US President George W. Bush promised Monday to reform the overburdened Social Security system, telling lawmakers a "crisis is upon them" and they must act. The US president told a news conference that he was determined to "fix the social security system for our children and our grandchildren."
Over the longer term, the US Social Security system faces a huge gap between its financing and the long-term benefits it promises to pay to an impending wave of baby boomers. "That is a problem. The system goes into the red. In other words there is more money going out than coming in 2018. There is an unfunded liability of 11 trillion dollars," Bush said.
"I understand how this works. You know, many times legislative bodies will not react unless the crisis is apparent," he added. "The crisis is upon them."
Bush has proposed fixing the system by letting younger workers put some of their Social Security payroll contributions into "personal savings accounts" for their own pensions.
The problem is that any money diverted into personal accounts is not available for today's retirees and disabled, leaving a short-term financial gap estimated by some analysts at up to two trillion dollars.
The White House has indicated it would borrow that money from the markets rather than raise payroll contributions or taxes.
Bush said the personal savings account had three key benefits: it encouraged an "ownership society; boosted savings, which could be used by entrepreneurs; and enabled people to pass on the assets as they choose. The president acknowledged, however, he had a tough task ahead to convince doubters.
"For a period of time we are going to have to explain to members of congress the crisis is here."
Bush also renewed his promise to halve the budget deficit.
"America's economy is on solid footing," he said. Early in 2005, Bush said he would submit to Congress "a budget that fits the times."
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