Beginning of the end for Social Security? Better save up!

[ChasingBlueSky 0]

We have heard for years that my generation will never see any of the money that SS is taking from our checks now. Didn't GWB make promises to fix SS in his first campaign? Well, guess it is time to start putting more money in my 401K. I'm certainly glad the debt and SS has become a background issue in this election

Greenspan Urges Social Security Cuts

By MARTIN CRUTSINGER, AP Economics Writer

WASHINGTON - Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites), stepping into the politically charged debate over Social Security (news - web sites), said Wednesday the country can't afford the benefits currently promised to the baby boom generation.

He urged Congress to trim those benefits to get control of soaring budget deficits, which he said threatened a "very debilitating" rise in interest rates in coming years.


Democratic presidential candidates denounced his proposals, and President Bush (news - web sites) and other Republicans sought to distance themselves from the Republican Greenspan.


The central bank chairman also repeated his view that Bush's tax cuts should be made permanent to bolster economic growth. He said the estimated $1 trillion cost should be paid for, preferably, with spending cuts so the deficit would not be worsened.


As for specifics on trimming Social Security, Greenspan told the House Budget Committee that one possibility would be to switch to an alternative measure of inflation for annual cost-of-living adjustments. Instead of relying on the Consumer Price Index (news - web sites), he suggested switching to a new chain-weighted CPI that gives lower inflation readings and thus would mean smaller payment increases.


Greenspan, who turns 78 next week, also suggested tying the retirement age for full benefits to longer lifespans with the age continuing to rise. The 65-year age for retiring at full benefits started increasing last year and now stands at 65 years and four months. It will increase to 67 over the next two decades and then stop rising.


Greenspan said his comments simply voiced views he has held since he chaired a blue-ribbon commission two decades ago. But the remarks set off a political storm.


Democratic front-runner Sen. John Kerry (news - web sites) said the way to address the deficit was to roll back tax cuts for the wealthy and "the wrong way to cut the deficit is to cut Social Security benefits. If I'm president, we're simply not going to do it."


Sen. John Edwards (news - web sites), D-N.C., called it "an outrage' for Greenspan to call for cuts in Social Security while at the same time endorsing making Bush's tax cuts permanent. Rep. Dennis Kucinich (news - web sites), D-Ohio, went even further and called for Greenspan to resign as Fed chairman, saying his comments were "a disgrace."


Bush said Social Security benefits "should not be changed for people at or near retirement."


Underscoring the view that Congress is not about to touch Greenspan's suggestions, especially in an election year, Republican House Speaker Dennis Hastert was asked to comment on the proposals and replied only, "He's a fine man."


In his testimony before the Budget Committee, Greenspan said the current deficit situation, with projected record red ink of $521 billion this year, will worsen dramatically once the 77 million members of the baby boom generation start becoming eligible for Social Security benefits in just four years.


He said projections show the country will go from having just over three workers supporting each retiree to 2.25 workers for every retiree by 2025.


"This dramatic demographic change is certain to place enormous demands on our nation's resources — demands we will almost surely be unable to meet unless action is taken," Greenspan said. "For a variety of reasons, that action is better taken as soon as possible."


He said taking action now would mean that people still working would have time to adjust their retirement savings plans to deal with smaller Social Security benefits.


Greenspan said at some point the country needed to face the fact that the government has promised more in entitlement benefits than it can afford to pay. He said the problem was even worse for Medicare because it was impossible to estimate what types of costly medical advances will be available in coming years.


He did not mention that Congress late last year, at Bush's urging, adopted a new prescription drug benefit as part of a Medicare overhaul now estimated to cost $540 billion over the next decade.


"I am just basically saying that we are overcommitted at this stage," Greenspan said in response to committee questions. "It is important that we tell people who are about to retire what it is they will have." He warned that the government should not "promise more than we are able to deliver."

While the country is currently enjoying the lowest interest rates in more than four decades, Greenspan warned that financial markets will begin pushing long-term rates higher if investors do not see progress in dealing with the projected huge deficits that will occur once baby boomers begin retiring.

As he has in the past, Greenspan called on Congress to reinstitute rules that require any future tax cuts or spending increases to be paid for either by spending cuts in other areas or increases in other taxes. Bush has called for the rules to cover only spending increases, not tax cuts.

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you can burn the land and boil the sea, but you can't take the sky from me....
I WILL fly again.....

[PhillyKev 0]

I don't understand why anyone is mad at Greenspan about this. He's just being honest and realistic.

This is what makes me mad. Not the first part, that part I think is the constitutional amendment that should be getting worked on instead of one about sex. That last part is what is ridiculous.

Quote

As he has in the past, Greenspan called on Congress to reinstitute rules that require any future tax cuts or spending increases to be paid for either by spending cuts in other areas or increases in other taxes. Bush has called for the rules to cover only spending increases, not tax cuts.

[billvon 3,120]

>Didn't GWB make promises to fix SS in his first campaign?

The problem has been solved! This is hot off the wires:

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BUSH TO CUT DEFICIT FROM FEDERAL BUDGET
The Onion

WASHINGTON, DC—President Bush proposed a $2.4 trillion election-year budget Monday that would boost defense spending, redistribute funds among government programs, and cross out the $477 billion deficit entirely.

"Nobody likes making cuts, but the nation's current rate of spending and the decreased tax revenues we've seen since implementing my tax cuts have created a deficit that we can't afford to carry," Bush said in a nationally televised address. "Someone had to have the vision, leadership, and courage to go in and erase that line altogether, no matter how unpopular and impossible that may be."

According to the Congressional Budget Office, the $477 billion deficit is the country's largest ever, easily topping the previous record of $290 billion in 1992. If the budget is approved, however, the deficit will roll down to $0.0 billion.

In the past, critics have accused the Bush Administration of responding to a mounting deficit and the ongoing recession with unsound fiscal policies like cutting taxes for the wealthy. Bush supporters say the deficit cut proves the wisdom of the president's economic plan.

"Bush has taken a brave step, one that was long overdue," Senate Majority Leader Bill Frist (R-TN) said. "He has taken charge of the budget problem once and for all, simply by saying 'The deficit stops here.'"

Faced with the difficult choice of either cutting government programs or raising taxes, Bush reportedly arrived at the radical new "deficit-cutting" solution late Sunday night, only hours before he was to announce his budget.

"I was staring at the figure for the deficit, and I decided that it simply could not stand," Bush said. "It was too high. Something had to be done. But Americans have been taxed and taxed. I say 'Enough taxes.' By my estimation, this historical crossing-out of the deficit will save American taxpayers millions, billions, and perhaps even bajillions of dollars."

The president then turned to Section 14-D of the official budget document, where the federal government's total expenditures, the GNP, and the difference between the two were listed. Using a black Sharpie, the president crossed out the third figure, eliminating it entirely.

Bush then held up the newly marked-up page and said, "My fellow Americans, I have solved the federal budget crisis."

The budget is expected to pass through the GOP-controlled Congress with little or no opposition.

"I don't know why I didn't have this idea before," Bush said. "For years, we have tried to control the deficit by eliminating federal programs, lowering taxes for the rich, sending out checks to everybody, and God knows what else. None of us once thought to just draw a line through it."

The Bush plan is not without critics.

"President Bush drew a line through the deficit, yes, and we commend him for that," Sen. Blanche Lincoln (D-AR) said. "But that doesn't solve the country's budgetary problems. While he was at it, why didn't he add several zeroes to the end of our GNP?"

Political pundits have been largely impressed by the visionary slash.

"Opinions vary as to what the long-term effects of the deficit cut will be," New York Times columnist Paul Krugman said. "One thing, however, is certain: The growing federal deficit, a Gordian knot that for three years no amount of cutting taxes and spending money could unravel, has been sliced in two by the president's bold, radical new take on the problem."

A CNN/Gallup poll taken immediately after the president's announcement showed that 67 percent of Americans support his decision to draw a black line through the deficit, and thereby eliminate it.

"I'm tired of the tax-and-spend Democrats always talking about adding zeroes to the GNP," said Henry Strom, 40, of Bakersfield, CA. "How about we cross out our debts and get our affairs in order before we start adding zeroes? We need to cut this deficit and stand firm against printing deficits in future budgets, as well."

According to Bush's political advisors, later this week, the president will declare that the U.S. has universal health care.