Train wreck


THE FEDERAL government's already got too many bills and too little money to meet them. That shortfall has been made a lot worse by President Bush's record tax cuts. And with the baby boomer bulge beginning to draw Social Security checks in just a few years, it's hard to see how the stage isn't set for a fiscal train wreck that might leave many seniors without all the benefits they're now expecting.

If somehow that rapidly gathering disaster hasn't yet dawned on many Americans - and, incredibly, that appears to be case - the warning this week from Federal Reserve Chairman Alan Greenspan about the likely insufficiency of resources to fulfill Social Security promises was certainly a reasonable and much-needed clarion call.

It was not the first time in recent years that Mr. Greenspan has sounded the alarm about the mounting federal deficits. But his solution - cutting Social Security benefits to future retirees while making permanent Mr. Bush's tax breaks for the well-off - struck an explosive political chord in an election year. Leaving aside the usual nattering about Mr. Greenspan's political motives and ego - his tenure on the Fed board expires in 2006 - the Fed shouldn't be the source of the nation's social welfare policies.

As has been typical throughout Mr. Greenspan's long record of at times contradictory pronouncements, there was plenty of room for interpretation beyond the headlines. The Bush administration saw validation of its drive to make its tax cuts permanent; Democrats walked away with affirmation of the very recklessness of those cuts, let alone continuing them.

Given that the deficits if these cuts are sustained likely will total more than $5 trillion over the next decade and that Social Security's out-go will start to exceed its revenues in 2017, virtually every tool is going to be needed to shore up the national Treasury. This includes:

Scaling back the Bush tax cuts. (Half or more of their benefits go to those making more than $145,000 a year.)

Reinstating "pay-go" rules requiring any tax cuts or spending increases to be paid for with parallel tax increases or cuts in other spending - also advised by Mr. Greenspan.

Cutting spending (farm subsidies and defense inefficiencies are prime targets).

And as a very last resort, re-examining the Social Security retirement age, now moving to 67; as Mr. Greenspan suggests, it may have to rise further, in line with Americans' longevity.

Mr. Greenspan is right to warn the nation that "you don't have the resources to do it all." He's wrong to propose starting to solve the problem by cutting back vital support for seniors, instead of by ending Mr. Bush's tax-cut subsidies to the well-off.

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