Social Security scare tactics are experiencing a revival. On August 27, Federal Reserve Chairman Alan Greenspan concluded that "we have promised more than our economy has the ability to deliver to retirees" and on September 2, President George W. Bush argued that "[w]ith the huge Baby Boom generation approaching retirement, many of our children and grandchildren understandably worry whether Social Security will be there when they need it." And because Social Security and Medicare are supposedly unsustainable, both Greenspan and Bush have supported privatization and benefit cuts. Of course, Greenspan is no stranger to such recommendations, for it was his counsel to President Ronald Reagan that led to Social Security benefit cuts and increases in the retirement age in the early 1980s.
Interestingly, Greenspan apparently did not read his own speech carefully enough. A closer look at his recent remarks and at data from the Social Security and Medicare trustees shows that the Fed chairman's and the president's conclusion are not supported by the facts. Social Security and Medicare are affordable and sustainable. Moreover, Greenspan touched on three important ways to address the systems' long-term financial needs that will not include sharp benefit cuts or privatization.