In His State of the Union Address, President Clinton Put Forward His Framework To Save Social Security Now, While Meeting America's Challenges for the 21st Century. The President and Vice President's framework strengthens Social Security by:

· Using The Budget Surplus To Help Save Social Security And Invest A Portion In the Stock Market To Seek Higher Returns. The President proposes to transfer 62 percent of the projected budget surpluses over the next 15 years -- more than $2.7 trillion -- to the Social Security system. The President proposes to invest less than one-quarter of the transferred surpluses in the private sector to achieve higher returns for Social Security -- just as any state or local government, or private pension does -- after working with Congress to devise a mechanism to ensure that the investments are made independently and without political interference by private sector managers with minimum administrative costs.

· This Framework Will Save Social Security Until 2055 -- And the President Will Work With Congress To Save It Until At Least 2075. Transferring over 60 percent of the surpluses to Social Security and investing a portion in the market will keep Social Security solvent until 2055. The President believes we must work on a bipartisan basis to make the hard-headed but sensible and achievable choices to save Social Security until at least 2075. As part of this effort, President Clinton believes that we must:

After Social Security Reform Is Secured -- Consistent With the President's "Save Social Security First" Commitment -- the President Proposes To:

· Strengthen Medicare for the 21st Century. The President's framework will reserve 15 percent of the projected surpluses for Medicare, securing Medicare until 2020. The President further called for bipartisan reforms that would allow Medicare to be secure until 2020 while also providing prescription drug benefits.

· Provides $500 Billion in Tax Credits to Create New Universal Savings Accounts -- USA Accounts. The President's framework will reserve 12 percent of the projected surpluses to create new Universal Savings Accounts (USAs) so working Americans can build wealth to meet their retirement needs. To help Americans save and to strengthen our current pension system, we would provide Americans a flat tax credit to make contributions into their USA Account. In addition, we would provide additional tax credits to match a portion of an individual's savings -- with more help for lower-income workers.

· Prepare America for the Challenges of the Future. The President's framework will reserve 11 percent of the projected surpluses for military readiness and other pressing domestic priorities.



· Debt-to-GDP Ratio Will Fall to Lowest Level Since 1917. As a share of the economy, the publicly held debt increased from 26% in 1981 to 50% in 1993. Since President Clinton took office, the publicly held debt as a share of GDP has dropped to about 45 percent. And under the President's framework, current projections suggest that the publicly held debt, as a share of GDP, will fall from about 45% today to less than 10% in 2014 -- its lowest level since 1917.


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