misty water-colored memories: of bare cupboards and demagogues

QUESTION: You've made Social Security reform the top of your domestic agenda for a second term. You've been talking extensively about the benefits of private accounts. But by most estimations, private accounts may leave something for young workers at the end, but wouldn't do much to solve the overall financial problem with Social Security.

And I'm just wondering, as you're promoting these private accounts, why aren't you talking about some of the tough measures that may have to be taken to preserve the solvency of Social Security, such as increasing the retirement age, cutting benefits or means testing for Social Security?

BUSH: I appreciate that question.

First of all, let me put the Social Security issue in proper perspective. It is a very important issue. But it's not the only issue -- very important issue we'll be dealing with.

I expect the Congress to bring forth meaningful tort reform. I want the legal system reformed in such a way that we're competitive in the world.

I'll be talking about the budget, of course. There's a lot of concern in the financial markets about our deficit, short-term and long-term deficits. The long-term deficit, of course, is caused by some of the entitlement programs -- the unfunded liabilities inherent in our entitlement programs.

I will continue to push on an education agenda. There is no doubt in my mind that the No Child Left Behind Act is meaningful, real reform that is having real results. And I look forward to strengthening No Child Left Behind.

Immigration reform is a very important agenda item as we move forward.

But Social Security, as well, is a big item. And I campaigned on it, as you're painfully aware, since you had to suffer through many of my speeches. I didn't duck the issue like others have done in the past. I said, "This is a vital issue and we need to work together to solve it."

Now, the temptation is going to be, by well-meaning people such as yourself and others here, as we run up to the issue, to get me to negotiate with myself in public. To say, you know, "What's this mean, Mr. President? What's that mean?"

I'm not going to do that. I don't get to write the law.

I'll propose a solution at the appropriate time.

But the law will be written in the halls of Congress. And I will negotiate with them, with the members of Congress. And they will want me to start playing my hand. "Will you accept this? Will you not accept that? Why don't you do this hard thing? Why don't you do that?"

I fully recognize this is going to be a decision that requires difficult choices. Inherent in your question is do I recognize that? You bet I do. Otherwise it would have been done.

And so, I just want to try to condition you. I'm not doing a very good job, because the other day in the Oval, when the press pool came in, I was asked about this -- the -- a series of questions -- a question on Social Security with these different aspects to it. And I said, "I'm not going to negotiate with myself. And I will negotiate at the appropriate time with the law writers."

And so, thank you for trying.

The principles I laid out in the course of the campaign, and the principles we laid out at the recent economic summit are still the principles I believe in. And that is: nothing will change for those near or on Social Security, payroll tax -- I believe you're the one who asked me about the payroll taxes, if I'm not mistaken -- will not go up.

The -- and I know there's a big definition about what that means.

Well, again, I will repeat, don't bother to ask me.

Oh, you can ask me, I can't tell you what to ask. It's not the holiday spirit.

(LAUGHTER)

It is all part of trying to get me to set the parameters, you know, apart from the Congress, which is not a good way to get substantive reform done.

As to personal accounts, it is a judgment essential to make the system viable in the out-years to allow younger workers to earn an interest rate more significant than that which is being earned with their own money now inside the Social Security trust.

But the first step in this process is for members of Congress to realize we have a problem. And so for a while, I think it's important for me to continue to work with members of both parties to explain the problem. Because if people don't think there's a problem, we can, you know, talk about this issue until we're blue in the face and nothing will get done.

And there is a problem. There is a problem because now it requires three workers per retiree to keep Social Security promises. In 2040 it will require two workers per employee to meet the promises. And when the system was set up and designed I think it was like 15 or more workers per employee.

That is a problem. The system goes into the red.

In other words, there's more money going out than coming in in 2018. There is an unfunded liability of $11 trillion.

And I understand how this works. You know, many times legislative bodies will not react unless the crisis is apparent, crisis is upon them. I believe the crisis is. And so, for a period of time, we're going to have to explain to members of Congress the crisis is here.

It's a lot less painful to act now than if we wait.

Yet anytime you and I question the schemes of the do-gooders, we are denounced as being against their humanitarian goals. They say we are always "against" things, never "for" anything. Well, the trouble with our liberal friends is not that they are ignorant, but that they know so much that isn't so. We are for a provision that destitution should not follow unemployment by reason of old age, and to that end we have accepted Social Security as a step toward meeting the problem.

But we are against those entrusted with this program when they practice deception regarding its fiscal shortcomings, when they charge that any criticism of the program means that we want to end payments to those who depend on them for livelihood. They have called it insurance to us in a hundred million pieces of literature. But then they appeared before the Supreme Court and they testified that it was a welfare program. They only use the term "insurance" to sell it to the people. And they said Social Security dues are a tax for the general use of the government, and the government has used that tax. There is no fund, because Robert Byers, the actuarial head, appeared before a congressional committee and admitted that Social Security as of this moment is $298 billion in the hole. But he said there should be no cause for worry because as long as they have the power to tax, they could always take away from the people whatever they needed to bail them out of trouble! And they are doing just that.

A young man, 21 years of age, working at an average salary...his Social Security contribution would, in the open market, buy him an insurance policy that would guarantee $220* a month at age 65. The government promises $127*. He could live it up until he is 31 and then take out a policy that would pay more than Social Security. Now, are we so lacking in business sense that we can't put this program on a sound basis so that people who do require those payments will find that they can get them when they are due...that the cupboard isn't bare?

And then, perhaps as early as March, they'll launch their biggest lift with the beginnings of a plan to reform Social Security and Medicare, the two entitlement programs that, even before the economy collapsed, were threatening the Treasury with bankruptcy. By any standard, it is a massive three-month agenda fraught with political risk. The key to getting it all done, Summers says, is entering into a "compact" with the country "that this isn't just government as usual throwing money at things." When Obama unveils his annual budget in late February or March, Summers promises that the President "is going to describe the kinds of approaches he wants to take to the entitlement problems that have been ignored for a long time." Some options might include delaying retirement, stretching benefits and lifting the cap on taxable earnings. Could one of these prevail? "Remains to be seen," Summers says.