way, that I think the Saver Summit could really workon in the years ahead because of the congressional legislation, youknow, having you meet again in a couple of years and then again in acouple of years after that. But for right now -- we know enough nowto know we can preserve financial stability in a responsible way andcut this vesting period from five to three years. And I hope verymuch that we'll be able to do that in the budget discussions with thelegislation that passes this year.
Finally, there's an easy to administer, defined benefitplan that's part of our budget proposal, and I hope the Congress willpass that.
Also, in an effort to encourage more workers to enrollin the 401(k)s that are already available to them, we have made itclear that employers can automatically enroll workers in the 401(k)
plan unless the workers themselves choose to opt out. Now,currently, most companies require the employees to opt in to the401(k) plans, a process that takes some time and some paperwork.Companies that have cut out the paperwork with automatic enrollmentpolicies that then the employees can opt out of report participationrates of about 90 percent, as compared to an overall participationrate of 67 percent for companies offering 401(k)s. So that'ssomething that you will discuss. It sounds like a small thing, butit's one thing that can really affect a very large number of peoplein getting them into the business of saving for their own retirement.
Let me just say, lastly, we all know we have to do moreabout personal savings. We have worked together in a bipartisan wayto expand the availability of IRAs and the attractiveness of them sothat people could invest in IRAs and then withdraw tax free if themoney were used for education purposes or health emergencies or otherthings of that kind. But we need, clearly, to do more. And this isan area where, quite apart from the 401(k) issues and the pensionareas, I invite you to give your best ideas to the administration andto the Congress.
Because -- let me just give you an idea of what adifference it could make. A person who could afford to save $5 a dayfor 40 years would have $300,000 by the time he or she retired, atjust a modest return, above and beyond Social Security and pension.Young people have a unique opportunity. If we can get it into theirminds early, if you save $2,000 a year beginning at age 25 and youretire at 65, you have $328,000. If you wait until you're 45 tostart, you only have $78,000. So that really matters.
And let me finally say that -- let me end where I began.This is a moment of real self-confidence for our country. Peoplehave the emotional space to think about the long-term. If you justthink about your own businesses, your own families, raising yourkids; if your child is sick and you're really worried, and you'rechild is 10 years old, it's hard to work up the emotional space tothink about where your child is going to college and how much it willcost. If you think you can't pay the electric bill at your business,it's pretty hard to think about whether you're going to buy a pieceof expensive equipment next year that will make you productive fiveyears from now.
Events intrude on nations just as they do on people intheir individual, personal, and business lives. We have been given agift, and we have to use it. This is a wonderful moment, but it is amoment of responsibility that we dare not squander.
Some of you probably know this, but it makes the point,finally, that if we have a saving nation, it means we have a nationof people who think about the future and who believe in it. WhenBenjamin Franklin died -- you know, a penny saved is a penny earned-- he left 2,000 pound sterling to the cities of Boston andPhiladelphia, with only one caveat -- nobody could spend any of itfor 200 years. By 1990, the 2000 pound sterling had matured into$6.5 million -- quite conservatively invested.
By leaving that money to people 200 generations removedfrom himself and his family -- I mean, 200 years removed -- BenjaminFranklin made a simple, powerful, eloquent statement that he believedin the promise of America, he believed in the future of America, andhe was prepared to contribute to it in a truly astonishing way.Well, we don't have to ask the American people to save for 200 years,but we do have to make sure they can think about tomorrow and preparefor it. And this is a magic moment to do it.
Thank you very much. (Applause.)