posted on March 2, 2005 08:13:14 AM
Greenspan Urges Action on Social Security
36 minutes ago Business - AP
By MARTIN CRUTSINGER, AP Economics Writer
WASHINGTON - Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) urged Congress Wednesday to move quickly to fix the financing problems in Social Security (news - web sites) and Medicare, arguing that delay will only make the country's budgetary problems more severe.
Greenspan again endorsed the key part of President Bush (news - web sites)'s Social Security overhaul to set up private accounts, but he stressed that much more needed to be done to put the giant retirement program and Medicare, which he said faced even more severe financial strains, on a more sound footing.
Last month, the Fed chairman had urged a go-slow approach on the narrower issue of allowing younger people to put a portion of their Social Security payroll taxes into personal retirement accounts.
Bolstering the administration's drive to get a Social Security reform bill enacted this year, Greenspan warned that every year of delay would make fixing the problem harder, especially after the baby boomers begin retiring.
Bush's proposal for private accounts has proved to be a hard sell.
"This is the mother of all issues," House Majority Leader Tom DeLay said Tuesday, as Republican congressional leaders conceded that they may not be able to win congressional approval of it this year.
Senate Majority Leader Bill Frist said Bush will have to take a lead in building support for private accounts, especially "when a lot of political figures want to run and hide and when you have a lot of people who say there's no problem."
In his testimony Wednesday, Greenspan repeated a warning he first made a year ago, saying he believed the government had promised more than it could deliver to the 78 million baby boomers now approaching retirement and saying that cuts in benefits would have to be considered.
"If existing promises need to be changed, those changes should be made sooner rather than later," he told the House Budget Committee.
Greenspan reiterated that he supports President Bush's push for setting up personal retirement accounts by diverting up to 4 percentage points of payroll taxes into the new accounts.
Diverting the payroll taxes into the Social Security trust fund, he said, had merely allowed the government to run larger budget deficits. Greenspan said that switching to the private accounts would be a way to bolster the nation's low savings rate.
In his prepared testimony, Greenspan did not repeat the cautionary message he sent last month: Creation of the accounts should be done slowly to gauge the impact the increased borrowing that will be needed will have on financial markets.
"The one certainty is that the resolution of the nation's unprecedented demographic challenge will require hard choices and that the future performance of the economy will depend on those choices," Greenspan said.
The Fed chief said that unless growth in the huge benefit programs is restrained, these programs will require more and more government resources, rising from about 8 percent of the total economy currently to 13 percent by 2030.
"In the end, the consequences for the U.S. economy of doing nothing could be severe," he said.
posted on March 3, 2005 11:12:07 AM new
Fri Feb 18, 6:17 AM ET
Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) said Thursday that Social Security (news - web sites) is not in "crisis" as President Bush (news - web sites) has declared, but emphasized that Congress must quickly address future funding problems in the program and far larger shortfalls in Medicare.
In remarks to a House committee, the central bank chief offered a sunny, short-term economic outlook with expanding business activity and low inflation. But he said the long-term picture was clouded by an aging population that will strain Social Security and Medicare and slow economic growth.
Greenspan said lawmakers must get a handle on the problems before baby boomers start retiring in 2008. To help control deficits, he said, any future tax cuts should be offset elsewhere in the budget.
"The first priority is to assure that deficits are under control," Greenspan said, warning that major changes are needed to restrain increases in budget deficits. The Congressional Budget Office (news - web sites) estimates Social Security and Medicare could soak up 26% of the economy by 2050.
In his testimony, Greenspan also suggested Congress limit the growth of mortgage giants Fannie Mae and Freddie Mac. "(By) enabling these institutions to increase in size," he said, "we are placing the total financial system of the future at a substantial risk."
But the focus of the hearing was Social Security, which Greenspan said is not in crisis. "Crisis to me usually refers to something which is going to happen tomorrow or is on the edge of going into a very serious change," he said. "That is not going to happen."
Greenspan said private accounts funded with a portion of the 12.4% Social Security payroll tax would not address the program's solvency. But they could move the program to a pre-funded basis while providing a sense of ownership, and possibly transferable wealth, to individuals lower down the economic ladder "who have had to struggle with very little capital."
However, he reiterated that increased government borrowing to finance the transition to private accounts posed a risk of higher deficits and interest rates.
Absolute faith has been shown, consistently, to breed intolerance. And intolerance, history teaches us, again and again, begets violence.
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Bush will fix Social Security just like he has fixed Osama Bin Laden and Iraq. Bush can't be trusted to run this country and you want to trust him with your retirement?
[ edited by logansdad on Mar 3, 2005 12:49 PM ]
posted on March 3, 2005 11:35:44 AM new
Your article is old logansdad. Why not find one up to date or is that to hard for you to research. Mine was posted the day he said it. About 2 weeks after yours.
posted on March 3, 2005 12:49:34 PM newWhy not find one up to date or is that to hard for you to research. Mine was posted the day he said it. About 2 weeks after yours.
I don't need to find a more updated article because I don't think his view has changed.
Greenspan agrees with Bush's plan for the retirement accounts, but he says that will not fix the problem as Bush stated. Greenspan urges action, but disagrees with Bush in the fact that there is a crisis.
Bush is the one that is trying to make this into a problem that needs to be resolved overnight without first looking at the problems.
Absolute faith has been shown, consistently, to breed intolerance. And intolerance, history teaches us, again and again, begets violence.
---------------------------------- Bush will fix Social Security just like he has fixed Osama Bin Laden and Iraq. Bush can't be trusted to run this country and you want to trust him with your retirement?
posted on March 4, 2005 05:22:26 AM new
Gee libra63 it looks like logansdad took care of your post about SS in short order. He is also right about Osama Bin Laden. First this White House is "pulling out all stops" and Bin Laden is "wanted dead or alive" than "Bin Laden is only one man" and "not that important" and now Bin Laden is most important again.
O.K. WHITE HOUSE ITS BEEN 3 1/2 YEARS. WHEN ARE YOU GOING TO GET BIN LADEN "DEAD OR ALIVE"?
I am sorry to say that this White House's actions are making it very had for its supporters like the L sisters to make relevant posts.
posted on March 4, 2005 01:51:39 PM new
Greenspan's caution
Read the fine print: His support for Bush Social Security reform is tepid
Published February 18, 2005
The obvious headline from Alan Greenspan's comments on Social Security this week is his support, however tepid, for private accounts. But check the fine print. The Federal Reserve chairman counseled caution. His conclusions, that Social Security's funding structure isn't working and accounts would be a good thing, came with heavy caveats. Among them:
Borrowing: The transition to private accounts would require borrowing $754 billion in the next decade and about $4 trillion over the long haul to pay benefits to retirees while diverting payroll taxes into the accounts. The federal government is already running record deficits. So much additional borrowing could drive interest rates up, reduce private-sector investment and slow economic growth. Be wary.
Savings: Greenspan identified the low national savings rate as a key problem for the economy. He then noted that the switch to private accounts would do nothing to improve the situation. Every dollar saved in the private accounts would have to be matched by a dollar borrowed by the federal government. Net change in national savings? Zero.
Debt: Greenspan doesn't buy President George W. Bush's assertion that all that borrowing would create no new debt. The White House line is it would merely involve swapping implicit debt, in the form of an unfunded obligation to pay future benefits, for actual debt, in the form of treasury bonds. Greenspan was skeptical of that logic and said that many on Wall Street may be too. Unfunded obligations can be reduced by program changes. Bonds, once issued, must be honored.
Solvency: Greenspan noted the stubborn reality that the accounts will do nothing to reduce Social Security's financial shortfall. Bush opened the door Wednesday to raising the $90,000 cap on income taxed for Social Security, an important tweak of his previous no-payroll-tax-hike position. That's good news because ensuring solvency will require benefit reductions, tax increases or some combination of the two.
Greenspan counseled caution and a go-slow approach should Congress decide to carve private accounts out of Social Security. That's not exactly a ringing endorsement.
Absolute faith has been shown, consistently, to breed intolerance. And intolerance, history teaches us, again and again, begets violence.
---------------------------------- Bush will fix Social Security just like he has fixed Osama Bin Laden and Iraq. Bush can't be trusted to run this country and you want to trust him with your retirement?
posted on March 15, 2005 10:42:14 PM new
Well...it looks like we're beginning to make headway now. The Senate voted 100-0 that social security IS an issue that needs to be addressed now.
So at least some are out of their denial that we don't need to deal with it now.
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From The Associated Press:
Mar 16, 1:09 AM EST
Senate Agrees Social Security Needs Help
By GLEN JOHNSON
Associated Press Writer
WASHINGTON (AP) -- The Senate unanimously agreed Tuesday that strengthening Social Security was "a vital national priority" but split acrimoniously along party lines on what to do about it in the first votes on President Bush's plans.
.........
The resolutions voted on Tuesday were nonbinding but symbolic of where the issue stands.
All 100 senators voted in favor of another resolution offered by Graham, who has sought bipartisan compromise on the issue, that pointedly avoided referring to Social Security's financial state as a "crisis," a term which Bush has used to objections by Democrats.
The provision said lawmakers "should work together at the earliest opportunity to enact legislation to achieve a solvent and permanently sustainable Social Security system." It omitted details of how the program would be reshaped.
The White House seized on that vote, issuing a statement in which press secretary Scott McClellan said: "The president welcomes this strong commitment from every United States senator, and hopes that all members will now work together in a constructive and bipartisan way to make it happen this year."
