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Retirement Planning > Social Security

Say Good-bye, Mr. Greenspan

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There is a time-honored tradition, in the sports and entertainment fields especially, of leaving at the top of your game. One thinks of Michael Jordans (first) retirement or of Jerry Seinfelds too soon departure from the airwaves.

More recently, weve seen Carrie Bradshaw and the rest of the ladies from “Sex and the City” say good-bye at the top of their game. And although there is a feeling of having lost something dear, theres also a realization deep in the gut that the right decision was made in checking out.

Leaving at the top of ones game almost never happens in politics. Here the rule is to do all you can to stay long after the party is over. Most politicians have to be wheeled out or shown the door by voters who see about them what the politicians dont see about themselves.

What brings this to mind is Alan Greenspan, Federal Reserve Board chairman, and politician par excellence. After his recent testimony on taxes and Social Security, I knew in my gut it was time for Mr. Greenspan to go.

I know he wont go voluntarilythat much goes without saying. Few humans could voluntarily give up as much influence as the Fed chief wields. But if he has any concern for his legacy and what posterity will make of him, he should quit now, while hes still near the top of his game.

Mr. Greenspan spoke before the House Committee on the Budget late last month. Against a backdrop of likely continuing federal budget deficits, the Fed chief was once again hailed as a visionary man of courage for bringing up the hottest potatoes of allSocial Security and Medicare. “The degree of uncertainty about whether future resources will be adequate to meet our current statutory obligations to the coming generations of retirees is daunting,” he said.

The part of his testimony that got the most press was his belief that a thorough review of spending commitments and “at least some adjustment in those commitments” are necessary.

Benefit commitments for those in and near retirement should be honored, Mr. Greenspan explained. “If changes need to be made, they should be made soon enough so that future retirees have time to adjust their plans for retirement spending and to make sure that their personal resources, along with what they expect to receive from the government, will be sufficient to meet their retirement needs,” he continued.

What was disturbing was what Mr. Greenspan did not say or what he very lightly skimmed over. He said nothing about the recklessness with which we have gone from a multi-trillion-dollar surplus situation to one where deficits accumulate as far as the eye can see. He touched so lightly on the revenue havoc wreaked by trillions of dollars in tax cuts that he might as well have been auditioning for Tinker Bell.

What he did say is that the fiscal gap should be primarily, if not wholly, closed from the outlay side, not through tax increases, which could pose significant risks.

Mr. Greenspan knows better. He should feel impregnable enough to say so and quit being so solicitous of the powers that be at either end of Pennsylvania Avenue.

He knows the tax cuts of the last few years have benefited predominately a tiny sliver of the population, while bestowing on Mr. & Mrs. Middle Class hardly enough to take their family to Disney World for a couple of days, let alone a week. Yet these are precisely the people whose future benefits from Social Security and Medicare he suggests need to be cut.

Its no secret that the Social Security tax is quite regressive and falls heavily on lower income segments of the population. But any revolt has been quieted by the expectation of getting something back from the system for your years of contributing.

If the tax continues to increase over time as legislated, but benefits are severely cut, doesnt that amount to a tax increase? In my book, it does. Mr. Greenspan needs to go public about why this tax increase is acceptable but others pose significant risks. If he cant do that, he should just go.

Steve Piontek

was drbing in his testimony about fiscal issues was what Mr. Greenspan very lightly skimmed ov

Reproduced from National Underwriter Life & Health/Financial Services Edition, March 12, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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