9:59am 03/02/05 GREENSPAN: MEDICARE MORE A PROBLEM THAN SOCIAL SECURITY
9:59am 03/02/05 GREENSPAN: HIGHER TAXES NOT A SOLUTION TO DEFICIT
9:59am 03/02/05 GREENSPAN REPEATS SUPPORT FOR PRIVATE SAVINGS ACCOUNTS
9:59am 03/02/05 GREENSPAN: SOCIAL SECURITY CHANGES SHOULD COME SOON
9:59am 03/02/05 GREENSPAN CALLS FOR 'MAJOR' DEFICIT-REDUCING ACTIONS
9:59am 03/02/05 GREENSPAN SAYS ECONOMY GROWING AT REASONABLY GOOD PACE
Read full testimony
http://www.federalreserve.gov/boarddocs ... efault.htm
Greenspan calls for major deficit reduction
By Greg Robb, MarketWatch
Last Update: 10:27 AM ET March 2, 2005
WASHINGTON (MarketWatch) -- Federal Reserve Chairman Alan Greenspan told Congress that the U.S. fiscal budget is unlikely to improve in coming years "unless major deficit-reducing actions are taken."
The forecast of continued large federal budget deficits is "of great concern because they would drain an inexorably growing volume of real resources away from private capital formation over time and cast an ever-larger shadow over the growth of living standards," Greenspan told the House Budget Committee on Wednesday.
He urged the committee to consider a major overhaul of Congressional budget laws, including renewing rules to offset any spending or tax cuts by cutting spending elsewhere.
Greenspan said that Congress should try to lower the federal deficit without resorting to tax increases, which would pose "significant risks" to economic outlook.
Greenspan repeated his support for private retirement accounts to bolster Social Security.
He said that Congress should tackle Social Security "sooner rather than later."
"If existing promises need to be changed, those changes should be made sooner rather than later," Greenspan said.
"We owe future retirees as much time as possible to adjust their plans for work, saving, and retirement spending," Greenspan said.
But the challenge of Medicare is "far more problematic" than that associated with Social Security, Greenspan said.
There is no accurate way to predict the cost of caring for the elderly in 2030, given the rapid improvements in medical technology.