| Trim baby boomer benefits now, Greenspan
urges
MARTIN CRUTSINGER; The Associated Press
JACKSON, Wyo. - Federal Reserve Chairman Alan Greenspan said Friday the
country will face "abrupt and painful" choices unless Congress acts
quickly to trim Social Security and Medicare benefits for the baby boom
generation. He said the government has promised more than it can deliver.
Returning to a politically explosive issue just before the Republican
National Convention, Green-span said the country must face up to "some
tough policy choices."
Government resources even under the most optimistic economic
assumptions on growth and productivity will be inadequate to provide baby
boomers with the level of benefits their parents got, he said.
Speaking at a two-day conference sponsored by the Kansas City Federal
Reserve on challenges posed by an aging population, Greenspan said
policy-makers must address the looming crisis in Social Security and
Medicare before the first wave of 77 million U.S. baby boomers begins
retiring later this decade.
"We owe it to our retirees to promise only the benefits that can be
delivered," 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."
And he warned, "If we delay, the adjustments could be abrupt and
painful.
"Curbing benefits once bestowed has proved difficult in the past," he
noted, so the government must be careful about enacting any new benefits.
Congress last year, at President Bush's urging, passed a new prescription
drug benefit expected to cost more than $540 billion in the next 10
years.
The 78-year-old Greenspan, recently confirmed for a fifth term as Fed
chairman, suggested one possible fix would be to increase the retirement
age for receiving full benefits. It is already scheduled to rise from 65
to 67. Greenspan has suggested that the retirement age be continually
adjusted to reflect ever-rising life expectancies. He has also proposed
trimming the annual cost-of-living adjustment retirees receive because the
current Consumer Price Index overstates inflation.
Greenspan has long been concerned about the benefits programs for the
elderly. Back in 1983, he chaired a commission that rescued Social
Security during an earlier funding crisis.
And starting last February, he has delivered a series of warnings about
the looming crisis in Social Security and Medicare, which is likely to
combine with soaring budget deficits to form the biggest economic
challenges in the next four years.
However, the government's two largest entitlement programs have
received little attention in the presidential race because neither Bush
nor his Democratic challenger, John Kerry, wants to dwell on financing
problems that present painful choices.
Bush favors giving younger workers the option of putting part of their
payroll tax into personal retirement accounts. Kerry opposes the plan for
partial privatization.
In the firestorm that erupted over Greenspan's earlier comments about
trimming benefits for baby boomers, Kerry rejected the idea of cutting
benefits while Bush said benefits "should not be changed for people who
are at or near retirement."
In a statement, Kerry spokeswoman Allison Dobson said Friday that
Greenspan's testimony "should be a wake-up call." She criticized Bush's
economic policy, saying, "It has driven up endless deficits and put Social
Security in danger."
(Published 12:01AM, August 28th,
2004)
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The News Tribune - Tacoma, WA
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