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Craig say Social Security
is unsustainable without changes
(Feb. 27, 2003
- Washington, DC)-- At a hearing today on the economic impacts of global
aging held by the U.S. Senate Special Committee on Aging, Federal Reserve
Board Chairman Alan Greenspan said that America's aging population will
have significant effects on the nation's fiscal situation.
particular," Greenspan said of the nation's fast growing senior
citizen population, "it makes our Social Security and Medicare
programs unsustainable in the long run."
population of senior citizens is expected to double in the next 30 years
to 71 million - up from 12.4 percent today to nearly 20 percent of the
population by 2030. Worldwide, the number of senior citizens is
projected to more than double in that same time from 420 million to 973
saying it and I'm glad to have Alan Greenspan say it. This nation
cannot continue with Medicare and Social Security without changes to both
systems. Those that say we can stay the course are just flat
wrong." said Sen. Larry Craig (R-Idaho), Chairman of the Committee.
The Chairman of
the Federal Reserve said that while changes are needed, raising payroll
taxes is not the answer.
"Aside from suppressing economic growth, large increases in payroll
taxes can exacerbate the problem of reductions in labor supply, whereas
policies that promote longer working life can ameliorate it,"
Greenspan said. "In addition, policies that link increases in
longevity over time to the eligibility age for Social Security, and
perhaps Medicare, may need to be considered. Such linkages would
help protect the financial and, hence, the economic viability of these
As the nation's
population ages, the Chairman of the Federal Reserve said that he expects
private pension assets "will almost certainly increase over the next
decade." Private pensions already account for about 12 percent
of household financial assets in the United States. Greenspan said
that as the nation ages in the future, rising pressures on retirement
incomes and a growing scarcity of experienced labor could induce greater
numbers of older Americans to stay in or rejoin the workforce of the
the U.S. economy is uniquely well suited to make those adjustments,"