Greenspan's complicity in the social security mess
Earlier this week Alan Greenspan, Chairman of the Federal Reserve system, testified before the House Committee on the budget. His comments on the need for social security reform attracted the headlines.
- "...One change the Congress could consider as it moves forward on this critical issue is to replace the current measure of the "cost of living" that is used for many purposes with respect to both revenues and outlays with a more appropriate price index...
Another possible adjustment relates to the age at which Social Security and Medicare benefits will be provided. Under current law, and even with the so-called normal retirement age for Social Security slated to move up to 67 over the next two decades, the ratio of the number of years that the typical worker will spend in retirement to the number of years he or she works will rise in the long term. A critical step forward would be to adjust the system so that this ratio stabilizes. A number of specific approaches have been proposed for implementing this indexation, but the principle behind all of them is to insulate the finances of the system, at least to a degree, from further changes in life expectancy..."
- "Federal Reserve Chairman Alan Greenspan does well to address, at the end of his career, problems that he did not have the guts to take on 21 years ago when he still was campaigning for a major federal appointment.
While many of the suggestions Greenspan made Wednesday now make sense — despite still likely being politically unpopular — one should know the chairman's history on this issue, how he avoided the unpopular road 21 years ago, and how we're paying for those decisions today...."