posted on June 16, 2004 03:49:39 PM new
Fed Chief Calls for Benefit Cuts
Alan Greenspan, the Federal Reserve chairman, provoked a political firestorm in the US yesterday when he urged cuts in social security benefits to get a grip on the ballooning budget deficit. He warned that the US government needs to take immediate action to curb spending. Mr...
By Guardian Newspapers, 2/25/2004
Alan Greenspan, the Federal Reserve chairman, provoked a political firestorm in the US yesterday when he urged cuts in social security benefits to get a grip on the ballooning budget deficit.
He warned that the US government needs to take immediate action to curb spending.
Mr Greenspan, who has repeatedly criticised the spendthrift nature of the Bush administration, challenged the White House assertion that it will be able to cut the budget deficit in half by 2009 as revenues increase on the back of an improving economy.
He said the shortfall could actually worsen once the first of the 77 million "baby boomers" in the US retires in 2008 and becomes eligible for social security benefits. The "favourable short-term outlook" for the US economy, he said, was "playing out against the backdrop of growing concern about the prospects for the federal budget".
Under George Bush, the budget has swung from large surpluses to a deficit predicted to reach $521bn this year, partly due to tax cuts and increased spending on the military.
Mr Greenspan said that increasing taxes could put the brakes on economic expansion. Instead, he said, the US might need to trim social security retirement benefits to rein in the deficit. He also floated the idea of lifting the retirement age to deal with the impending crisis.
The Democrats, targeting the administration's financial record as an election issue, immediately seized on the comment. "Greenspan is right to call attention to the record-shattering deficit under Bush," said presidential nominee candidate John Edwards. "But it is an outrage for him to suggest that we should extend George Bush's tax cuts on unearned wealth while cutting social security benefits that working people earn."
Both Mr Edwards and rival John Kerry have promised to repeal the president's tax cuts.
Mr Bush also reacted yesterday, trying to calm fears that social security benefits would be cut in the short term and maintaining that his target for reducing the deficit was on track. "My position on social security benefits is: those benefits should not be changed for people at or near retirement."
Mr Greenspan, testifying before the House budget committee, said: "This dramatic demographic change is certain to place enormous demands on our nation's resources." If the budget deficit was not contained then it could eventually "slow the growth of living standards" by diverting capital that would otherwise be used to stimulate economic growth, he added.
posted on June 17, 2004 07:20:15 PM new
Give Bush 4 more years without worry of reelection and he will do anything to make the rich RICHER and the poor an middle class poorer.
posted on June 18, 2004 11:49:33 AM new
We can never get any reform of SS because anytime anyone wants to fix the bloated monster, we get the "grannies eating dogfood" wails.
