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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.

John Snow
Secretary of the Treasury
April 15, 2005

John Snow
Hello, everyone, and welcome to Ask the White House. I know that Tax Day isn't anyone's favorite day of the year, but I'm awfully glad to be spending part of it with you, answering your questions on taxes and Social Security. Every American who pays taxes is paying a lower Federal tax bill today than they did before President Bush's tax cuts were enacted, so I hope that you find this April 15th had significantly less sting than some tax days you may remember. My great hope, and the great hope of our President, is that Congress will make those cuts permanent so that you can count on less painful tax days for years to come. Okay, let's get started; I'm looking forward to your questions.

Jared, from Grand Rapids, MI writes:
When are the Refunds going to be sent out.

John Snow
Jared, if you file electronically – something that I recommend doing – and use direct deposit, you can get your refund in two weeks or less. If you file with paper, particularly right at the deadline, the average refund time can be six to eight weeks.

Greg, from Wisconsin writes:
Filing taxes is still very complacated and time consuming. And I don't know how much money is spent running the IRS.Why prevents us from having a national sales taz? It would be nice to take home the money I earn, so I can decide how to spend it.

John Snow
Greg, these are great questions and some of the many issues that are being examined right now by the President’s Advisory Panel on Tax Reform.

While America remains known for its economic flexibility and dynamism, our tax code has grown larger, bulkier, more burdensome and lethargic with every passing year. The Internal Revenue Code and regulations are terribly complex, and overwhelmingly long at more than a million words. The code is so filled with loopholes, exceptions and lengthy explanations that individuals and businesses spend more than six billion hours every year on paperwork and other tax headaches. Some research places the total compliance costs of the income tax at roughly $130 billion annually – about 13 cents for every dollar in income tax revenues collected. Of this $130billion, individuals have born the brunt, spending about $85 billion trying to comply with our maze of a tax code. In fact, the average American spends around 25 hours preparing their tax return.

Imagine what this great country could do if we could get a few billion hours back… and a few billion dollars in lower compliance costs as well. And that’s why the President has asked that a bipartisan panel work together to come up with some options for tax reform. He has asked that the fine people on that panel be guided by the goals of increased fairness, simplicity and ease of understanding, and economic growth and job creation. The President has also asserted that any reform proposal should carry on the good traditions of recognizing the importance of homeownership and charity in our society.

The panel has held six meetings so far… two here in Washington and one apiece in Tampa, Chicago, New Orleans and San Francisco. They are hearing expert testimony at each meeting, and receiving a wide range of critiques and ideas from all over the country. They’re doing great work, and I am looking forward to receiving their recommendations by the end of July. You can find out more about their work – and what they’re hearing about your idea of a national sales tax – at

John, from AZ writes:
Why does the Federal Income Tax laws have to be so copliicated? Is it only to favor the rich and corporationa???

John Snow
John, the President believes that the tax code doesn’t have to be so complicated. That’s why he has tasked the Advisory Panel on Tax Reform with coming up with some options for tax reform, guided by the goals of increased fairness, simplicity and ease of understanding, and economic growth and job creation.

Katie, from Ames, IA writes:
I would like to know whether the White House regards the Social Security system as a social insurance program, or a retirement plan. And, could you please be a bit more specific about just what the aadministration proposes. So far, you have really proposed nothing concrete.

John Snow
Hello, Katie; thanks for your question! We definitely do not see Social Security as a stand-alone retirement plan – every American ought to plan for their retirement using personal savings and investment as well as participating in their employer’s retirement plan (a 401K, for example) if one is offered at their workplace. If your employer doesn’t offer a retirement plan or pension, IRAs are a good option for you. Social Security is more like the third leg of the retirement ‘stool’ – it was never intended to be the sole source of income for retirees, but more like insurance against poverty in retirement. Of course, we know that for many retirees Social Security is the sole source if income, which makes the need to preserve, protect and strengthen Social Security for every generation even more important.

I appreciate your question about a specific proposal. The President has laid out principles for reform – such as not changing benefits for those Americans 55 or older, not increasing the payroll tax rate and the creation of voluntary personal accounts so that younger workers can build a nest egg – but he has also asked that the American people have a dialogue, and that the Congress bring forward a variety of proposals. That dialogue is occurring and those proposals are coming forth, so great progress is being made toward a more specific plan to save and strengthen the system.

Bob, from Orlando, FL writes:
Would Social Security have been in such danger so soon if Congress had not started "borrowing" from the Social Security fund for general revenue expenses?

John Snow
Thanks for this excellent question, Bob. You’ve touched on an important point about Congress “borrowing” from Social Security. The President recently traveled to the Treasury’s Bureau of Public Debt in Parkersburg, West Virginia, where a filing cabinet filled with “IOUs” represents the Social Security “trust fund.” The fact that congress borrowed does not affect the cash-flow or insolvency dates of Social Security, because we do owe that money and we will have to pay it back. That said, the fact that the government has borrowed from Social Security to cover other government expenditures has certainly not helped our country from a macro-economic point of view… as Federal Reserve Chairman Alan Greenspan has suggested, borrowing from the trust fund meant that money was spent that could have been saved – and more capital savings leads to a more robust economy.

America’s changing demographics are at the heart of Social Security’s pending insolvency. Since the system is pay-as-you-go, the ratio of workers to retirees is critical, and it is in a steep decline that puts the system in jeopardy. For example, in 1950, there were 16 workers for every one person drawing benefits. Today, there are just over three workers for each beneficiary. By the time today's 20-year-olds retire, that number will drop to 2 workers for every beneficiary. That’s the reason why the government will begin to pay out more in Social Security benefits than it collects in payroll taxes by 2017, and by 2041 – when younger workers begin to retire – the system will be bankrupt. The longer we wait to fix the problem, the more expensive it becomes. According to the Social Security Trustees, every year we delay action increases the unfunded liability by $700 billion.

A final note, Bob, that your question reminded me of: Unlike the “trust fund” that exists today only as IOUs, personal retirement accounts would provide the ultimate lock box for your Social Security savings by keeping your money in your hands, not in the hands of a government who, unfortunately, will always find a way to spend it for you.

Collin, from White Plains writes:
If the Social Security system will run out of money in a few years, how will current recipients be affected

John Snow
Hi, Collin. Your question is a very important one and I want to be very clear: Americans who are 55 or older – that includes current and near-retirees – will not be affected by any reforms to Social Security. The system is solvent for these generations. That doesn’t mean, however, that the system’s demographic time bomb won’t keep ticking during the coming years. And although that ticking doesn’t put current beneficiaries at risk, it must not be ignored – we need to enact reform soon in order to save and strengthen the system for younger workers.

Kevin, from Hawaii writes:
Hello I recently read the proposal found on this website on Social Security reform. It seems like a justified and realistic plan under my initial reading. Why do you think that it is achieving such opposition? I would also like to be able to read more about it. Any direction would be appreciated. Thanks for your time.

John Snow
Hello, Kevin! It’s great to hear from a Hawaiian; you live in a very beautiful state. Thanks so much for your interest in Social Security reform; I’m glad you see the leadership and good sense in the President’s principles for reform, and I encourage you to also visit to learn more.

As the President often says, if fixing Social Security was easy, it would have been done by now. The President understands the challenges we face, but he believes it the responsibility of elected officials to fix problems, not pass them on to future generations.

Paul, from Donora, PA writes:
I am interested in receiving the full details on the president's social security reform plan. I have a liberal coworker I have been arguing with over several issues and I would greatly appreciate more ammunition when next we meet.

John Snow
I appreciate this question, Paul – I’m engaged in daily discussions on this topic myself, and I know how helpful it is to have good information. I think you’ll find to be a very informative website. Additionally, since no one explains the President’s vision better than the President himself, I’d recommend reading his speeches on the topic, which can be found at /infocus/social-security/map.html.

Paul, from Bristol, Conn. writes:
Why not leave Social Security alone for now, but offer private investment accounts to workers to supplement Social Security when they retire? We should change over gradually in phases as it is too big a change and too costly to do all at once. Also, the public would feel more comfortable and we would have more of their support.

John Snow
Thanks for this thoughtful question, Paul. You make an excellent point about gradual change, and the President shares your sensibilities on that issue. The ability to voluntarily redirect some of your payroll taxes into a personal retirement account – your own personal ‘nest egg’ – would change gradually, over the years, for the precise reason you cited. Change to a system this vast, and this important, must be done slowly but surely. That’s another reason why it is so important that the Congress make decisions on the details of reform as soon as possible; the sooner reform is enacted, the more time we’ll have for a fiscally safe, gradual transition.

Maegan, from Dardanelle, Arkansas writes:
Will there be any sort of social security for the generation born in 1985-1990?

John Snow
Hello, Maegan! Yes, Social Security will exist for today’s youngest workers. But its promise for those younger generations is weakening at this time. With people living longer and having fewer children, the solvency of the pay-as-you-go-system is at risk, no question. That’s why we need to enact Social Security reform – to strengthen the system for America’s children and grandchildren. With meaningful reform, younger workers and future generations could have a much brighter retirement future that includes voluntary personal retirement accounts – a ‘nest egg’ that belongs to the individual worker, not the government, and uses the power of compound interest to deliver a greater return on investment than the current system ever could.

Thomas, from Richmond, Virginia writes:
There does not seem to be any connection between private accounts and fixing social security. Why not just adjust benefits slightly and raise the ceiling on income applicable to the tax?

John Snow
Thanks for this terrific question, Thomas. We – the President and his Administration – believe that personal accounts are an integral part of any solution in order to make the system more fair for future generations, but you’re right – other changes will be necessary to achieve solvency for the program.

Although the President has not ruled out the option you mentioned, that does not mean that he has embraced it. Raising the “cap” on income that is subject to payroll taxes would still be a tax increase and would have adverse effects on job creation and the overall economy.

Elizabeth, from Boston Mass. writes:
Hi, Chuck I have a Question to ask you?Ihave disability type social security and I was wondering if that will be effeective

John Snow
Hello, Elizabeth! Allow me to reassure both you and Chuck: benefits will not change for those currently receiving them. Furthermore, the safety net of benefits for future generations of workers with disabilities is a top priority for the President in any reform scenario.

George, from Denton, TX writes:
It is my understanding that President Bush has established a federal tax commission. What's the purpose of the commission, who serves on it and what are they charged with doing? Also, are there any preliminary findings?

John Snow
On January 7, 2005, President Bush established a bipartisan Advisory Panel on Federal Tax Reform to recommend options for reform of our tax code that are fair, simple and pro-growth. Former Senators Connie Mack (R-FL) and John Breaux (D-LA) are the Chair and Vice-Chair of the nine-member Panel. The Panel must issue its recommendations by July 31st. For more information on the Panel, the Panel members and their work, please check out their website

Elaine, from Connecticut writes:
With all the hype around Social Security and the fact that its in financial trouble, the solution to me is so simple everyone pays social security tax on ever dollar they earn. Remove the cap. I pay on ever dollar I earn and I think everyone else should too no exceptions.

John Snow
Although the President has not ruled out removing the cap, doing so would be a tax increase and would have adverse effects on our overall economy and job creation. Of particular concern is the impact this approach would have on small-business owners who file their business income on individual income tax forms. Removing the cap would be an added tax on their business income, something to be very mindful of when you consider the fact that small business creates most of our nation’s new jobs.

George, from Seward, NE writes:
Can you please explain the advantage of bankrupting the country now to the tune of several trillion dollars now by privatizing future benefits now as a solution to the possible prospect of negative cash flows at some time in the indefinite future? Seems like ideology driving good sense to me.

John Snow
Thank you for this enthusiastic question, George. Please know that the only thing facing bankruptcy is the Social Security system itself – if we don’t do anything to save it! Fortunately, if we act now, we can both save and strengthen Social Security. We can shore up its promise to younger generations while preserving its benefits for current and near-retirees. No one is suggesting “privatizing future benefits;” the President would like to see workers have the opportunity to invest some of their payroll taxes in a voluntary personal retirement account that they would own and control within the Social Security system. Personal retirement accounts will actually pre-fund retirement benefits that the current pay-as-you-go system owes already. It’s like when someone prepays their home mortgage – sure you incur costs now but it reduces bigger costs down the road.

Jennifer, from Long Beach, California writes:
Although the current social security program may look weak in upcoming years, what makes the Bush Administration so certain that the proposed privitization of social security is the way to go for furture generations?

John Snow
Thanks so much for this question, Jennifer – it’s a good chance for me to provide some more information about the President’s vision, his hope for America’s youngest workers and future generations.

President Bush is not interested in “privatizing” the Social Security system. He wants everyone to remain in the system but would like to see it reformed in a way that continues to provide a safety net while also allowing workers to get a better return on investment from their payroll taxes. This would be done by investing a portion of their Social Security taxes in voluntary personal retirement accounts that would be fed by the power of compound interest; they would be wholly owned by the individual worker, not the government; and they would be a nest egg that could be passed on to loved ones.

Personal retirement accounts would be invested in a mix of conservative bond and stock funds. Workers would be permitted to allocate their personal retirement account contributions among a small number of very broadly diversified index funds patterned after the retirement program that Members of Congress and other Federal employees currently enjoy.

The accounts would also be protected from sudden market swings on the eve of retirement. To protect workers as they near retirement, personal retirement accounts would be automatically invested in the "life cycle portfolio" when a worker reaches age 47, unless the worker and his or her spouse specifically opted out by signing a waiver form stating they are aware of the risks involved. The life cycle portfolio would gradually shift the allocation of investments as the individual neared retirement so that it was weighted more heavily toward low-risk bonds. You can find more information on personal retirement accounts at .

Jennifer, the current structure of the Social Security system worked better when our country’s demographics were different, when we had as many as 16 workers essentially paying benefits for every retiree. Since that ratio has declined to just over three-to-one and will continue to decline to two-to-one (when today’s youngest workers retire), the system just won’t work as well as it used to. We can’t change our demographic reality, but we can update the system to give greater retirement options and hope to the youngest Americans, and beyond.

JOHN, from TEXAS writes:


John Snow
Hello, John! Your fellow Texan, President George Bush, shares your desire to make paying taxes simpler. That’s why he put together an advisory panel on tax reform and tasked them with coming up with some options for a new tax system. He has asked that the terrific people on that panel be guided by the goals of increased fairness, simplicity and ease of understanding, and economic growth and job creation. The President has also asserted that any reform proposal should carry on the good traditions of recognizing the importance of homeownership and charity in our society. You can learn more about the Panel and what they’re working on at

ADAM, from VALLEY AL writes:

John Snow
Adam, I’m awfully glad you asked… because the deadline to pay your Federal taxes is today, April 15th! It is the same day every year. If you can’t get your taxes done today (you can file electronically with the IRS or make sure that you mail them in time to be post-marked with today’s date), you’ll have to file for an extension with the IRS.

If you need help, The IRS web site – - is the fastest quickest, place to get forms and information. You can also call our toll-free help line at 1-800-829-1040 or visit an IRS Taxpayer Assistance Center.

We pay taxes because the government needs money to implement a sweeping variety of services and programs. Your tax dollars go toward everything from building new roads to paying the salaries of our men and women in uniform who preserve our freedom and protect us from threats. It’s very important to file and pay your taxes – on time and honestly. It’s the law, it’s the right thing to do, and it’s also less of a financial burden than it used to be, thanks to President Bush’s tax cuts. Thanks to those cuts, 44 million families with children will receive an average tax cut of $2,300; about 25 million small-business owners will save an average of more than $3,000 and 110 million Americans will see their taxes decline by an average of $1,716.

Michael, from Powell, TN writes:
I appreciate the President's efforts to cut taxes. Why is a tax cut good for the people?

John Snow
Thank you for asking, Michael… I really like your question, and I appreciate the President’s leadership on tax cuts, too. Tax cuts – especially across-the-board cuts like the President and Congress have enacted in recent years – are good for individuals because everyone gets to keep more of the money they earn. This also means that there is more money in the economy (money that would otherwise be in the government’s pocketbook), which nearly always leads to an increase in economic growth and job creation.

Indeed, the President’s tax cuts, combined with sound monetary policy, proved to be the right stimulus that our country needed for our country’s economic recovery and current outstanding growth.

The American economy has created over 3 million jobs since May of 2003. And while job growth can never be fast enough for those looking for work, the steady pace of job creation has been an unmistakable sign of an economy that has recovered from very tough times, and is now expanding.

Evidence of our economic health abounds: GDP growth for 2004 was 3.9 percent. The unemployment rate is down to 5.2 percent - lower than the average rate of the 1970s, 1980s and 1990s. Inflation, interest rates, and mortgage rates remain at low levels. Homeownership rates are at record highs.

Thanks again for your question, Michael!

James, from Daphne, Alabama writes:
Dear Mr. Snow, I am a high school senior, and I am currently writing a report about inequitable taxes and reform propositions. My question is, what are some of the propositions to reform inequitable taxes that are being considered, and what is the probability that one or more of these may go into effect? Thank you for your time.

Sincerely, James

John Snow
James, I hope you take some time to do some research at The President’s Advisory Panel on Tax Reform is doing great work on examining our current system of taxation, and exploring the ways in which we might improve it to be simpler, fairer and pro-economic-growth.

Daniel, from Lakeville, CT writes:
Hi Mr. Snow, I am a 15 year old very interested in politics and the economy. Why are there so many loopholes for the rich? I live in a pretty wealthy family. But shouldn't everybody pay their fair share?

John Snow
Hi, Daniel. You may not have had the responsibility of paying taxes yet, but let me assure you that honest Americans do pay their fair share more often than not. I am concerned, as you are, with the “loopholes” in the system. That’s one of the reasons the President wants to make the tax code simpler and easier to understand. I hope it comforts you to know that the outstanding employees of the IRS are working hard, every day, to ensure that taxpayers do pay their fair share and aren’t breaking the law to escape paying their full tax bill.

Daniel, the IRS is committed to striking a balance between catching those who would avoid paying and providing excellent service to all taxpayers. In fact, President Bush’s 2006 budget requested an additional $500 million for IRS enforcement activities. This represents a 7.8% increase in funding over FY 2005. The increase will provide additional resources to examine more tax returns, collect past due taxes and investigate cases of tax avoidance.

Americans who play by the rules and pay their taxes deserve confidence that others pay their fair share as well. Increasing enforcement not only catches tax cheats, but discourages others from avoiding paying their taxes.

It is also worth noting that, since the President’s tax cuts were enacted, higher income individuals are now paying a higher percentage of total individual income taxes. Those in the upper brackets are paying more of our nation’s share of taxes than they did before those cuts. Before the President’s 2001 and 2003 tax cuts, the top 1% paid 30.5% of individual income taxes. Now they pay 32.3%. Before the cuts, the top 10% paid 62.6%. Now they pay 64.8%. And on the other end, the bottom 50% paid 4.1% of all individual income taxes before the cuts, and now they pay 3.6 %. Which means that taxpayers that rank in the top 50% pay 96.4% of all individual income taxes.

Brandon, from Houston, TX writes:
Mr. Snow, For the sake of the nation's prosperity, is the Advisory Panel on Federal Tax Reform considering the overriding principle of taxing the unproductive (and the wealthy) more heavily than others? Targeting economic stagnancy at the source seems a better path to growth than a focus on shifting to a sales tax or simplifying the income tax.

John Snow
Thanks for this interesting question, Brandon. President Bush appointed the Panel to develop options to reform our tax code that are simple, fair, and pro-growth. It is a big challenge, and the Panel will be required to make difficult choices, but I am confident they will present options to ensure our tax system will keep pace and help expand America's growing, dynamic, and changing economy.

Annette, from Chicago writes:
Dear Secretary Snow: Will individuals who were BORN BEFORE 1955 ("Baby Boomers") be EXEMPT from the upcoming changes to the SOCIAL SECURITY RETIREMENT PROGRAM??

John Snow
Thanks for this question, Annette, it’s a very important one. It is actually those individuals who were born in or before 1950 who will be exempt from any changes. Anyone who is 55 years old or older today need not be concerned with their own benefits, for they will remain unchanged. However, people in that age group should absolutely be involved in the terrific national dialogue that we are having on this critical issue. The President knows that current and near retirees have an invaluable perspective on the Social Security reform, and that they want their children and grandchildren to have a safe, secure retirement.

As the President discussed in his State of the Union Address, for those younger than 55 today, but middle-aged, changes will be made gradually with age, so that those closer to retirement, and with less time to accumulate assets in their personal retirement accounts, will experience smaller changes than younger workers and future generations.

Rodney, from Laurel, MD writes:
Thanks Sec. Snow for this forum. As someone in their early 30s, I'm excited about more options for using more of my money and putting it where I think best.

Two questions related to that - how is the Tax Reform panel progressing, I understand they have a pretty tight deadline (5 more months or so), and do you see their efforts tied in at all wSoc. Sec reform?

John Snow
Hi, Rodney. I’m glad to hear you’re interested in saving and investing for your future. The President is working to make sure that your opportunities to do so increase – and you’re right, saving and investing is impacted by both Social Security and tax reform. On January 7, 2005, President Bush established the Advisory Panel on Federal Tax Reform to recommend options for reform of our tax code that are fair, simple and pro-growth. You are absolutely right; the deadline to issue their recommendations to me is July 31st, and they have been working hard, and making good progress - they have held several meetings and issued a statement--check out their website:

The Panel is focusing on tax reform, not on Social Security reform, but there is a terrific national dialogue on Social Security that I hope will lead us to a day when you can save some of your payroll taxes in a voluntary personal retirement account.

Photo courtesy Department of the Treasury

Walt, from Naples, FL writes:
Have you paid a visit to the duck who has nested outside your building? Any ducklings hatched yet?

John Snow
Most everyone here at the Treasury Department – myself included – has visited the mother duck who I’m told has many nicknames, ranging from “Quacks Reform” and “T-Bill” to “Duck Cheney.” The duck is observed by hundreds of official visitors and tourists who walk down Pennsylvania Avenue every day. She has created quite a stir by choosing this prestigious – and very public – address as the location for her nest, and she has appeared on every major television network as a result. I’m pleased to say that her visitors have been very respectful of the job she is doing: the warming and care of nine eggs, which we expect to hatch with ducklings sometime around the end of this month. Last week, returning to the office after giving testimony on Capitol Hill, I was able to visit the duck and her nine upcoming “de-duck-tions.”

John Snow
Thanks, everyone, for all of your terrific questions and comments. I'm already looking forward to our next conversation on Ask the White House!

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