Kerry, Greenspan Differ on Social Security
Sat Aug 28, 9:24 AM ET
By MARY DALRYMPLE, Associated Press Writer
story.news.yahoo.com
SEATTLE - John Kerry ) doesn't talk much about Social Security on the campaign trail, but he laid out some thoughts for a voter in Everett, Wash., who doubted that the government retirement program is really in trouble.
"We've made little fixes, little jots and jags here and there, that have been able to change it," the Democratic presidential candidate said, noting that Social Security has survived 20 years of predictions that its demise is around the corner.
Those words of reassurance struck a much different tone than the warning issued by Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) earlier Friday when he said that, even under the most rosy economic assumptions, the government has promised more Social Security benefits than it can deliver to retiring baby boomers.
"If we delay, the adjustments could be abrupt and painful," Greenspan said in Jackson, Wyo., at a Federal Reserve conference on the challenges posed by an aging population.
The first wave of the nation's 77 million baby boomers begins retiring later this decade, a phenomenon that government experts say will mean fewer workers paying into the system that funds retirement benefits for a growing and graying population.
The nonpartisan Congressional Budget Office (news - web sites) reported this summer that Social Security will start paying out more in benefits than it collects in payroll taxes in 2019. The same report calculated the program won't become insolvent until 2052, but Greenspan and others say policy-makers should start thinking about the retirement wave now.
"The baby boomers will be starting to retire under the next president's watch," said Maya MacGuineas, executive director of the Committee for a Responsible Federal Budget.
Kerry said Friday that the best way to ensure Social Security's future is with policies that bolster the economy and raise workers' wages, letting them contribute more to the program.
"I guarantee you, the first best thing to do to protect Social Security is to put America back to work in jobs that pay more," he said.
MacGuineas said she disagrees with Kerry's assessment that a few minor changes here and there will keep the system afloat, and his position that a stronger economy can solve Social Security's problems.
"Those are pretty darn large tweaks we're talking about," she said, adding that economic growth alone won't bolster the program because workers' benefits increase as their wages rise, increasing the future obligations of the system.
A number of government studies have come to the conclusion that the baby boom wave will force the government to cut benefits, raise taxes or push back the retirement age to preserve the benefits.
Kerry ruled many of those options out.
"I will never privatize Social Security. I will not cut Social Security benefits. And I will not raise the retirement age," he said.
Peter Diamond, a professor of economics at the Massachusetts Institute of Technology (news - web sites), said he agrees with Kerry's assessment that the program can be saved with relatively minor changes, but his plan envisions small tax increases and small benefit reductions to make that happen.
In a book outlining possible revisions to the program, Diamond said he offered both benefit cuts and tax increases to make it acceptable to Republicans and Democrats.
"It's in the category of nips and tucks," he said. "There are no huge, radical changes." |
