03/10/04 — Greenspan: His ideas are worth our consideration

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Greenspan: His ideas are worth our consideration

Alan Greenspan suggested that Social Security be protected through three steps: Making President Bush’s tax cuts permanent, cutting government spending, and reducing the amount of benefits that future retirees are promised.

It didn’t take long for the politicians to start demagoguing that last one. Use the word “reduce” and “benefits” in the same sentence and you’re going to ignite the airwaves.

Said John Kerry, the Democrats’ apparent presidential nominee: We’re not going to save Social Security by keeping Bush’s tax cuts, by golly.

Well, of course, it wasn’t Bush who suggested it, but statements like Kerry’s make nice sound bites. If they imply something that isn’t true, that’s okay as long as they tend to make the opponent look like an ogre.

As for the meat of Dr. Greenspan’s suggestions, they at least deserve consideration. The time iscoming when the Social Security program will bein a crisis unless we begin looking now for ways to save it.

Cutting future benefits would be a drastic measure, but drastic measures may be necessary.

Greenspan is no novice on Social Security and other economic issues. He has been on the Federal Reserve Board since 1987 and was appointed chairman by Presidents Reagan, George Bush and Bill Clinton. He was, like many economists, a Republican, but he collaborated with the Democrats in the Clinton administration to suppress inflation and keep unemployment at the lowest levels in history.

Furthermore, he was chairman of the National Commission on Social Security Reform in the early 1980s. The commission helped to prevent bankruptcy of the program.

On his first two steps for saving Social Security, cutting spending and lowering taxes, Greenspan seems right on track. Cutting taxes is a proven way to stimulate private-sector spending, investing, manufacturing, hiring — even though some find opposition to tax cuts politically irresistible. The advantages of cutting spending are obvious, too, but are equally easy to politicize when a candidate is trying to make himself look kinder and gentler than the other guy.

Greenspan didn’t mention another highly political possibility — allowing workers the option of going for higher dividends on their retirement dollars, rather than settling for the paltry returns that the current setup gets.

The way it’s done now, the government takes money out of your paycheck, and then takes an equal amount from your employer, both earmarked for Social Security. The Social Security program lends the money to the government and gets back just what it needs to pay its obligations. There is but a tiny return, if any, to an individual on the money taken from his paychecks over the years.

President Bush has discussed allowing Personal Retirement Accounts for anyone who wanted one. They wouldn’t be mandatory. Whoever wished to do so could continue under the old program. But a person opting for a PRA could have a portion of his money put there, just for him, and he could invest it as he saw fit.

People make their own decisions with IRAs and 401-Ks. Why should they be denied that right with the other part of their retirement savings?

PRAs would constitute real reform in Social Security. The holders and seekers of high offices ought to be working together to explore all possibilities for saving the program, rather than yapping like little feist dogs at every idea that comes along.

Published in Editorials on March 10, 2004 12:46 PM