Greenspan Lobs a Grenade Into the Political Arena

Posted on February 25, 2004

Federal Reserve Chairman Alan Greenspan lobbed a grenade into the political arena with his comments about the ballooning U.S. deficit of $521 billion, which he said must be reduced. Chairman Greenspan warned that if we do not take steps to reduce the deficit, long term interest rates will rise and eventually wreak havoc on the U.S. economy. When the 70 million baby boomers start to retire there will be a massive demographic shift. There won't be enough people paying into the system to pay out benefits. His solution to this problem? Cut spending on social security. Greenspan recommends cutting the amount of benefits for future retirees, raising the retirement age and changing the index used to calculate inflation.

These comments have created a firestorm of outrage in this election year from the AARP, Democrats and seniors. President Bush tried to calm fears by stating that: "My position on social security benefits is: those benefits should not be changed for people at or near retirement."[emphasis added]

Hmmm...that sounds like he does support cutting benefits for anyone who isn't going to retire in, say, the next five years or so. Doesn't surprise me a bit. Anyone who reads the newspaper knows that Social Security is bankrupt. The funds are co-mingled to pay for other projects...there is no magic "lockbox" that keeps those funds separate. And lately the government has been spending like a drunken sailor, to quote Senator John McCain.

So, you know that big chunk of cash that's witheld from your paycheck every two weeks? Don't count on ever seeing it again in the form of a government check that arrives when you hit 65. I hope you're all putting something into savings, because I guarantee you that social security won't be there to bail you out in your Golden Years.