Greenspan Supports Personal Retirement Accounts for Social Security

In spite of clear evidence that Social Security will begin to run permanent huge deficits in just 13 years, some on Capitol Hill refuse to acknowledge that there is even a crisis. They need to listen to Federal Reserve Chairman Alan Greenspan, who testified before the Senate Banking yesterday.

Chairman Greenspan noted that American demographics will change severely as the baby boom generation retires, creating “a very major problem for (the) pay-as-you-go system.” Indeed, these changes will cause benefits to exceed contributions by 2018. And if nothing is done, Americans are sure to face tax hikes and benefit cuts.

Greenspan said he supports reform through the creation of Social Security Personal Retirement Accounts (PRAs). PRAs will allow Americans to own their retirement by diverting a portion of their payroll taxes into a personal account, which is what President Bush is proposing.

No doubt, PRAs are the best way to save Social Security. Greenspan acknowledged that the program’s $10.4 trillion unfunded liability requires more than minor adjustments when he told the Senate Banking Committee that fixing Social Security will “require more than tinkering.” Creating PRAs will get America out of the pay-as-you-go trap and allow all workers to own their future.