- THE MAGAZINE
Wading into the hot-button political issues of job losses and Social Security, Greenspan said that erecting protectionist barriers was not the answer to foreign competition and that Congress would at some point have to address the problem of the pending retirement of 77 million baby boomers. He repeated his warning that Congress will have to trim future Social Security benefits.
Greenspan, in response to a question from Democratic presidential candidate Rep. Dennis Kucinich, D-Ohio, said that the government cannot afford to meet all the promises in Social Security and Medicare that have been made to future retirees.
"We do not have enough in real resources to meet the promises that have already been made. We will not be able to fully meet the benefits to the next generation, the baby boomers that are retiring," Greenspan said.
"We have to construct a pattern that the benefits we do promise will be delivered rather than have these people retire in very large numbers and find out that they were betrayed by government," Greenspan said.
Greenspan's comments about the need to trim retirement benefits provoked a firestorm of criticism when he made them last month, with critics charging that Greenspan was urging benefit cuts at the same time that he was urging that President Bush's tax cuts be made permanent.
Greenspan did say on Thursday that he believed some tax increases would be needed to bolster Social Security because the funding gap was so large that it could not be closed entirely by trimming benefits. But he said Congress should start with benefit reductions before moving to tax increases because higher taxes would act as a drag on economic growth.