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Tuesday, December 06, 2005

Greenspan Would Not Rule Out Tax Increases for Entitlement Reform

Both Social Security and Medicare have long term fiscal challenges in front of them - not enough taxes are or will be collected to fully fund expected benefits as benefits continue to grow and the working population ages. There are two principal ways out of the problem - cut benefits, or raise taxes (or some combination of both).

Federal Reserve Board Chairman Alan Greenspan has weighed in on the issue, and surprising some he indicated that tax increases should not be ruled out. In a recent speech, he indicated, however, that he would still prefer that reforms come primarily, if not wholly, from spending cuts and not taxes. A principal focus of the speech was that reform be addressed sooner, rather than later, before the problem gets too large.
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