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For Immediate Release
Office of the Press Secretary
February 3, 2005

Press Gaggle by Scott McClellan
Aboard Air Force One
En route Fargo, North Dakota

11:15 A.M. EST

MR. McCLELLAN: Good morning to everybody. Let me run through the day first, then I'll get to questions.

The President spoke with Prime Minister Koizumi this morning. This was a call the President initiated. They talked about the successful election in Iraq and the way forward. They also talked about the importance of moving forward on the six-party talks with North Korea. And they talked about ways to build upon what is already a strong relationship between the United States and Japan.

And then following that, the President had his usual briefings. And he went to the Prayer Breakfast, as you all are aware.

When we land in Fargo, the Freedom Corps greeter is Fran Rickers, who has volunteered since 1977 at the Fargo Veterans Affairs Medical Center. Then the President will participate in a conversation on Social Security. And the conversation participants -- we'll get you the list -- but will include a university finance professor, and it'll include some individuals who are concerned about the problems facing Social Security. It'll include a couple of younger workers and parents and a mother, I know, of some children who are, I believe, in their 20s now. And we'll get you that information.

And then following that, at the next stop in Great Falls, Montana, the President will be greeted by Char and Roy Brady, they have volunteered with Cascade County Retired Senior Volunteer Program -- RSVP is the acronym. And they both have volunteered with that organization for a number of years. And then in the conversation there in Montana, again, a university finance professor will be present, as well as some -- several citizens who are concerned about the state of Social Security.

And let's see if there is any -- well, we'll get you the list. That will include a grandmother, as well -- no, a grandfather, as well, who has a number of grandchildren -- 25, according to what I have. So obviously looking at this from a context of what we can do to make sure the system is better for our children and grandchildren.

Let's see. Oh, in that conversation, too -- at the end of that conversation, after he participates in it with those individuals, I expect that he'll be -- similar to like he did in some events last year, where he'll take some questions from the audience, as well, in that one. Then we're overnighting in Omaha.

A couple of other things. On Tuesday, the President will make remarks at the Detroit Economic Club. I just want to update that to the schedule. Today, I think at 11:30 a.m., we have a conference call -- it's going on at 11:30 a.m. eastern, so we won't be on it, but everybody on the ground will be able to participate -- on some of the new initiatives the President outlined last night.

And, finally, there is a story in The Washington Post this morning, which we will put some paper out correcting the record about that story.

Q What story --

MR. McCLELLAN: It was the story that said that individuals investing in personal accounts will have to return money to the government, the money that they invest in those personal accounts. The story is wrong. Individuals get to keep everything they set aside in personal accounts, plus the increased rate of return they'll realize on their investment. So to suggest otherwise is wrong. It is the individual's account and the government cannot touch it -- and the article suggested otherwise.

Q -- that reporter's report?

MR. McCLELLAN: I just wanted to mention that, because it was wrong and there is some comments from people in the article suggesting that our plan was something that it is not.

Q Which lawmakers are on the plane? And does the President feel as if he has persuaded any Democrats with his speech last night?

MR. DECKARD: Senator Conrad and Senator Burns. I don't believe there is any House members, but I'll double-check on that.

MR. McCLELLAN: We'll get you the list off the schedule in just a second.

Q Does the President feel as if he's able to persuade Democrats last night with his speech?

MR. McCLELLAN: Some Democrats I don't think necessarily needed persuading about the need to strengthen Social Security. You have people like Congressman Boyd, who I've talked about recently, who has already signed on to legislation to address Social Security's -- the insolvency facing Social Security.

Q He's the only one in all of Congress, right? The only Democrat?

MR. McCLELLAN: I don't know that I would describe it that way.

Q But --

MR. McCLELLAN: It's early in the process, first of all. But the President today is going to continue to talk about the serious problem facing Social Security for future generations. He'll talk about how the system is going insolvent. And he'll hear from these individuals about why they believe it's important to act now to fix that problem. And the President is directly -- speaking directly with the American people about the need to act this year to strengthen Social Security, because it gets worse over time.

And the President made it very clear last night in his remarks that we have to have an open and candid discussion about the serious problem facing Social Security, and that he welcomes all ideas in this discussion. And we should be focusing on solutions and ways we can work together to address this problem and make Social Security permanently sound.

Q Scott, will the President be talking about solutions today, or is this still about hearing from people to define the problem?

MR. McCLELLAN: I think you'll hear both. I expect you'll hear both. I mean, he talked about some ideas for making Social Security permanently sound and strengthening it for younger workers, so that they can realize something close to what Social Security is now promising, but cannot deliver.

Q How open and candid will this actually be? How many participants oppose what the President is doing? Is it every single participant --

MR. McCLELLAN: I'm sorry?

Q Is every single person, both in the audience and on the panel, are they all supporters of the President's plan?

MR. McCLELLAN: I don't know. There are several -- at the first event I think there are a few thousand that will be there. I imagine the second event is also --

Q The first event, the people that are speaking --

MR. McCLELLAN: -- a number of people. But these are events like we do other places --

Q -- all support him?

MR. McCLELLAN: They're ticketed events; people distribute tickets to individuals in the community. So I'm sure you'll have people from the community. But I don't think you could describe it that way.

Q But those on the panel that are speaking at the first event -- do all of them support the President's plan?

MR. McCLELLAN: You'd have to ask those individuals. Do they support the President's plan? I think they -- I think that these are individuals that understand that there is a real problem facing Social Security. That's what we're trying to highlight in these events, is the problem facing Social Security and the need to act to address it this year.

Q When will the President start talking about how to address the funding shortfall? He's talked a lot about private accounts --

MR. McCLELLAN: He talked about some ideas that he feels -- that he believes should be on the table and that we should discuss. I think, again, if you go back and look at the first term, we were able to accomplish many big things. This is a big thing, too -- taking on and strengthening Social Security. And the President recognizes that it is a difficult task, and that's why he believes it's important to approach this in a bipartisan way, and that's the message he sent last night in his State of the Union remarks.

He believes it's important to look at all ideas that can address this growing problem, that it is only getting worse over time. He talked about how in 2018, the system will be paying out more than it's taking in. And he talked about how Social Security has not kept up with changing times. It was designed for another era, and it served an important purpose, and he wants it to continue to serve an important purpose for all Americans. The problem is that -- it's fine for those at or near retirement today; it's working fine. But it's for our younger workers that it faces serious challenges, and we shouldn't be passing on the problem to them and letting it get worse, because the options become much fewer if you let it grow over time.

Q In terms of how the plan is structured, if personal accounts are part of the solution, an important part of the solution, why wait until 2009 to begin phasing them in?

MR. McCLELLAN: For the reasons the President stated last night, and that we've stated previously, so that younger workers can prepare for the day when they will be able to, if they so choose, invest their payroll taxes, part of their payroll taxes in personal retirement accounts. The President believes that's the best way to proceed forward for addressing this issue, and do so in a fiscally responsible way.

Q Haven't you said that's irresponsible? Haven't you said that every year that we wait, it costs an extra $600 billion to fix the system?

MR. McCLELLAN: That's why we need to act this year. Yes, every year --

Q -- this year, so it looks a little rosier on the budget side?

MR. McCLELLAN: -- because personal accounts are part of a comprehensive solution for strengthening Social Security. But it takes more than just personal accounts to find a comprehensive solution that makes Social Security sound, permanently sound, as the President described last night. And that's why he wants to act this year.

But the full, comprehensive plan has not been agreed to at this point. The President is very much reaching out and saying, I welcome ideas. There are a number of ideas that have been proposed by people on both sides of the aisle. He highlighted some of those ideas last night. He said, these are on the table, let's discuss these ideas and try to find a solution that is bipartisan and that permanently fixes the system.

Q Was the President upset last night --

MR. McCLELLAN: One second. But you are correct, as we pointed out, that each year we wait to act, it's going to, according to the Social Security trustees, add $600 billion to the cost, and each year after that, starting next year, and then each year after that, it's another $600 billion or more.

Q Doesn't this also allow you guys, by starting in 2009, and then phasing it in, to then use a 10-year budget number that really masks the true cost of it?

MR. McCLELLAN: That's the personal account -- that's the personal accounts that we're talking about.

Q Personal accounts, isolating on that. If you go beyond that 10-year time frame, the budget frame, by phasing it in. You guys lower the cost of this, just the personal accounts. That next 10 years, when this thing is fully phased in, isn't that where we're going to see a humongous surge in the cost of the transition costs?

MR. McCLELLAN: It's interesting, because there were some that -- I think the best way to describe it is -- a couple things, I'm going to come to that. But first of all, we have to keep in mind the choices facing us to address Social Security. We can stay with the status quo, and younger workers are going to face massive tax increases or massive benefit cuts, or we can fix the problem, and help younger workers realize a greater rate of return on their own payroll taxes, and give them some ownership in it. That's what the President believes we ought to do, because he believes we were elected to solve these problems, and not pass them on.

Now, in terms of the cost issue relating to personal accounts, personal accounts don't add any additional cost to the system, because the obligation for the government goes away. But it does allow younger workers to realize a greater rate of return.

Q But --

MR. McCLELLAN: Well, moving some of those costs forward is what you're referring to, because it will bring down the unfunded liability facing Social Security, which the trustees put at nearly -- well, $10.4 trillion to permanently fix it. But you have to look at the full, comprehensive plan for permanently fixing Social Security to get into those details. And right now, those are issues we're discussing with members of Congress about how we go about doing that, because that will impact those projections, and what those costs would be.

Q What about the transition costs that figure in that next 10 years, and then the first 10 years --

MR. McCLELLAN: The cost of inaction is far greater when it comes to Social Security. And like I said, you're bringing some of those costs forward. It's not adding -- personal accounts do not add to the overall cost of Social Security. And it brings some costs forward. It's not --

Q But I'm not talking -- in the short term, it's going to cost people more in the form of higher deficits, especially in that next 10-year time frame.

MR. McCLELLAN: The unfunded liability is more than $10 trillion facing Social Security right now. And that's why the President believes we need to address this issue, and make it permanently sound, so you do away with that unfunded liability. And that's what this is about, and making it work better for younger workers, and letting younger workers realize the same kind of returns that we're seeing at the federal level through the Thrift Savings Plan which the President talked about last night.

Q The President said very little about --

MR. McCLELLAN: I'm sorry, one last thing on Jim's point that I wanted to mention. You know, there is a lot of -- there is some partisan spin out there saying that this plan was going to cost -- the President's plan on personal accounts was going to cost $2 trillion over the next 10 years. People were saying what they were against and opposing something before it had even been announced. The President believes we ought to be working together to find solutions and focusing on what we're for, and --

Q But what --

MR. McCLELLAN: Hang on, I'm coming -- no, no, hang on -- and putting forward ideas for solving the problem. And that's the spirit in which the President is working. This is early in the process, and we recognize there's going to be a lot of posturing early in the process. We've seen that on other issues -- other big issues that we've worked to tackle, as well. And we've been able to accomplish great things through the President's leadership. He's going to lead on this issue, and for people to go out and suggest that -- again, try to suggest costs at this point beyond that 10-year amount, it is just wrong, because --

Q But --

MR. McCLELLAN: Wait, no --

Q -- I'm saying, well, look at the Social Security Trustees report. You look at 10 years and this thing wasn't phased in, those numbers that everyone's talking about might actually look like, wow, they were dead on.

MR. McCLELLAN: No, the numbers they were talking about were, they cost -- no, no, let's be clear, were talking about that it would be $2 trillion over 10 years. That was reported a lot, based on what people -- based on what some people were saying. The $2 trillion number was used an awful lot, and we worked on a plan that was going to be phased in. We felt that was the best way to approach this and address it.

Q But it would be over a trillion dollars, yes or no?

MR. McCLELLAN: Can I finish?

Q You're saying --

MR. McCLELLAN: You have to look at what the overall, comprehensive solution is for addressing the fiscal problems facing Social Security to get into those assumptions. And we're still working with Congress on those matters. But, no, answer my question, isn't that what people were saying? A few were going out there and trying to use partisan spin to suggest that it was going to be $2 trillion over the next 10 years, and that's just not the case.

Q The President said very little about North Korea in his speech, and people are contrasting that to three years ago when he said North Korea was part of an "axis of evil." Is he more hopeful of restarting the talks now? Is there any reason to be more hopeful? You mentioned the call he had with Koizumi.

MR. McCLELLAN: We will see. That depends on -- in part, on North Korea's willingness to come back to the six-party talks. All nations in the region are sending a unified, clear message to North Korea that it needs to end its nuclear weapons program, that -- all parties are saying that they want a -- in the region are saying, we want a nuclear-free peninsula.

And so everybody is sending a clear message to North Korea. We put forward a practical, detailed proposal for resolving the nuclear issue when it comes to North Korea, at the last round of talks. North Korea has sent some indications that they want to come back to the talks. We'll have to see how serious they are by the actions they take. But I think all parties are urging North Korea to come back to the talks, so that we can talk about how we move forward in a substantive way on the proposal that we put forward at the last round of talks.


MR. DECKARD: Governor Hoeven, Senator Kent Conrad, Senator Burns and Congressman Rehberg.

MR. McCLELLAN: The President has been visiting with them for most of the flight.

Q Is Senator Conrad going to have any part in the formal program of the first event?

MR. McCLELLAN: I don't think any of these have any formal role, I mean, other than the President probably recognizing them.

Q He'll go to the first event, or he'll go to the --

MR. McCLELLAN: I think -- do you have the schedule there? He's scheduled to go.

END 11:35 A.M. EST

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