Greenspan urges caution

WASHINGTON – Federal Reserve Chairman Alan Greenspan urged a go-slow approach on personal Social Security accounts on Wednesday, saying that while he embraces the idea central to President Bush’s proposed overhaul, he is concerned about stability in financial markets.

“If you are going to move to private accounts, which I approve of, you have to do it in a cautious, gradual way,” Greenspan said in response to intense questioning from both Republicans and Democrats in an appearance before the Senate Banking Committee.

“I think it’s a good thing to do over the longer run,” he said, because something must be done to fix the system.

Bush’s proposal would allow workers under age 55 to divert a chunk of their Social Security taxes into voluntary, private investment accounts.

Greenspan repeated his call to Congress to take action to shore up the massive entitlement programs of Social Security and Medicare. Those programs face huge financial strains with the looming retirement of 78 million baby boomers in 2008.

Bush, meanwhile, said he has not ruled out raising taxes on those who earn more than $90,000 a year to help bolster Social Security’s finances. Under the current system, payroll taxes are paid only on the first $90,000 in wages.