Greenspan Sounds Alert on Social
Security
By MARTIN CRUTSINGER
By MARTIN CRUTSINGER
JACKSON, Wyo. (AP) - For at least the fourth time this year, Federal Reserve Chairman Alan Greenspan has touched the electrified third rail of American politics - Social Security.
He did it here in the shadows of the Grand Teton Mountains as Friday's leadoff speaker at a two-day conference about challenges that the global economy faces because of rapidly aging populations.
As he did first in February, during testimony before Congress, and several times since, Greenspan issued his warning that the White House and Congress need to come up quickly with a plan to trim the Social Security and Medicare benefits that 77 million baby boomers are scheduled to receive when they retire.
He said haste is critical. There is no way benefits currently promised can be financed by government, he said, and Americans born in the 20 years after World War II need to be put on notice so they can start putting away extra retirement savings during their working years.
Even under the most optimistic economic assumptions of
growth and productivity, government resources will be inadequate to provide the
baby boom generation with the level of benefits their parents got, he said.
``If we have promised more than our economy has the
ability to deliver, ... as I fear we may have, we must recalibrate our public
programs so that pending retirees have time to adjust through other channels,''
he said. ``If we delay, the adjustments could be abrupt and painful.''
The
78-year-old Greenspan, recently confirmed for a fifth term as Fed chairman,
suggested a possible fix would be to increase the retirement age for receiving
full benefits. It already is on schedule to rise from 65 to 67.
Greenspan, who chaired a commission in 1983 that rescued
Social Security from a previous financial crisis, has suggested that Congress
look at trimming the annual cost-of-living adjustment retirees receive because
the current Consumer Price Index overstates inflation.
Greenspan also has suggested in earlier comments that
Congress should look at tying the age of retirement to future increases in life
expectancies.
In
his speech Friday, he cautioned against trying to close the funding gap simply
by raising the payroll taxes that support Social Security and the Medicare
programs, saying higher taxes would hurt job creation.
Other speakers at the Jackson conference, sponsored by
the Kansas City, Mo., Federal Reserve, echoed Greenspan's comments about
dilemmas that aging populations pose for government policy-makers.
While the United States faces a major problem, the
situation is even worse in Europe and Japan. Birth rates have declined further
than they have in the United States, and the Europeans and Japanese have
received less help in bolstering their labor forces with new immigrants.
Anne Krueger, deputy managing director of the
Washington-based International Monetary Fund, said poor countries also will face
serious problems with aging populations toward the middle of this century. She
said countries such as India and Brazil must act now to firm up their fiscal
positions to cope with rising pension costs.
On
the Net:
Federal
Reserve: http://www.federalreserve.gov
