Greenspan and the deficit

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Yesterday, Greenspan dropped the bombshell that Social Security needs substantial change to address a geometrically expanding deficit. The suggested changes included raising retirement age, smaller costs of living, and reducing benefit amounts (Greenspan Urges Cuts to Social Security to Rein In Deficit, NYT, Gilpin, 2/25/04). I discussed the impact of the looming Social Security porblem to your attention with the article Economic crisis take 2, 09/27/03. In that article, I noted that there was an underfunded liability of $25 trillion by 2013 (a figure quoted from Peter Petersen head of the Federal Reserve Bank). This will give us a total deficit of approximately $33 trillion by 2013.

Obviously this is huge and the implications are daunting. However, for Greenspan to argue that the remedies are to cut costs, and reduce benefits, (and by the way change the way that inflation is calculated) as sole remedies is maddening to say the least. Bush has put in play tax cuts he wants to make permanent which will drive both the short and long term budget up by trillions of dollars. He (and his senatorial partners in crime) have put in place a prescription drug plan that will cost almost a trillion over the next three years that goes straight to drug compnaies. Bush has dramatically increased funding for the DoD, not to mention the costs of wars, that are costing billions more every year.

Yet did Greenspan suggest doing anything about these issues? Not that I have seen reported. Instead, he played right into the Bush plan of killing social services, decimating Social Security, and the plan to privatize Social Security. It seems clear that Greenspan wants to continue to hold his post. However, the ploy is so transparent. I am ashamed by the blatant partisanship of Greenspan's recommendations. How in the world he could just "overlook" those issues that are driving up the deficit is beyond me.

Don't get me wrong. We are facing a massive Social Security crisis. However, it is one that has been looming for quite some time as legislators have freely drained the Social Security Reserve. Obviously that needs to be addressed. It is also likely that decisions need to be made about how to deal with the looming shortfall. Some are suggesting rolling back the Bush tax prizes, and actually adding a slight increased tax to the top 1% of earners. I don't know if either of these measures will fully address the problem, but they would certainly help. I do think that paying back what has been drained from the fund, and stopping the use of it as a "kitty," in combination with the other recommendations would go a long way towards mitigating the problem.

But the Pres really doesn't want us thinking about deficits or even the economy. Therefore I predict that it will be full steam ahead on the rhetorical debate on gay marriage. Or maybe another war will provide sufficient fear and distraction.

Posted by rowan at February 26, 2004 09:00 AM | TrackBack | Printable Version | [eMail this article!] |