Greenspan Repeats Pending Social Security Crisis Warning

August 27, 2004 ( - Federal Reserve Chairman Alan Greenspan again took aim at the pending Social Security and Medicare crises, asserting that retirees will face "abrupt and painful" choices if Congress does not act swiftly.

“As a nation, we owe it to our retirees to promise only the benefits that can be delivered,” Greenspan said in opening remarks to a Jackson, Wyoming conference sponsored by the Federal Reserve Bank of Kansas City on the challenges posed by aging populations, the Associated Press reported. “If we have promised more than our economy has the ability to deliver, as I fear we may have, we must recalibrate our public programs so that pending retirees have time to adjust through other channels. If we delay, the adjustments could be abrupt and painful.”

Greenspan said addressing the problem by raising payroll taxes was problematic as this would make it harder for employers to hire new workers. The 78-year old Fed chairman has said that he favors raising the age at which full Social Security benefits are delivered to retirees. (See Greenspan: Cut Future Soc. Sec. Benefits ).

However, he said any solution must address all the economic impacts that changes in the government’s two biggest benefit programs would entail, such as the effect on retirement decisions, the size of the labor force and the saving behavior of all Americans, according to the AP.

Greenspan has repeatedly spoken on the issue during this election year, acknowledging its political sensitivity, but saying it was one that must be dealt with. In his statement before the Wyoming conference, he stated that this issue was particularly poignant given the impending retirement of 77 million baby boomers.