Greenspan urges action on Medicare, Social Security

WASHINGTON – Federal Reserve Board Chairman Alan Greenspan Wednesday urged Congress to move soon toward reducing future Social Security and Medicare benefits, warning that growing budget deficits threaten to cause economic “stagnation.”

Congress is “overdue” in addressing the looming fiscal problems, he said, testifying before the House Budget Committee. Greenspan appeared on Capitol Hill a day after the Senate’s top Republican suggested that President Bush’s push to remake Social Security might have to wait until next year. The Fed chairman, speaking for himself rather than the central bank, again endorsed diverting some Social Security payroll taxes into individually controlled investment accounts. He again recommended that policy-makers do so cautiously, to avoid disrupting markets.

Greenspan argued that lawmakers should consider introducing private accounts because the nation has promised retirees more benefits than it has the resources to deliver. “Something’s got to give,” he said. “We have to find a better model.”