- The Washington Times - Monday, March 14, 2005

Federal Reserve Chairman Alan Greenspan is scheduled to testify this morning before the Senate Special Committee on Aging, which is conducting a hearing “exploring the economics of retirement.” Today offers senators an ideal opportunity to have Mr. Greenspan expound on the means by which Social Security can achieve its paramount goal of “full funding.”

During Mr. Greenspan’s three congressional appearances this year, legislators peppered him with questions about his views on Social Security, in general, and personal retirement accounts (PRAs), in particular. Having studied each of the lengthy transcripts of the three hearings, we have been intrigued by Mr. Greenspan’s repeated references to the potential of PRAs to provide long-term “full funding” to Social Security. Regrettably, however, senators and representatives have not attempted to get him to expand upon his general remarks regarding full funding. This has been so even though Mr. Greenspan has offered to “respond in more detail.” At today’s hearing, we hope senators will take Mr. Greenspan up on his offer.

Under the retirement program’s current pay-as-you-go system, Mr. Greenspan has frequently observed in his recent testimonies, Social Security has accumulated unfunded liabilities of $3.7 trillion over 75 years and $10.4 trillion in perpetuity. “So we are very far short, and we have very great difficulty in fully funding the existing [pay-as-you-go] system,” Mr. Greenspan told the Senate Banking, Housing and Urban Affairs Committee on Feb. 16. Noting that the current pay-as-you-go model has “shown very considerable difficulty” in achieving full funding over the long term, he endorsed a “forced-savings model” based on PRAs because “it has in it the seeds of developing full funding by its very nature.” Afterward, he told Chairman Richard Shelby that he would “respond in more detail in response to a number of questions that I’m sure you and your colleagues have.” Later, Mr. Greenspan, pressed by Sen. Charles Schumer, said that “[i]n and of itself” setting up PRAs “doesn’t alleviate the current problem” of solvency.

It would be extremely helpful to the Social Security debate if senators today succeed in having Mr. Greenspan provide specific details, in quantifiable and chronological terms, of precisely how the laudatory goal of full funding is achieved in the context of PRAs.

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