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Greenspan's call for cut in social security sparks row

By Sridhar Krishnaswami

WASHINGTON, FEB. 28. The Chairman of the Federal Reserve Board, Alan Greenspan, has stepped on a political minefield in an election year by calling for cuts in social security to help reduce deficits.

Democrats have pounced on the suggestion and the U.S. President, George W. Bush, and the Republicans are distancing themselves from the remarks.

Mr. Greenspan told a Congressional panel on Wednesday that the country simply cannot afford the retirement benefits promised to the baby boomers and called on Congress to trim some of the existing and promised benefits.

The contention is that soaring deficits from out-of-control entitlement programmes could lead to a "very debilitating" increase in interest rates in the years to come. Of small comfort to the White House was that Mr. Greenspan repeated his known position that the tax cuts of Mr. Bush would have to be made permanent so that economic growth could be bolstered; and that the estimated $1 trillion cost would have to be matched with spending cuts so that there is no additional stress on the budget deficit.

One of the suggestions was to link retirement age for full benefits to longer lifespans. But Democrats, who traditionally have had social security as one of their main election planks, would have nothing to do with the suggestion.

One of the things that Mr. Greenspan told lawmakers is that the Government has promised more in entitlement benefits than it can afford to pay; and that the Government should only promise what it is able to deliver.

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