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.
John Helliwell,
a professor at the University of British
Colombia, argued that immigration will make only
a small dent toward offsetting the problems of a
shrinking labor force that must to support more
retirees.
"Neither
increased migration nor international transfers
of savings is expected to offer much assistance
in digesting the variety of demographic
transitions expected over the next 50
years," he said in a paper he presented to
the conference Saturday.
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.
Federal
Reserve: http://www.federalreserve.gov
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original source
page: http://biz.yahoo.com/ap/040828/greenspan_social_security_9.html?printer=1
view full
speech here: http://www.federalreserve.gov/boarddocs/speeches/2004/20040827/default.htm
