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Published: Wednesday, 9/1/2004

Hang on to Social Security

ALAN Greenspan may be the Republican economic guru, but you can bet that his name won't be taken any other way than in vain at this week's Republican National Convention.

Just as the GOP delegates gathered in New York City, the Federal Reserve chairman warned once more that Social Security and Medicare benefits will have to be cut for Baby Boomers because the government won't be able to afford them.

In Mr. Greenspan's own words, "We owe it to our retirees to promise only the benefits that can be delivered. 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."

Funny, but we haven't seen such a plank in this year's Republican platform nor, for that matter, in the Democrats'. President Bush has said only that benefits "should not be changed for people who are at or near retirement." Sen. John Kerry, the Democratic presidential nominee, has said that benefits should not be cut, period.

The notion of cutting pension benefits under Social Security and Medicare, which pays for medical care for retirees, is so politically explosive that neither political party will do anything to resolve what Mr. Greenspan sees as a serious problem until it actually hits the fan.

According to a report last March by the Social Security board of trustees, Social Security is adequately funded at projected benefit levels through 2042. After that, the fund will be able to pay only 70 percent of benefits. The Medicare program, by most accounts, is better off, although it could be crippled by the rising cost of health care.

So why is Mr. Greenspan issuing what amounts to a doomsday prediction, and worrying that the government has "promised too much"?

That's a good question, given that the Fed chairman wasn't shy about giving Congress his blessing in 2001 and 2003 when it rammed through President Bush's excessive package of tax cuts.

Mr. Greenspan had no qualms about tax cuts heavily tilted toward the richest Americans, but now he is afraid "too much" has been promised to those who, on average, receive a little over $1,000 a month from Social Security after a lifetime of work.

To put the matter into perspective, the Washington-based Center on Budget and Policy Priorities points out that the cost of making the tax cuts permanent, which will surely happen if Mr. Bush is re-elected, "over 75 years will be about $11 trillion - three times the Social Security shortfall and nearly the same size as the Social Security and Medicare hospital insurance shortfalls combined."

As we've argued before, governing this country to the benefit of most of its residents is a matter of priorities. The government can proceed as it has under President Bush and borrow billions of dollars to give back to the wealthy in the form of tax cuts, or it can adopt a more sensible pay-as-we-go approach and avoid the "abrupt and painful" benefit cuts Mr. Greenspan warns about.

The tax cuts haven't given the economy the stimulus promised by the President and his smooth-talking economic advisers. To the contrary, living-wage jobs are down, and poverty is up (see below).

This is an issue we would like to see debated during the remaining 60 days of the presidential campaign, if either candidate has the guts to take up the challenge.



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