Good morning. Last Tuesday night in my State of the Union Address, I was honored to report to the American people that our families, our communities, and our country are stronger, healthier, and more prosperous than ever. But I warned that we cannot let the hum of our prosperity lull us into complacency. Instead, we must use this moment of promise to meet the long-term challenges we face as a nation, to meet our historic responsibility to the 21st century.
Over the last 6 years, our hard-won fiscal discipline has given us the chance to meet those long-term challenges. Six years ago our budget deficit was $290 billion. Last year we had a budget surplus of $70 billion. We expect another one a little larger than that this year, and we're on course for budget surpluses for the next 25 years.
So now we face a new choice: what to do with the surplus. I believe we should use it to plan and save for retirement, to strengthen the readiness of our military, to get our children ready for the 21st century. Very simply, I believe we should use the first surplus in three decades and the projected ones in the future to meet America's great challenges. Above all, that means saving Social Security and Medicare.
We all know that the baby boom will soon become a senior boom. The number of seniors will double by 2030; average life expectancy is rising rapidly, and that means rising costs for Social Security and Medicare.
I propose to keep Social Security strong for 55 years by committing 60 percent of the surplus for the next 15 years and investing a small portion in the private sector just as any private or State pension would do. We should make further tough choices to put Social Security on a sound footing for the next 75 years, to lift the limits on what seniors on Social Security can earn, and to provide support to reduce the poverty rate among elderly women, which is twice the poverty rate among seniors as a whole. We can do that with a good bipartisan effort.
Once we've accomplished this, I propose we use one of every six dollars of the surplus over the next 15 years to double the life of the Medicare Trust Fund.
Then I believe we should dedicate $500 billion of the surplus to give working families tax relief for retirement savings, by creating new Universal Savings Accounts—USA accounts—to help all Americans build a nest egg for their retirement. Under my plan, families will receive a tax credit to contribute to their USA account and an additional tax credit to match a portion of their savings, with a choice in how they invest the funds and more help for those who will have the hardest time saving.
Let me give you an example of how USA accounts could work. With the help of USA account tax credits, working people who save and invest wisely from the time they enter the work force until the time they retire could have more than $100,000 in their USA account, and a more secure retirement. That's the kind of tax relief America needs. By providing this new tax credit for retirement savings, we can make it possible for all Americans to have a stake in the remarkable economic growth they have worked so hard to create.
Social Security first, then saving Medicare and giving tax relief to help all Americans save in the new USA accounts, investing in defense and education—that's the right way to use America's surplus. If we squander the surplus, we'll waste a once-in-a-lifetime opportunity to build a stronger nation for our children and our grandchildren. Instead, let's work together to prepare our Nation for the great challenges and opportunities of the 21st century.
Thanks for listening.