February 17, 2005

Greenspan sees success in gradual rate hikes policy

Fed Chairman Alan Greenspan said Wednesday the economy is in good shape but warned that Americans urgently needed to save more -- and he endorsed the idea of private accounts as part of Social Security reform.

(H/T to the incomparable Roger L. Simon, who we hope is recovering nicely from last week's gall bladder surgery.)

The Fed chairman also indicated the central bank would continue to raise interest rates gradually.

Greenspan waded into one of the more contentious issues facing Congress coming out in favor of fundamental changes in the Social Security system, but he urged caution. The Fed chief said the move toward private accounts should be gradual to limit borrowing needed to keep benefit payments, while payroll taxes are diverted into the new accounts.

And under questioning by Democrats, he conceded that private accounts by themselves would not boost the nation's saving rate. But he said that not making changes to Social Security was risky and not sustainable. Once the transition costs are paid for, a Social Security system with an individual account element would add to the net national savings rate, said Greenspan, which would strengthen the economy and help retirees.

He urged action before 2008 to prepare Social Security for the coming wave of retiring "baby boomers," and said separately it was "imperative to restore fiscal discipline" in the United States to help narrow the nation's huge trade deficit.

Uh-oh!
Looks like the Dimocrats are going to have to think of something else to do to block President Bush!
Might I suggest another candlelight vigil around the statue of FDR?
Surely, a bunch of Dim senators and congresspersons weeping and chanting "We miss you! Come back to us!" to the sculpture of the 4-term Dem demigod Prez would conjure up their lockbox from the ether and fix the SSA problems before the whole Ponzi scheme goes bankrupt.

(H/T to Roger L Simon, who is recovering from emergency gall bladder surgery. Take care of yourself, Rog--you're the top!)