Greenspan's Social Security Warning

October 4, 1999

The Wall Street Journal Friday reported that "Greenspan Objects to Focus of Social Security Debate." The Federal Reserve Board Chairman, in remarks following a speech in Minnesota, argued that the competing "lock-box" proposals floating between the White House and Capital Hill do little to address Social Security's real long-term problems.

From the Journal article:

"I'm terribly concerned that everyone keeps talking about solving the Social Security problem by how they move the Social Security funds around," Mr. Greenspan said last night after a speech to the Minnesota Meeting, a public-affairs forum. He chided politicians for focusing on "bookkeeping" and said, "This is not just a budget or financial problem that can be readily resolved by moving different accounts about."

Greenspan is correct. Even if the Social Security Trust Fund contained real assets - which the president's own budget admits that it doesn't - these funds would not be nearly enough to maintain benefits for the long term. And Social Security would continue to be a bad deal for almost all workers.

The real solution to Social Security's problems is to raise its rate of return by investing in real assets rather than political promises. Only a system of personal accounts, in which individual workers own, control and invest their own payroll taxes, can provide retirement security for the long run.

2001 Index | 2000 Index | 1999 Index | 1998 Index