Greenspan: U.S. May Need to Trim Retiree Benefits
Wed February 25, 2004 01:52 PM ET
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reuters.com
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By Glenn Somerville
WASHINGTON (Reuters) - Federal Reserve Chairman Alan Greenspan on Wednesday said Congress should consider cuts to U.S. Social Security benefits by raising the retirement age and offering less generous adjustments to future payments.
His comments stirred immediate political ripples, with Democratic presidential front-runner John Kerry saying he would never curtail benefits.
President Bush said he would safeguard those at or near retirement -- something that Greenspan suggested as well -- but did not rule out reduced outlays in future.
Urging swift action on a spiraling budget deficit -- forecast to hit a record $521 billion this year -- Greenspan told the House Budget Committee that spending restraint was the best way to meet future commitments rather than raising taxes and endangering the economy.
"The exact magnitude of such risks is very difficult to estimate, but they are of enough concern, in my judgment, to warrant aiming to close the fiscal gap primarily, if not wholly, from the outlay side," he said.
Greenspan warned a major budget crunch looms as early as 2008 as tens of millions of Baby Boomers, born after World War II, begin to qualify for early retirement benefits.
"This dramatic demographic change is certain to place enormous demands on our nation's resources -- demands we almost surely will be unable to meet unless action is taken," he said. "For a variety of reasons, that action is better taken as soon as possible."
SETTING AN EXAMPLE?
Greenspan, who turns 78 next week, suggested that among the remedies available to lawmakers would be raising the age at which Social Security and Medicare benefits are provided.
"No matter what was said in Washington just this morning, the wrong way to cut the deficit is to cut Social Security benefits," Kerry said during a speech at the University of Toledo. "If I'm president, we are simply not going to do it."
Even with the "so-called normal retirement age" set to climb to 67 from 65 in the next two decades, the years people spend in retirement relative to their working years will increase as Americans are living longer, Greenspan said. |
