Bush says, "I've touched it!"

"I'm sure there are some, when they heard the State of the Union, if they listened to it, that said, why is he spending so much time on what had been -- used to be called the 'third rail of American politics?'" Bush told the audience. "That means, if you touched it, you were politically electrocuted. I guess that's what it meant."

We could give it all back to you and hope you spend it right. (Applause.) But I think -- here's the problem. If you don't spend it right, here's what's going to happen. In 2013 -- that's just 14 years away -- taxes people pay on their payroll for Social Security will no longer cover the monthly checks. So we have to get into the Social Security trust fund, the savings account. By 2032, it will be gone. After that, if we haven't done something, we can only pay a little over 70 percent of the benefits. By then, the cost of living will be higher and it will be devastating.

Even before that, by 2010, the Medicare fund will run out of money. Why? Because the fastest growing group of people -- this is a high-class problem, this is a high-class problem, we should be so lucky to have only problems like this -- the fastest growing group of people in America are people over 80. And I hope to be one some day, and so do you, right? (Applause.) And so does -- I hope, every child in this audience will live to be over 80. The kids in this audience actually will have a life expectancy of about 85 years if medical science keeps advancing.

But the older you get, the more you need a doctor, or the more you need drugs or the more you need something just to kind of get through the day -- I'm finding that out already. (Laughter.) Everything kind of hurts when it's cold and you've got to stretch your legs more. So that's going to happen by 2010.

So what I said last night is not as popular as what others can tell you. Others can say, we've got this surplus now, I just want a big tax cut, I'll give it back to you, you'll figure out what to do with it. But I believe if we save 60 percent of this surplus for Social Security, here's what we can do. We can make the trust fund all right to 2055. We can protect Social Security for 55 years. (Applause.) We have a list of other options that are all a little controversial, but if we can get the Republicans and Democrats to hold hands, we could do it. It wouldn't hurt anybody very much. They're really good things for the program over the long run.

And if we did that, we could protect Social Security for 75 years and we could reduce the poverty rate among elderly women on Social Security -- they're twice as likely to be poor. And we could remove the earnings test which now limits what seniors on Social Security can earn for themselves. So I think that's a good use of the surplus that will help our parents, our children, our grandchildren. (Applause.)

Now, same thing with Medicare. If we just save one-sixth -- one in very $6 of this surplus -- for 15 years, and set it aside for Medicare, then we save Medicare to 2020. Then if we can get the Republicans and Democrats together -- and in March we're going to have a report from a bipartisan commission that will start the debate -- we can make a few other changes, save until 2020, and begin to provide for prescription drugs; it's the single, biggest need that senior citizens on Medicare have. (Applause.)

Now, let me tell you what else you'll get. You're going to have everybody say that government doesn't know how to spend this money. Look, folks, Social Security and Medicare work. I'm not talking about spending this money, I'm talking about saving it.

Now, here's what I think about it. This is the other thing I want you to understand. If we save three-quarters of this surplus for 15 years only, to solve Social Security and solve Medicare well into the 21st century, what else will happen? We will, by holding this money -- we've got to do something with it, what do you do with this money? You buy back the privately- held debt. We will be reducing the debt of the country. We will take the debt of America in relationship to the size of our economy, the level of debt held by the public, to its lowest level since before World War I in 1917.

Now, why should that matter to you? You say, "Fine, Mr. President, give me the money, I'd rather have a new car. I don't care about World War I. Why does that matter?" Here's why it should matter to you. If we keep driving the debt down, then you will keep interest rates down, you will keep home mortgage rates low, you will keep credit card interest rates low, you will keep the interest rates that you pay on your car payments low, you will keep more investment coming in to Buffalo and Erie County, you will have more jobs here. (Applause.) And that's something we have to do together. It will protect us.

You see all this financial upheaval around the world. That's because these countries, their budgets are out of balance, and if people run off with their money, they have to put their interest rates through the roof just to get the money to come back. If we start paying down on our debt a little bit, which I remind you, we quadrupled the debt, quadrupled the debt between 1981 and 1993, if we just started paying down on it a little bit, saving this money, protecting Social Security and Medicare, then you would be somewhat more protected from these global economic events and long after I'm gone from the White House, you would have stable interest rates, affordable lives and the knowledge that investment would come into Buffalo and Erie County to build a better future. So I hope you will support what I have advocated last night. (Applause.)

Now, let me just say two other things I think we ought to do to deal with the aging of America that help not just the elderly, but the rest of us. Number one, Social Security was never intended to be the sole source of income. Even when President Roosevelt signed it, he said we need more pensions, we need more private savings. But a lot of people retire today and don't have any.

And a lot of you young people today, I don't know how many people, the young people I talk to in their twenties or late teens, or even up to their early thirties who say, "You know, this is not going to be enough." Last night, I proposed setting aside more than 10 percent of the surplus to actually give people an incentive to save, a targeted tax cut to say, if you will set up this universal savings account, a USA account, the government will give you, in effect, a tax cut -- we will match the money in your savings account and you can invest it however you want for your own retirement. (Applause.)

And if you have -- now, this is very important. And very low-income, working people who have great difficulty saving, it takes every penny they've got to put clothes on their kids' back and pay the utility bills and the rent and make the car payment, we have a provision in our plan to give extra help for those least able to save. I want every American to have a savings account and have a part of this country's wealth. If everybody was a part of the wealth, you would see the income graph shrinking instead of growing, and that's what this is about. (Applause.) This is a good way to have a tax cut because it's a tax cut that benefits you today and tomorrow and 10 years from now and 30 years from now.

So let me also say, when you hear the tax cut debate, remember: We've got tax cuts in our plan, a $1,000 tax credit -- that's a $1,000 tax cut for long-term care, for seniors, for disabled people, for ailing people or the families that care for them. That's one of the biggest problems families have today. And with the aging of America, it will get bigger and bigger. We ought to support and give people a tax cut for long-term care.

We ought to have tax cuts for child care, including as was said earlier, for people who provide care by being stay-at-home parents for very young children. We ought to have these tax cuts. We ought to give people tax incentives to deal with our environmental problems. Every one of the tax cuts that are in my budget we have paid for so we can keep the budget balanced, keep the surplus coming and deal with the long-term problems.

So I'm sorry if I made the atmosphere too serious. We've had a lot of fun today. But I want you to think about this. We cannot afford to squander this moment. When have we ever had this many resources, this many things going right at one time in this country -- it has been a long, long time. We have to make the most of it. We have to look at the long-term challenges facing America. (Applause.)

So I ask you to think about this. I ask you to talk to your friends and neighbors about it. When people come out and disagree with my approach, listen to them and sit down and have a discussion about it. But you just remember this: We've been in debt for 30 years. And for the 12 years before I became President, we were so deep in debt we couldn't even think about the kind of money we've invested in Buffalo for police on the streets, to help more housing projects, people have houses, to deal -- all the things that have been done. And we are out of debt now, but we have a big responsibility now to think about that long-term challenges.

This country is going to change in a breathtaking way. We're on the verge of finding cures, or preventions for diseases from Alzheimer's to Parkinson's to arthritis to all kinds of cancers. I think it will happen probably in my lifetime. There are children here in this audience who either they or their contemporaries will be walking not on the moon, but on Mars. This world is going to change. (Applause.)

And we have to do our very best to prepare. So I will say again -- it may sound good if somebody says, this is your surplus and we ought to give it back to you. But you ought to ask yourself, what's America going to look like 10, 20, 30 years from now? How are all the families going to deal with the retirement of the baby boom generation? How are we going to deal with our responsibilities for the medical care of our parents through Medicare? And can we keep interest rates low and the economy going?

If you like this improving economy, what I'm trying to do is to give you a way that will maximize the chances that we will have a strong economy for the next 10 to 15 to 20 years and prepare for the aging of the baby boomers.

I hope you will support it. I thank you for one of the great days of my presidency here. God bless you. (Applause.)

That's because Clinton wasn't talking about personal savings accounts like Bush is. Clinton was talking about putting the surplus into a savings account, which became known as a lockbox.

Too bad the surplus is gone.

I proposed setting aside more than 10 percent of the surplus to actually give people an incentive to save, a targeted tax cut to say, if you will set up this universal savings account, a USA account, the government will give you, in effect, a tax cut -- we will match the money in your savings account and you can invest it however you want for your own retirement. (Applause.)

"I've touched it," the president added. "I touched it in 2000, when I campaigned here and around the country; I touched it in 2004; and I really touched it at the State of the Union, because I believe we have a problem."

"I'm sure there are some, when they heard the State of the Union, if they listened to it, that said, why is he spending so much time on what had been -- used to be called the 'third rail of American politics?'" Bush told the audience. "That means, if you touched it, you were politically electrocuted. I guess that's what it meant."