Baby Boomers Get Ready!

[Darryl G. Thomas]

Greenspan Urges Pension Benefit Cuts

By Nell Henderson
Washington Post Staff Writer
Friday, August 27, 2004; 12:39 PM

JACKSON HOLE, Wyo., Aug. 27 -- Federal Reserve Chairman Alan Greenspan today urged Washington policymakers to consider scaling back future federal retirement benefits, saying that the nation has probably promised more than the economy can realistically deliver.

Greenspan, himself, appeared to have pulled back from his more forceful comments on Capitol Hill earlier this year, in which he clearly called for restraining the growth in Social Security and Medicare spending by reducing benefits for future retirees. Those remarks, although echoes of warnings he has made for years, prompted a barrage of criticism, in large part because of the sensitivity of the topic in a presidential election year.

However, the Fed chairman made much the same point in more oblique language today, in remarks to a conference here on the economic impacts of global population changes.

"If we have promised more than our economy has the ability to deliver to retirees . . . as I fear we may have, we must recalibrate our public programs so that pending retirees have time to adjust," Greenspan said. "If we delay, the adjustments could be abrupt and painful."

Greenspan, who chaired the 1983 commission that recommended several changes to shore up the Social Security program's finances, did not urge altering benefits in specific ways today. But he did note that a variety of changes in both federal programs and Americans' retirement and saving behavior could ease the "adjustments" that will have to be made as the population ages.

Americans, for example, could work longer, said Greenspan, 78, who has served as Fed chairman for 17 years. They are living longer and healthier. Work is "becoming less physically strenuous, but more demanding intellectually," he said. Yet workers have been retiring at younger ages in recent years.

One way to encourage workers to retire later, he suggested, would be to raise the age of eligibility for full retirement benefits or to slow the growth of Medicare benefits.

Americans also should save more, both as individuals and as a nation, he suggested. The individual saving rate is less than 2 percent, and the nation borrows an amount equivalent to about 5 percent of its annual gross domestic product from overseas to finance its spending and investment.

Without greater saving, he said, the country will not have the money to invest in the new technologies needed to continually boost worker productivity, or output per labor hour.

Rising productivity, he said, "offers the greatest potential for boosting" the economy's resources "to a level that would enable future retirees to maintain their expected standard of living without unduly burdening future workers."

Retirees tend to save more, he said, expressing hope that the large post-World War II baby boom generation will do the same.

Greenspan also implicitly urged actions to reduce the record federal budget deficit, but saying that "critical to national saving will be the level of government, specifically federal government saving."

"Unless actions are taken," he said without specifying the actions, the deficit will become far worse as the share of the American population over age 65 grows from about 12 percent today to around 20 percent by 2035.

Greenspan also repeated his call for the nation to "engage in a long overdue upgrading of primary and secondary school education," as another way to enhance productivity.

The problems of supporting a growing elderly population are common throughout the industrialized world, where the ratio of older adults to younger adults has been rising for at least 150 years, he said.

The aging of the population slowed greatly with the baby boom that followed World War II, but picked up again as birth rates fell and life expectancy rose through the late 20th century.

U.S. working-age population is projected to grow more slowly in coming years, with the rate of increase falling from about 1 percent per year today to 0.25 percent per year by 2035, he said. Meanwhile, the baby boom generation is just a few years away from starting to claim federal retirement benefits.

"The relative aging of the population is bound to bring with it many changes to the economy of the United States -- some foreseeable, many probably not," Greenspan said. "Inevitably it will again require making difficult policy choices to balance competing claims."

[kedoane]

My mom is 70 years old and she has Alzheimers for the past few years. If Greenspan forces someone who has health problems to work, then there will probably a big stink raised (at least I would raise one since I have seen what this disease has done to my mom.)

[Dr Dave]

I never believed I'd collect anything from Social Security. No company I ever worked for had a pension fund. Fortunately my wife made some good money in the '90s, and has planned conservatively.

Left to my own devices, I'd probably be living in a box at age 70, or worse. I doubt whether I'd have the dough for the anti-depressants that allow me to be functional in the modern world.

[clinthopson]

I've been collecting Social Security now for over 6 years. Donna starts in a couple more years.

It's a nice supplement.

Being holier than thou, we've built up a nice profit sharing fund, along with our employees and will do just fine.

So you youngsters better start saving and stop spending your money on booze, broads and the Devil's music.

Isn't it time for Alanbaby to retire?

[graypencil]

I guess suspending DUBByas big tax giveaway to the rich would be out of the question ..

currently "recieving SS ..but like Clint, it's only a small part of what I exist on ..ASCAP/ AFM pension /and some muni bond fund dividends.

Maybe Greenspan could go and get his gig back with Henry Jerome ..

[Captain Hate]

For all you deficit Chicken Littles that whine about your grandchildren having to pay the debt payment (which is horseshit) this is the real deal that will hit your children right between the eyes. The coming situation for social security is an actuarial nightmare, with too many recipients depending on too few workers. Unless significant changes are made in the way SS works, and that doesn't include forcing Alzheimers sufferers to work, the system will explode.

When Bob Kerrey provided the decisive vote for passing Clinton's 1993 budget, he did so with the provision that Clinton appoint a bipartisan commission on entitlement spending. He did and I remember John Breaux was the lead Democrat on it. They came up with a workable plan that, while I'm not sure it would have been the ultimate answer, would have been a needed step in the right direction. Unfortunately Clinton, in an act of sheer opportunism, rejected the proposals and used SS as a wedge issue for his re-election. This could have been an impressive legacy for Clinton, one that I would've applauded; instead it was just more Slick Willy looking out for #1 and fuck all else.

[Gary Sisco]

It's not like no one has been saying this for decades. I've talked about it so much even my friends are sick of hearing it. In the end, the boomers (myself included) will pay through the ass with a lot of misery in our elder years for this insane complacency.

Typically, Greenspan talks in terms of cutting benefits rather than forcing Congress to stop the illegal raiding the SS trust fund every day, which would require him to confront the real powers that be in this society, rather than force the rest of society to pay for their grossly irresponsible -- indeed, mad -- spending spree that's now decades old.

And that's the only problem SS have. It's not a benefits problem (the benefits are hardly extravagant, let's face it). It's a raiding problem that should be placed squarely on the shoulders of those responsible: Congress, both parties; and every administration for at least the last 25 years, both parties. Neither can blame the other for Congress and the presidents' illegal behavior. They've both been raiding the trust fund for longer than some regulars here have even been alive.