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Greenspan's Idea to Trim Social Security Is Not the Way to Reduce Nation's Budget

March 27, 1988

On March 3, The Times published a story that Federal Reserve Board Chairman Alan Greenspan told Congress it should consider trimming Social Security and other entitlement programs as it searches for ways to reduce the federal budget deficit. ("Greenspan Urges Cut in Social Security Program")

On that same day, Social Security recipients received their checks with the usual informative, little enclosed card. I quote from this card, printed in the name of the U.S. Department of Health and Human Services, Social Security Administration:

"The Social Security program continues to operate on a sound financial basis. Income to the Social Security trust funds is expected to exceed outgo by about $36 billion this year. . . . Social Security is funded through payroll taxes paid by employers, employees and the self-employed, and not from general revenues."

The chart on the card shows the present trust fund balance as $104 billion. It projects the 1990 trust fund balance to be $200 billion, the year 2000 balance to be $1.3 trillion, and the year 2010 trust fund balance to be projected as $4.5 trillion. It further states: "Any reserves not used for benefits or operational expenses are invested in U.S. government securities and earn the prevailing rate of interest."

It would appear that there are three possible conclusions to be drawn from the contradictory statements by Greenspan and the Social Security Administration:

1) Greenspan has been misquoted.

2) Social Security does not have the trust fund it says it has.

3) Greenspan is firing the opening gun for Congress or the Reagan Administration to seize the trust fund to reduce the deficit.

It doesn't add up to trim Social Security benefits as Greenspan advocates, thus increasing the trust fund balance, unless the real object is to seize the trust fund balance and transfer it into the general fund, thus reducing the budget deficit.


Santa Maria

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