Friday, March 12, 2004

Greenspan recommends the inevitable

i.e. raise taxes, cut benefits:

Greenspan: Job Growth Will Pick Up Before Long | "Greenspan said Thursday that 'employment will begin to increase more quickly before long,' and that erecting protective trade barriers was not the answer to the nation's current worries about the loss of jobs to foreign competition.

During his testimony before the House Education and Workforce Committee, Greenspan said nothing that made analysts waver in their belief that the Fed will keep a key interest rate at a current 45-year low of 1 percent for most of this year. Fed officials will meet on interest rates Tuesday.

But Greenspan did wade into the hot-button political issues of job losses and Social Security. He said erecting protectionist barriers was not the answer to foreign competition and that Congress would at some point have to address the problem of the pending retirement of 77 million baby boomers.

Greenspan repeated his warning that Congress will have to trim future Social Security benefits, but he added that he thought a tax increase would also be needed to close the massive funding gap.

For the good of the economy, he said, Congress needs to get most of the savings by trimming benefits."

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