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Office of the Press Secretary

For Immediate Release February 25, 1999

                            February 25, 1999 

In His State of the Union Address, President Clinton Put Forward His Framework To Save Social Security and Strengthen Medicare -- This Is A Plan To Ensure That We Meet Our Obligations To All Generations. The President and Vice President's framework strengthens Social Security and Medicare 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 -- $2.8 trillion -- to the Social Security system. By devoting the bulk of that money to paying down the debt, the President's plan cuts our interest payments and puts the government in a better position to meet its obligations to Social Security.

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 as the independent Social Security actuaries have certified. The President believes we must work on a bipartisan basis to make the tough but sensible choices that are necessary to save Social Security until at least 2075. As part of this effort, President Clinton believes that we must:

(1) Reduce Poverty Among Single Women. Reduce poverty among

         elderly women -- particularly widows, who have a poverty 
         rate nearly twice the overall poverty rate for older 
         Americans; and

(2) Eliminate The Earnings Test. Eliminate the confusing and

         out-dated earnings test so that we stop discouraging work 
         and earnings among older Americans.

Strengthen Medicare for the 21st Century. The President's framework reserves 15 percent of the projected surpluses for Medicare, securing Medicare until 2020. The President believes that the new resources should be utilized to achieve broader, bipartisan reforms that modernize Medicare, make it more efficient, provide for a long-overdue prescription drug benefit, and keep Medicare safe until 2020.

After We Have Acted to Secure Social Security and Medicare, President Clinton Proposes To:

Provide $536 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, 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.


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|                    A FISCALLY RESPONSIBLE PROPOSAL:                  |
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| 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 44%. And under the | | President's framework, the publicly held debt will be cut by more | | than two thirds, and, as a share of GDP, will fall from 44% today to |

| 7.1% in 2014 -- its lowest level since 1917.                         |
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