Nobel
Prize winning eoconomist Joseph Stiglitz told Amy Goodman that if
the BAIL OUT money to BANKSTERS had just been given to the SOCIAL SECURITY
system, patching the HOLE that BUSH and GRENSPAN allege was there, we’d
have fixed AMERICA!
MAY
2007 NEW
YORK (CNN/Money) - Fed Chairman Alan Greenspan warned Congress Wednesday
to take quick
action
to fix the nation’s swollen budget deficit—including measures that could
cut some future Social Security payments—to avoid even bigger problems
for the nation’s economy down the road.
The
central bank chairman also repeated his assertion that recent tax cuts
should be made permanent and said cutting spending was a better way to
fix the deficit than tax increases. Greenspan, in remarks for delivery
to the House Budget Committee, noted that the recent surge in the deficit
is particularly dangerous, coming
less than a decade before Baby Boomers begin drawing on federal retirement
benefits, putting an ever bigger strain on government resources. (THE
GREEN IS
a period of SURPLUS, ENDING 2001, AND THEN with WTC/ 911, the DEFICITS
START UP.
“This
dramatic demographic change is certain to place enormous demands on our
nation’s resources—demands we almost surely will be unable to meet unless
action is taken,” he said in his remarks. “For a variety of reasons, that
action is better taken as soon as possible.”
Greenspan
said that, if the demographic shift is permanent—and rising longevity makes
that a realistic prediction—then “significant structural adjustments” to
Social Security and Medicare would be necessary, particularly since Medicare
benefits could skyrocket as medical technology advances.
He
proposed some solutions that would reduce future Social Security benefits
to retirees, including raising the ages at which retirement benefits are
paid and changing the inflation measure used to index the payments.
He
later denied that he was specifically suggesting that Social Security payments
be cut, saying he was merely suggesting better “technical means” of setting
benefits.
But
the changes he suggested would cut benefits—raising the retirement age
would result in people drawing benefits for a shorter period of time, and
his preferred index for cost-of-living increases, the chained consumer
price index, would result in smaller benefit increases than the traditional
CPI if recent trends continue.
No impact
on current retirees?
In
separate remarks to reporters in Washington, President Bush weighed in
on the issue, echoing Greenspan’s assertion that near-term Social Security
obligations be met.
“My
position on Social Security benefits is this: Those benefits should not
be changed for people at or near retirement,” Bush said, Reuters news agency
reported.
Democrats
on the House Budget Committee, in their comments to Greenspan, expressed
dismay about the prospect of cutting Social Security benefits to make cutting
taxes easier—a hint the issue could heat up ahead of the presidential election.
Greenspan
also said greater budget discipline was needed, and he bemoaned the recent
expiration of Congressional rules that enforced such discipline.
While
acknowledging that recent tax cuts had helped worsen the budget picture,
Greenspan said he favored cutting spending rather than raising taxes, suggesting
tax hikes could hurt the economy.
“I
am fully aware of the fact that it may not be possible to keep the tax
rate down and still maintain some semblance of deficit control,” Greenspan
said in response to a lawmaker’s question. “But ... I would strongly recommend
that the priority of evaluations start with the expenditure side: what
can be constrained, what can be reduced.”
$500
billion deficit seen Earlier this month, President Bush unveiled a budget
forecast that projected a deficit of more than $500 billion, which would
be the biggest ever in dollar terms. As a percentage of gross domestic
product (GDP), it seems likely to be the biggest since the mid-1980s. However,
the forecast did not include hundreds of billions of dollars for other
costs, such as military expenses in Iraq.
Greenspan
said the deficit spending of recent years has helped the economy recover
from the 2001 recession, and some economists don’t think the deficit is
a short-term problem for the economy.
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.
“If
no action is taken at all ... we’re going to be confronted within a few
years with a marked upward ratcheting of long-term interest rates, which
is very debilitating to long-term economic growth,” Greenspan said in response
to a lawmaker’s question.
In
the short term, Greenspan said, the economy seems to have gathered strength
and that “prospects for sustaining the expansion” are good.
He
said household and business balance sheets were stronger, the Fed’s super-low
interest-rate target was still “highly accommodative,” and that fiscal
stimulus would also help the economy this year, while productivity would
keep inflation low.
Still,
he was not particularly bullish about job growth, which has long been a
glaring weak spot in an otherwise healthy economy.
“Overall,
the economy has lately made impressive gains in output and real incomes,
although progress in creating jobs has been limited,” he said.
This
view seemed unlikely to change market expectations that the central bank
will keep its target for a key short-term interest rate, already at the
lowest level in more than 40 years, unchanged at least until the summer.