Addressing a White House economic conference last week, President Bush vowed that he would use his second term to push for tort reform, tax reform and health-care reform, while curbing federal spending. His most stirring call, however, was for a program of Social Security reform that would include personally owned retirement accounts that would be funded with a portion of a worker’s payroll tax.
Bush reminded the audience that he had campaigned in both 2000 and 2004 on this issue.
“I did talk about some principles during the course of the campaign,” Bush said. “One was nothing will change if your retired or near retirement. Two, I do not believe we should raise payroll taxes to fix the system. Three, I do believe younger workers ought to be allowed to take some of their own money, some their own payroll taxes, and, on a voluntary basis, set up a personal savings account, an account that they manage, an account that will earn a better rate of return than . . . their money earns inside the current Social Security trust, an account they can pass on from one generation to the next, in other words, it’s your asset, and an account the government can’t take away.”
Bush pitched the plan as part of his vision for an “ownership society.” “I believe in owning things,” he told the conference. “I think it will be healthy for our system [for people] to own and manage their own account. It will cause them to have a vital stake in public policy. People will ask more questions about fiscal responsibility than ever before. People will want to watch carefully decisions made by government at all levels if they have a vital stake in watching their portfolio grow.”
Bush added that the owners of Social Security personal retirement accounts would not have complete freedom to control their own assets. “[P]eople are not going to be allowed to take their money for their retirement account and take it to Vegas to shoot dice,” he told a laughing audience. “This is going to be a managed account, similar to the thrift savings plan that we federal employees have available to us now.”