Greenspan solves the upcoming crisis in Social Security

Greenspan states the obvious regarding the financial problems soon to beset Social Security and Medicare. And what is his solution? Cut the benefits. That after congress enacted costly prescription legislation to support the Insurance a pharmaceutical industries. How much schooling in economics did he need to come to that profound solution. I have a much better Idea. Ice flows in the arctic upon reaching retirement age.

Greenspan Urges Look At Senior Benefit Costs

Adjust Programs Soon, Fed Chief Says

By Nell Henderson
Washington Post Staff Writer
Saturday, August 28, 2004; Page E01



JACKSON HOLE, Wyo., Aug. 27 -- Federal Reserve Chairman Alan Greenspan on Friday urged Washington policymakers to consider reducing future Social Security and Medicare benefits, saying that the nation has probably promised more to upcoming retirees than the economy can realistically deliver.

"If we have promised more than our economy has the ability to deliver to retirees, . . . as I fear we may have, we must recalibrate our public programs so that pending retirees have time to adjust," Greenspan said in remarks to a conference here on the impact of global population changes. "If we delay, the adjustments could be abrupt and painful."

The nation may have promised more than it can realistically deliver to future retirees, Federal Reserve Chairman Alan Greenspan said. (Larry Downing -- Reuters)


Greenspan's remarks echoed warnings he has given many times before, though his statement Friday was made in more oblique language. Earlier this year, he made a far more forceful statement on Capitol Hill about the need to restrain the growth in Social Security and Medicare spending by reducing benefits for future retirees.

Those remarks prompted a barrage of criticism, in large part because of the sensitivity of the topic in a presidential election year.

Greenspan's comments about the long-term economic peril of the nation's retirement system came on a day when a key short-term economic indicator also took a downturn.

The Commerce Department yesterday lowered its estimate of economic growth for the second quarter of this year to a 2.8 percent annual rate from its earlier projection of 3 percent. The reduced figure marks the slowest expansion of the country's gross domestic product in about a year and reflects the effect of higher oil prices and sluggish consumer spending.

Greenspan, who chaired the 1983 commission that recommended several ways to strengthen the Social Security program's finances, did not urge any specific benefit changes. But he did note that a variety of amendments in both federal programs and Americans' retirement and saving behavior could ease the "adjustments" that will have to be made as the population ages.

Americans, for example, could work longer, said Greenspan, 78, who has served as Fed chairman for 17 years. They are living longer and healthier. Work is "becoming less physically strenuous but more demanding intellectually," he said. Yet workers have been retiring at younger ages in recent years.

One way to encourage workers to retire later, he suggested, would be to raise the age of eligibility for full retirement benefits or to slow the growth of Medicare benefits.

Americans also should save more, both as individuals and as a nation, he suggested. The individual saving rate is less than 2 percent, and the nation borrows an amount equivalent to about 5 percent of its annual gross domestic product from overseas to finance its spending and investment.


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