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Welcome to "Ask the White House" -- an online interactive forum where you can submit questions to Administration officials and friends of the White House. Visit the "Ask the White House" archives to read other discussions with White House officials.

Chuck Blahous

Doris, from Quebec,Canada writes:
I am an American residing in Canada,I am 60 years old and retired,I am looking forward to my Social Security check,will this change, to the system ,affect me in any way?

Chuck Blahous
Thank you, Doris. President Bush has established some basic principles for strengthening Social Security, the first of which is that there will be no changes in the benefits of those now in or near retirement. If you are currently receiving, or are shortly about to receive Social Security benefits, then nothing would change for you.

jay, from anchorage writes:
why not invest portion of the social security trust funds into stocks instead only into u.s treasury?

Chuck Blahous
The President believes that workers under Social Security should have the voluntary opportunity to save and invest a portion of their payroll taxes in a personal account. This account would enable them to build nest eggs for retirement, which they would own, which they would control, and which they could pass on to their children.

The value of voluntary choice is something in which the President strongly believes. This also includes the choice not to have a personal account, and to stay entirely within the current Social Security structure. It includes the voluntary choice, through a personal account, to invest in safe, prudent, diversified stock funds, but also the choice not to do so.

If we were, as in your question, to require that the payroll taxes each American pays into Social Security be invested in the stock market through the Trust Fund, this would run counter to the President’s belief that we should allow individual workers ownership and choice, giving them a say in how their money is saved and invested.

There are important additional arguments against government-directed investment in the stock market. Historically, when governments have controlled the investment of pension funds in private markets, this has led to investments being steered to political purposes. A system of individually controlled accounts would prevent the political conflicts of interest that would arise from government-directed investment.

Kirk, from Waco, TX (Baylor University) writes:
Mr. Blahous,With social security reform being a hot topic on the horizon, what should I as I college student be concerned about in the upcoming months? In other words, what about social security reform most affects me?

Thank you,

Kirk Marshall

Chuck Blahous
Kirk, it is commendable that you are following this issue because you will be much more affected by the decisions that are made on Social Security this year than would older Americans. The system will not change for today’s seniors, but we will need to change the system if it is to be viable for you. Furthermore, the type of system that we have will determine the taxes that you as a worker will pay in your years ahead.

The one thing I would most advise you to watch for is whether reforms are enacted that would permanently strengthen Social Security, as opposed to changes that simply postpone the day of reckoning. In the past, there have been several instances of action to shore up Social Security temporarily, but not in a way that stabilized the system for good.

If we continue the pattern of minor changes that has characterized Social Security reforms in the past, then during your working career you will again face the likelihood of tax increases or further adjustments to your benefits.

President Bush has made a priority of fixing the system for good. That’s the test against which we believe Social Security proposals should be measured.

Adam, from Washington DC writes:
As we look to rework the SS system to create a more sustainable benefit system, can we not curb a few of the payouts now that would fill the gap between the program funding and capital requirement?

Chuck Blahous
Adam, we do not need to curb any benefit payments today, because the system has enough money to deliver full benefits to those now in or near retirement.

The problem with the current system is a vast difference between the benefits that it is promising in the future and the revenues that it will have on hand to pay them. Social Security, for example, is currently promising the average retiree in 2050 a benefit that is 40% higher, after adjusting for inflation, than an average retiree receives today. That benefit level is also approximately 30% higher than the current system would be able to afford to pay in 2050.

Clearly, decisions will need to be made in order to get the system back on track for our children and grandchildren. We want to work with Congress to find the best way to do it.

Stuart, from New Jersey writes:
How can we make the transition to invester owned social security without incurring 2 trillion in dept to fund current citizans recieving assistance?

Chuck Blahous
As long as we have a Social Security system, there will be costs no matter what we do. The Social Security Trustees have told us the cost of maintaining the current system without change. It is approximately $10.4 trillion, in present value. That is the extra revenue that the system would need to have on hand today, above and beyond all payroll taxes, to meet the gap between taxes and promised benefits.

A number of comprehensive proposals have been put forward, some by Members of Congress, others by the President’s bipartisan Commission to Strengthen Social Security. President Bush has not selected a specific reform proposal. Several of these proposals would fix the system permanently while considerably reducing the cost of sustaining the system under current law.

The current system would begin its “transition” from the black to the red in 2018. From that date onward, under current law, the current system would face a deficit that is growing worse with each following year. The President has proposed that we head off this event by beginning to invest now in the future of Social Security. We can do this for far less than the $10 trillion cost of sustaining the current system.

Mary, from Kyle, Texas writes:
Would it not make more sense to lift the income level of SSI Tax than to place more tax and take away more benefits from those who pay now? Same Tax rate whether it is a $1 income or $10 billion dollar income.

Chuck Blahous
We cannot tax our way out of the Social Security problem.

To explain why, let’s remember why Social Security has a problem. It has a problem because the number of elderly is growing faster than the workers that must support the Social Security system. In 1950, there were 16 people paying into Social Security for every one taking benefits. Today, there are slightly more than 3 workers to support each person on Social Security. By the time today’s young workers retire, there will be only two workers to support each person on Social Security.

The result is that the cost of paying Social Security benefits, taken altogether, is rising relative to the size of the overall economy. If we were to raise taxes, that could only buy some time – future generations would simply have to come back and raise taxes again.

Currently, we expect that by 2018, the Social Security system will permanently cost more each year than it collects in taxes. Even if we were to subject every penny of wages in America to the payroll tax, this would only delay that onset of permanent deficits by six years, from 2018 to 2024. We simply cannot solve the problem that way.

R.D., from Furman University writes:
Mr. Blahous, How do you address critics who say that the President and the administration is exaggerating the crisis in the Social Security System? Is there really a need to address Social Security right now?

Chuck Blahous
Thank you for the question.

There is a broad bipartisan agreement that action must be taken soon to fix the Social Security system.

The Social Security Trustees found in their 2004 report that the system is not sustainable under current financing arrangements, and urged that action be taken soon.

The Congressional Budget Office has also warned that Social Security is not sustainable under current law.

The General Accounting Office has found that the Social Security system faces substantial financing challenges, and that they will appear sooner than is apparent from the annual Social Security Trustees’ reports.

You may also recall that President Clinton called for Congress to “Save Social Security First” and devoted a year of public education to the need to strengthen Social Security.

It is simply not credible to argue that Social Security’s fiscal strains are distant or minor. The first Baby Boomers turn 62 in 2008. By 2025, there will be only 2.3 workers to support each person on Social Security. By 2018, the program will owe more in annual benefit obligations than it collects in annual taxes.

The problems facing Social Security have been long noted. The only thing different about this President’s message is his commitment to resolving these problems.

Mike, from Albuquerque, NM writes:
I am 56 years old. How will privitization improve my retirement benefits? It seems to me that those who will benefit the most are those who need it the least. Thank you.

Chuck Blahous
Thank you, Mike.

The first point I would make is that the President does not want to privatize Social Security. He wants to provide individuals with greater choice and control within Social Security. For those now on Social Security, nothing would change. For those who choose not to have a personal account, the traditional Social Security benefit would still be there for them. And even those who choose to have personal accounts would still draw benefits from the traditional Social Security system.

On your second point, you may be interested to learn that both the Social Security Administration and the General Accounting Office have performed studies of Social Security proposals and found that those who would gain the most from various personal account plans were the lowest-income participants. In the particular plans that they studied, the greatest gains of all would go to widows, largely due to the power of inherited assets from the personal accounts.

Bryan, from Roswell, GA writes:
Mr. Blahous, Many think of SS, as being something that cannot possibly be reformed. President Bush has taken this on reformation task. Should we expect a new form of SS, that will not have to be reformed again. Or just one that will enable it to be around only longer than what policy makers predict?

Chuck Blahous
Thank you, Bryan. Yes, the President has taken on a major task, precisely because he does not want to leave our children and grandchildren with unresolved problems. We very much want to have a Social Security system that does not need to be fixed again in the future. You will probably hear the President continue to talk about this goal in the weeks to come.

Matt, from Gilroy, CA writes:
How much to private companies stand to make with the possible privitization of Social Security???

Chuck Blahous
The President does not intend to “privatize” Social Security but to create personal ownership and choice within the Federal Social Security program. Because the Federal government would continue to operate Social Security, very little of the costs would be handled by private companies. As an example, consider the Thrift Savings Plan system of personal accounts that is available to federal employees. The costs of running this system are very low, and most of them are covered by the Federal government.

The Social Security Administration has estimated that administrative costs for a new system of personal accounts would equal only 0.3% of the balances in those accounts each year. Of this, the vast majority of expenses would be recordkeeping and basic administration, which would presumably still be handled by the Federal government.

Caleb, from Crawfordsville,IN writes:
Hello and good afternoon Mr.Blahous. My question for you is this: How often will you be meeting with the President to find ways to save social security for future generations as the baby boomers are retiring or getting ready to retire? Will these meetings focus on how to implement the individual personal acccounts as the President favors or will other solutions be brought forth so that there is just not one solution to this problem America will face in the coming years? Thanks and have a good new year.

Chuck Blahous
Thank you, Caleb. We will continue to meet on this very important issue. In the meetings I have attended, there have been discussions not only about the best way to set up and structure personal accounts, but also how best to fix Social Security as a whole so that it is strong and sound for our children and grandchildren.

Gary, from Madison, WI writes:
A big issue during the last Presidential election had to do with Social Security and what to do about it so that future retirees would have something to look forward to as far as a source of income. Now that President Bush is still in charge, how long do you think it will be before we see any action as far as his proposing to privatize social security to individual accounts where each person could manage their own "nest egg.?"

Chuck Blahous
The precise timetable for action is something that we will need to work out with Congress, but the President has made very clear that he will work hard to fix Social Security as soon as it can be accomplished.

The nature of the Social Security problem is such that the longer we wait, the tougher our choices become. By moving promptly and prudently, we can save Social Security for future generations.

Brady, from Port St. Lucie, Florida writes:
I'm 33 years-old and a public school educator. My question is, Will I have a Social Security benefit when I retire? How are the personal (Social Security) accounts going to help me?

Chuck Blahous
Brady, you are of an age where you have a lot at stake in the current Social Security debate. The current system, by 2018, will owe more in annual benefit payments than it is collecting in taxes. At that point, the government would need to make some tough decisions about how to keep full benefits flowing. Even if the government produced additional money from 2018-2042, then by 2042 the system would still become insolvent – at a time when you are 70 years old, and counting on benefits.

You will get a Social Security benefit, but we will need to make changes to the system in order to make sure that it remains sound during your retirement. One of the changes we want to make is to give you the opportunity to start putting some of your payroll taxes aside in a personal account in which you can build a nest egg for retirement.

Laura, from Johnson writes:
I think that raising taxes would help put more money into social security Why does the bush administration believe otherwords aboutit?

Chuck Blahous
In the past, Social Security taxes have been raised repeatedly. In 1937, the original tax rate was 2%. Because Social Security has needed to be shored up several times over the decades, the total rate has had to be raised time and again – eventually resulting in the 12.4% tax rate we have today.

Americans are collecting Social Security for longer and longer as lifespans lengthen in our country. Under our current system, this means that costs go up over time – rising faster than the economy as a whole.

What this means is that we can’t really fix Social Security by raising taxes. Because costs are going up faster than the tax base, future generations would simply have to raise taxes again.

President Bush wants the Social Security system to be fixed for good, and does not want to leave future generations with a situation in which they would face still further tax increases.

Christi, from Oklahoma City, OK writes:
Dear Mr. Blahous,I am a 27 year old who has been working since I was 16 and paying into a Social Security account. Can you please address what will happen to my funds if Social Security becomes privatized?

Thank you for your time.

Chuck Blahous
Christi, thank you for your question. Unfortunately, the way that the system is now, you do not truly have a Social Security account. The Social Security Administration keeps track of your name and your earnings record, but it is not saving any of that money in an account for you. Your Social Security taxes are now used, mostly, to pay benefits for those now in retirement. The remainder of your Social Security taxes, under Social Security law, goes to finance the current operations of the federal government.

President Bush is proposing to allow you to designate some of your Social Security taxes to be saved for you in a personal account, where you can build a nest egg for your own retirement. This would not be a “privatization” of Social Security, but would rather add an element of personal choice and control and savings to the current Social Security system.

Chuck Blahous
Thank you again for the opportunity to hear and to answer your questions, which were excellent. I hope you will all continue to follow and to participate in the unfolding debate over how best to strengthen Social Security for our children and grandchildren.