Federal Reserve Chairman Alan Greenspan (search) has touched off a political firestorm with his call for benefit cuts in Social Security and Medicare for future retirees.Meanwhile, in fantasyland:
Greenspan told Congress that soaring budget deficits from out-of-control entitlement programs could lead to a "very debilitating" rise in interest rates and threaten the economy in coming years.
Democratic front-runner John Kerry (search) said the way to address the deficit is to roll back tax cuts for the wealthy and "the wrong way to cut the deficit is to cut Social Security benefits. If I'm president, we're simply not going to do it."If we ignore it, maybe it'll go away! Or at least we won't be in office when the monkey starts hurling poo all over the livingroom.
Democratic presidential contender John Edwards (search) called it "an outrage' for Greenspan to call for cuts in Social Security while at the same time endorsing making Bush's tax cuts permanent.
Bush said Social Security benefits "should not be changed for people at or near retirement."
Greenspan noted that projections show the country will go from having just over three workers supporting each retiree on Social Security to 2.25 workers for every retiree by 2025.
"This dramatic demographic change is certain to place enormous demands on our nation's resources — demands we will almost surely be unable to meet unless action is taken," Greenspan said. "For a variety of reasons, that action is better taken as soon as possible."
He said taking action now would mean that people still working would have time to adjust their retirement savings plans to deal with smaller Social Security benefits.
Greenspan said at some point the country needed to face the fact that the government has promised more in entitlement benefits than it can afford to pay. He said the problem was even worse for Medicare because it was impossible to estimate what types of costly medical advances will be available in coming years.