Greenspan Speaks, Mimics Bizzyblog
I fear that we may have already committed more physical resources to the baby-boom generation in its retirement years than our economy has the capacity to deliver. If existing promises need to be changed, those changes should be made sooner rather than later. We owe future retirees as much time as possible to adjust their plans for work, saving, and retirement spending. They need to ensure that their personal resources, along with what they expect to receive from the government, will be sufficient to meet their retirement goals.
…..Unfortunately, the current Social Security system has not proven a reliable vehicle for such [private] saving. Indeed, although the trust funds have been running annual surpluses since the mid-1980s, one can credibly argue that they have served primarily to facilitate larger deficits in the rest of the budget and therefore have added little or nothing to national saving.
(paragraph break added to transcript excerpt for clarity)
In my view, a retirement system with a significant personal accounts component would provide a more credible means of ensuring that the program actually adds to overall saving and, in turn, boosts the nation’s capital stock. The reason is that money allocated to the personal accounts would no longer be available to fund other government activities and–barring an offsetting reduction in private saving outside the new accounts–would, in effect, be reserved for future consumption needs.
Translations:
- The system is hurting badly.
- That’s because the politicians spent the money.
- Private accounts will keep the money out of the politicians’s greedy hands.
Which leaves only one question: Did Greenspan get his speech from yesterday’s Social Security Point 2 of the Day, from Steff Chalk’s Saturday column, or both?
UPDATE: As of 12:30 ET, as you might expect, not one word about Greenspan’s note that creating and enhancing private accounts will keep it away from politicians in (so far) USAT, Marketwatch, or Yahoo (click on links in the right column to check for yourself).
