Government Promising More Than It Can Deliver

[jeffrey]

The U.S. government must not promise benefits to aging baby boomers that it cannot afford, because that could mean painful future adjustments to taxes and spending, according to Federal Reserve chairman Alan Greenspan.

"As a nation we owe it to our retirees to promise only the benefits that can be delivered," Greenspan said in opening remarks at a Fed symposium in Jackson Hole, Wyoming.

In fact, Greenspan said he fears that the government has promised more than it can deliver and that it must "recalibrate" its public programs -- like Medicare and Social Security -- so that people who are getting ready to retire will have time to "adjust through other channels," an apparent warning that baby boomers may have to spend less or save more in order to afford retirement.

"If we delay, the adjustments could be abrupt and painful," Greenspan said. "Because curbing benefits once bestowed has proved so difficult in the past," he added, government policymakers "must be especially vigilant to create new benefits only when their sustainability under the most adverse projections is virtually ensured..." [read more at money.cnn.com]