FOR IMMEDIATE RELEASE April 05, 2005

CONTACT: Brendan Daly/Jennifer Crider 202-226-7616

Democratic Leaders Pelosi and Reid Urge President Bush to Pay Back the Social Security Trust Fund

Today, Senate Democratic Leader Harry Reid and House Democratic Leader Nancy Pelosi sent a letter to President George W. Bush urging the President to publicly express his commitment to paying back the Social Security Trust Fund, noting such a commitment would ensure Social Security’s solvency for decades to come.  While the President travels to West Virginia to visit the Bureau of Public Debt, the Democratic Leaders urged the President to keep the government’s obligation to America’s workers who have paid into the Trust Fund for years and fully expect to receive their benefits.

The Leaders wrote, “We are writing today to urge you to publicly express your commitment to pay back the Social Security Trust Fund for all Social Security payroll taxes diverted for other purposes.”

The Leaders also questioned the wisdom of statements made by the president and members of his administration that there is no Trust Fund and that the government may not meet its commitment. 

“It is simply wrong to suggest that the Social Security Trust Fund does not exist, or that the securities held by the Trust Fund are merely pieces of paper.  For a President to even suggest that the federal government might, for the first time, default on a security backed by the full faith and credit of the United States unnecessarily misleads American workers about the health of the Social Security program.  Just as significantly, these statements could raise needless doubts among American and foreign investors about the United States’ willingness to meet its fiscal obligations.”

The Democratic Leaders again expressed their commitment to working with the president to strengthen Social Security.  By first doing no harm, paying back the Trust Fund and working to increase savings, Democrats are ready to work together to find ways to ensure Social Security will continue to be the most successful social program ever created.

A copy of the letter is below:

April 5, 2005

President George W. Bush

The White House

Washington, DC  20500

Dear President Bush:

We are writing today to urge you to publicly express your commitment to pay back the Social Security Trust Fund for all Social Security payroll taxes diverted for other purposes.  This would ensure Social Security's solvency until 2052, according to the non-partisan Congressional Budget Office. 

As you know, as a result of bipartisan legislation signed by President Reagan in 1983, Social Security has been accumulating huge annual surpluses in preparation for the retirement of the Baby Boom generation.  American workers were promised that if they paid payroll taxes beyond those required to pay for current benefits, the surpluses would be invested in securities backed by the full faith and credit of the United States.  These securities would be redeemed to pay guaranteed benefits as the baby boomers retired. 

Despite this commitment, statements by you and other members of your Administration have raised questions about whether the government will honor its Social Security obligations. 

Just last week you said:

            "By the way, we don't have a trust in Social Security...what happens is we take your money, we pay money out for the promises for those people who have retired, and if we've got anything left over, we spend it on things other than Social Security....And what's left are a pile of IOUs, paper."  [Cedar Raids, Iowa; 3/30/05]

This type of statement is highly misleading and dangerous.  It is simply wrong to suggest that the Social Security Trust Fund does not exist, or that the securities held by the Trust Fund are merely pieces of paper.  For a President to even suggest that the federal government might, for the first time, default on a security backed by the full faith and credit of the United States unnecessarily misleads American workers about the health of the Social Security program.

Just as significantly, these statements could raise needless doubts among American and foreign investors about the United States' willingness to meet its fiscal obligations.  This has potentially broad ranging and damaging implications for our economy.

It is especially unwise to raise doubts about the full faith and credit of the United States at a time when the federal government is running historically large and unsustainable deficits.  These deficits are forcing the U.S. government to borrow hundreds of billions of dollars from foreign governments and investors.  If these investors lose confidence in U.S. securities, Americans will be forced to pay higher interest rates to service our growing debt.

Today, as you visit the Bureau of Public Debt, you have an excellent opportunity to publicly commit yourself to our government’s moral and legal obligation to pay back the Social Security Trust Fund. We urge you to commit to paying back every Social Security dollar that has been used for other purposes and hope that you will then agree to work with us on a bipartisan basis to address the challenges that Social Security faces many decades in the future. 

We look forward to your earliest reply.

Sincerely,

HARRY REID                                      NANCY PELOSI

Senate Democratic Leader                    House Democratic Leader

“ Democrats are united in presenting a New Direction for America, one that will make our nation as strong as its people, one that brings opportunity, security, and prosperity to all Americans. ”

Democratic Leader Nancy Pelosi