I don't know if anyone has posted anything on this subject, but I think there are many people on this board that is going to be retiring in the next few years, and can be relevant. After reading/listening to some of the debates of Social Security reform I can see why now why GWB Jr want to have privatize accounts, and the Dems are stenously against it. Under GWB Jr's plan, the excess moneys paid into the accounts can't be tapped by Congress for something other than Social Security, and the tax & spend Dems are hopping mad.
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Fed chief: Expect Social Security cuts
Greenspan tells Congress that cuts in future retirement benefits are all but
inevitable.
March 15, 2005: 5:12 PM EST
By Kathleen Hays, CNN economics correspondent
NEW YORK (CNN/Money) - Federal Reserve Chairman Alan Greenspan told Congress
that the mounting financial pressure of a wave of retiring baby boomers is so
great that cuts in future government retirement benefits are all but inevitable.
The Fed chairman told the Senate Special Committee on Aging that the nation has
about three years to work out a fix. "In 2008, the leading edge of what must
surely be the largest shift from retirement in our nation's history will become
evident as some baby boomers become eligible for Social Security," he said in
his prepared remarks.
By that date, the population 65 years and older will be more than one-fourth of
the adult U.S. population, Greenspan said, referring to forecasts by the Social
Security trustees. That would be up from 17 percent currently.
"This huge change in the structure of our population will expose all our
financial retirement systems to severe stress and will require adjustments for
which there are no historical precedents," he said.
This huge demographic shift is the main reason why Social Security and Medicare
are facing enormous financial obligations that he says cannot be met without
some choices that most in government are loathe to make.
"At present, the Social Security trustees estimate that the unfunded liability
over the indefinite future to be $10.4 trillion," Greenspan noted in his
prepared remarks. "The shortfall in Medicare is calculated at several multiples
of the one in Social Security."
"These numbers suggest that either very large tax increases will be required to
meet the shortfalls or benefits will have to be pared back," he said.
Greenspan also stressed that rising spending on Social Security, Medicare and
Medicaid is one more reason why the federal budget "is on an unsustainable path,
in which large deficits result in rising interest rates and ever-growing
interest payments that augment deficits in future years."
"Unless the trend is reversed, at some point these deficits would cause the
economy to stagnate or worse," he said.
Senator Hillary Clinton challenged the Fed chairman on his support for tax cuts
early in President Bush's first term. Many Democrats blame the tax cuts for
helping turn the budget surplus that existed at the end of President Clinton's
first term into record deficits, and lately more and more have accused Greenspan
of favoring Bush policies, contrary to his official status as an independent
chairman of the Federal Reserve.
Greenspan said most leading economists at the time had expected budget surpluses
to stretch into the future, citing forecasts by the Office of Management and
Budget as well as by the bipartisan Congressional Budget Office. And he said
that he had also pushed for tight rules on Congressional spending and more
fiscal discipline.
"I don't think that the issue is a question of taking a wholly different view...
It turns out we were all wrong," he said, referring to the prevailing budget
surplus forecasts. He also said that he would take the same position again if he
was faced with the same circumstances.
Senator Clinton finished her questioning with a quick parting shot: "Just for
the record, we were not all wrong, but many people were wrong."
Greenspan also repeated his support for some kind of private investment accounts.
The main reason he gave is that putting part of people's retirement taxes in a
private account would be like putting them in a "lock-box" so that the funds
could not be diverted into spending on other government programs.
Find this article at:
http://money.cnn.com/2005/03/15/commentary/column_hays/greenspan_socialsecurity/index.htm?cnn=yes