by John M. Curtis
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Copyright March 1, 2004
All Rights Reserved.

capegoating baby-boomers, Federal Reserve Chairman Alan Greenspan signaled his retirement is long overdue, telling the House Budget Committee to cut Social Security benefits for the rapidly aging “me-generation.” Greenspan's brainstorm finds a new way of dealing with the government's runaway deficits, expected to threaten the economy as boomers begin drawing Social Security benefits in 2011. Faced with a whopping $521 billion deficit, the Fed chairman urges retaining President Bush's tax cuts at the expense of 76 million rock-n-rollers looking ahead to retirement over the next 15 years. White House spin-meisters point out that today's deficits represent only 4.2% of the Gross Domestic Product, less than the 6.2% record in 1992, when Bill Clinton beat President George H.W. Bush. In reality, the rate of income tax revenues is the lowest since the Eisenhower administration.

      Greenspan's plan couldn't come at a worse time for Bush, trying to stem his current slide in approval ratings, dropping since Jan. from 60% to 47%. Telling 76-million boomers that he intends to balance the budget on their backs doesn't help Republicans heading into November. Giving tax breaks and prescription drug benefits doesn't reassure upcoming seniors, busy planning retirements. Ambitious amnesty or guest-workers' programs, designed to give immigrants legal status, and, yes, benefits, already puts intolerable pressure on the federal budget. Immigrants—legal or otherwise—already receive the lion's share of government largesse, especially Medicaid funding, currently subsidizing health care for new immigrants. Because of the sluggish economy, Greenspan favors cutting expenses, like Social Security, over rolling back tax cuts and generating new revenue.

      Greenspan blames tomorrow's astronomical deficits on expected payouts of Social Security benefits. “This dramatic demographic change is certain to place enormous demands on our nation's resources—demands we almost surely will be unable to meet unless action is taken,” said Greenspan, ignoring whopping increases in defense spending, largely stemming from reconstructing Iraq. Forget going after terrorists, the costs of democratizing Iraq exceeds the Marshall plan, rebuilding Europe after World War II. There's no sudden demographic-change taking place. Bean counters at Social Security and in Congress have long known that aging baby-boomers would put additional strain on the system. It was assumed that an expanding economy would accommodate new financial burdens. No administration can go on uncontrolled spending binges, give generous tax cuts, finance costly wars, extravagant drug benefits and new guest workers' programs without breaking the system.

      Before Greenspan punishes baby-boomers, he should lecture the White House on how runaway spending and misguided tax cuts cause serious economic problems. Giving generous tax cuts when there's no moola in the national piggybank makes absolutely no sense. Greesnpan knows that Supply-Side economics—how tax cuts stimulate the economy, create jobs and produce balanced budgets—can't work without fiscal discipline. Without belt-tightening, and going after waste, fraud and mismanagement, it's unrealistic to expect tax cuts to reverse whopping deficits. When Clinton generated hefty surpluses in the late ‘90s, that was the time to cut taxes—not when tax revenues, as a percentage of the GDP, hit 50-year lows. You can't fund costly wars, give lavish Medicare drug benefits and subsidize massive new immigration programs when government can't pay its bills.

      Despite rosy reports about accelerated growth, today's artificially low interest rates clearly indicate the economy remains in trouble. Keeping rates at rock-bottom, Greenspan's worries about deflation outweigh concerns about inflation. Tax cuts produce far less stimulus than Greenspan's loose monetary policy. “No matter what was said in Washington just this morning, the wrong way to cut the deficit is to cut Social Security,” said Democratic front-runner John Kerry, rejecting the idea of usurping boomers' Social Security benefits. Created in 1935, Social Security currently pays out $470 billion to more than 46 million retired and disabled beneficiaries. Calling Greenspan's proposal “irresponsible,” William Novelli, head of AARP—the nations' largest senior advocacy group—blasted the Fed chairman for playing with Social Security to balance the federal budget.

      Greenspan's insensitivity, merited or not, should result in his immediate resignation. It's outrageous calling for cuts in Social Security when he readily bailed-out Long-Term Capital Management, an elite Wall Street hedge fund with whom he had close personal ties. Before Bush throws baby-boomers to the wolves, he should reconsider whether the federal government can afford generous tax cuts, extravagant prescription drug plans, ambitious amnesty programs and costly military adventures. If fighting terrorism and national security are really the priorities, then something must give before messing with boomers' Social Security benefits. Tax cuts and low interests can't reverse the current spending binge, throwing the budget out-of-whack. Before the Fed chairman recommends tampering with Social Security, Greenspan should lecture the White House about fiscal discipline.

About the Author

John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He's editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.

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