Greenspan issues a warning, and no one responds -- again

Federal Reserve Chairman Alan Greenspan has issued another reality check for the nation, one that should be taken seriously by politicians in Washington and by every baby boomer everywhere.
Greenspan said that the country will face & quot;abrupt and painful & quot; choices if Congress does not move quickly to trim the Social Security and Medicare benefits for the 77 million post-war children who will begin collecting those benefits in less than a decade.
Greenspan summarized the situation succinctly: It is wrong for the government to hold out the promise of more retirement benefits than it is capable of providing.
Greenspan was speaking at a two-day conference late last month sponsored by the Federal Reserve Bank of Kansas City on the challenges posed by aging populations.
Heard it before
This isn't the first time Greenspan has talked about the challenge that baby boomers, by their sheer numbers, represent to the Social Security System. In February, he told Congress: "This dramatic demographic change is certain to place enormous demands on our nation's resources -- demands we will almost surely be unable to meet unless action is taken."
He added, "for a variety of reasons, that action is better taken as soon as possible."
Neither political party seems willing to respond to the dangers Greenspan forecasts.
President Bush has proposed converting the money in the Social Security trust fund into private accounts that workers could invest on their own. Unexplained is how that money, which the system now relies on to pay current benefits, would be replaced.
Democratic presidential nominee John Kerry has pledged he will not privatize Social Security, cut benefits or raise the retirement age.
What neither candidates appears to be willing to say is that retirees and the public at large can't have it all. Either benefits will have to be cut, withholding taxes will have to be increased or the system eventually will collapse.
The Congressional Budget Office predicts that Social Security will go bust in 2052. Medicare, which is funded by a similar system, could be insolvent by 2019.
Paying the bill
Even that assumes that the federal budget is going to be able to absorb its obligations to the Social Security trust fund as they come due. For decades, Social Security has been collecting more in payroll taxes than it has paid out in benefits. The surplus has been collected in a trust fund, which has been lent to the federal government.
When the baby boomers start to retire, they will go from paying into the trust fund to drawing it down. In effect, that is the day the bill will come due for trillions of dollars in federal budget deficits that are being accumulated.
Still, no one on either side of the aisle seems willing to tell the American people that they can't have it all. It has been more than 20 years since the last attempt to shore up Social Security. In 1983 President Reagan signed a bill that saved the system by paring benefits and raising taxes.
Perhaps after the election, Congress and the administration will begin addressing the issues that Greenspan has raised. But the American people deserve more. They deserve a candid debate about the future of Social Security as part of this presidential campaign, because if whoever is in the White House for the next four years is going to have to have the courage to face the threat to Social Security and Medicare head-on.