Greenspan warns against deficits (says to cut social security)

CNN ^ | 02/24/04

[hoosierboy]

NEW YORK (CNN/Money) - Federal Reserve Chairman Alan Greenspan warned Congress Wednesday to take quick action to fix the nation's swollen budget deficit, saying it could impair the ability to pay Social Security benefits and weigh on the broader economy.

[hoosierboy]

I know it really has to be breaking news to be posted here, but the fact that greenspan said we need to cut social security payments or raise the age to receive benefits, brings pictures in my head of 80 yr old senoir citizens mugging greenspan with their canes outside the capital building after he has given his speech. Oh and if this does happen I expect to take full credit for this prophecy.

[dogbyte12]

Bush needs to tread lightly here. Even if he agrees with Greenspan, he needs to "set up a commission" to study this proposal. The commission's study period should end some time after November 2nd.

Grumpy seniors will get mad, but also boomers, if they feel that they have been paying into the system for 30 plus years and they are going to get a rate cut. This could be political dynomite.

[LibertarianInExile]

In other news, Greenspan proposed spinning money from straw and $#!##!ng gold bricks to reduce the deficit. Yeah, Congress will lower Social Security payments or raise the retirement age. You betcha that'll happen. Right after Jack climbs back down the magic f'in beanstalk.

[SierraWasp]

Wall Street took it as braking news!!!

It stopped a broadly rising market right in it's tracks this morning.

[Muleteam1]

To most people who are at least ten years from SS, this is not new news. Many, possibly most, younger Americans expect to never draw SS even though they will have to pay it. But then that's the way a pyramid scheme is supposed to work.

Muleteam1

[Lael]

BTTT!!!

[Cold Heat]

But Greenspan and other economists have warned that, over time, persistent deficits and high government debt will push interest rates higher, hurting economic growth and the nation's living standards.

While I recall several Economists saying that this connection exists, it has never happened and Greenspan, to my knowledge has never stated it in this way.

Someone correct me if I am wrong.

[Cold Heat]

Many, possibly most, younger Americans expect to never draw

A common misconception and totally wrong.

If that were to actually happen, it would be because there is no government, nor a U.S.A anymore.

[Blood of Tyrants]

They will literally break the bank rather than cut SS benefits. I don't know which is worse, unconstitutional government entitlement programs or wasteful and unnessary government programs. Do you realize that only the government has employess classified as "essential employees"? Does that mean that the rest are non-essential? If they are non-essential, why do we have them?

[Cold Heat]

It stopped a broadly rising market right in it's tracks this morning.

The market was stalled until the hearing. Then started up.

The market liked the comments.

[anniegetyourgun]

The Bush administration is way ahead of this issue. They've had a proposal on the table since he was a candidate the first time. Privatization is the answer.

[unixfox]

But then that's the way a pyramid scheme is supposed to work.

Yep, and those at the bottom of the pyramid always get left holding the bag.

[LandofLincoln]

This guy is so far out of touch it is unbelievable. Cut Social Security, but quit collecting it too.

This is bad for the economy, because Americans will have to spend less and save more. I am for closing SS down, so I can quit contributing to it. I know that I am never going to see a dime of it. Let's cut the retirement package that Congress has in place for themselves, as well. The PIGS!

[anniegetyourgun]

And personally, I'd like to see them add means testing to those who remain on the plan.

[Glenn]

What an amazing way of stating the obvious (to most of us) Greenspan has.

[Cold Heat]

This guy is so far out of touch it is unbelievable. Cut Social Security, but quit collecting it too.

Good grief!

[miloklancy]

Ah yes, Alan Greenspan telling Congress once again, what it doesn't want to hear. Being at the virtual bottom of that government pyramid scheme known as social security, I really have no hurt feelings over either slashing benefits or raising the age to receive benefits. I just count that money that is withheld from pay check as a loss anyway.

[Cold Heat]

And personally, I'd like to see them add means testing to those who remain on the plan.

You get means tested everytime you send in your 1040A or whatever.

Disability is further tested every 3 years. The VA has even more in the way of means testing.

Therefore, I would say that it is being done already, although more can be done perhaps.

[dogbyte12]

The Bush administration is way ahead of this issue. They've had a proposal on the table since he was a candidate the first time. Privatization is the answer.

I don't think it is that simple. Wish it would be. The administration quietly shelved their program to introduce privatization. Part of the problem at the time of course was that the market was in the tank. It is very hard to convince people to switch over to a market based system when the market frankly stunk.

Senior citizens happen to be the most risk adverse people on the planet. Many of them are still keeping their money in low interest accounts because they are terrified of the ups and downs on Wall Street. Remember, the senior citizens grew up during the depression for the most part. There are big exceptions to this rule, but it is still a truism.

If the President wants to go the privatization route once again, he needs to time it well. If the market makes a huge 500 point run, he needs to run out the door, grab a microphone in the rose garden and make the speech then. Otherwise, no matter how right economically he may be, politically, it can be a killer. The democrats have long experience in terrifying the old people. Think they are going to play nice this time?

[familyofman]

Someone has to inform Greenspan about the fact that "deficits don't matter".