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American Morning

Social Insecurity?

Aired February 26, 2004 - 07:05   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


SOLEDAD O'BRIEN, CNN ANCHOR: Let's turn now to the nation's largest senior citizen's group, the AARP. They're no fan now of Federal Reserve Chairman Alan Greenspan. The group says it is at odds with the chairman after he said yesterday that growing federal deficits will require future cuts in the nation's major retirement programs.
For more on what is already a hot-button political issue, we take you to senior White House correspondent, John King.

Hey, John, good morning.

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: Good morning to you, Soledad.

The Fed chairman, Alan Greenspan, is certainly raising quite a political storm here in Washington. There are 77 members of the baby- boom generation, the first wave of them just four years away from reaching the retirement age. Chairman Greenspan says the government is promising way too much in terms of Social Security benefits and Medicare benefits -- much more than the country can afford, he says. Not exactly what President Bush or his Democratic rivals wanted to hear.

(BEGIN VIDEOTAPE)

KING: The Fed chairman put election-year pressure on both political parties, warning that without difficult choices soon, the looming retirement of the baby boomers will bust the federal budget.

ALAN GREENSPAN, FEDERAL RESERVE CHAIRMAN: We will eventually have no choice but to make significant structural adjustments in the major retirement programs.

KING: By that, Chairman Greenspan means raising the Social Security retirement age and reducing annual cost-of-living increases.

At the White House, quick proof there's a reason they call Social Security the third rail of politics.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: My position on Social Security benefits is this: That those benefits should not be changed for people at or near retirement.

KING: Both leading Democratic presidential candidates rushed to rule out Social Security benefit cuts. SEN. JOHN KERRY (D), PRESIDENTIAL CANDIDATE: The wrong way to cut the deficit is to cut Social Security benefits. If I'm -- if I'm president, we are simply not going to do it.

SEN. JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: The answer is not to cut Social Security benefits for those who need them and depend on them. The answer instead is to stop tax cuts for the wealthiest Americans.

KING: Chairman Greenspan has legendary status in Washington, and both parties looked for election-year advantage in his testimony. To the Democrats' delight, he said growing federal budget deficits eventually threaten long-term interest rates and living standards.

GREENSPAN: It's out somewhere and it's out there in this decade.

KING: Republicans liked his recipe for reducing that red ink. Greenspan did not rule out tax increases, but was adamant that Congress impose strict budget caps and cut spending first.

GREENSPAN: It's an easy solution to a problem where you have a deficit to increase taxes. It's not evident to me that over the long run that actually works.

KING: And Republicans nodded approvingly when Chairman Greenspan said the 10-year Bush tax cuts had helped the economy out of recession, and, in his view, so long as spending is controlled, that those tax cuts should be made permanent.

GREENSPAN: They should be continued, because, I think, over the long run they will benefit this economy.

(END VIDEOTAPE)

KING: It's not that President Bush or leading Democratic voices on budget issues in Congress don't think that the chairman is right and don't think they need someday to address Social Security and even Medicare, Soledad. But what they say is that without a bipartisan consensus, it would be political suicide to do so in an election year.

O'BRIEN: At the same time, John, there are some who say that what Chairman Greenspan is proposing is not going to work. What evidence do those people who have that position have to back up their point?

KING: Well, this is an issue in which there are so many positions. Some say, why raise the retirement age? That's unfair to seniors. Why cut the cost-of-living increases? That's unfair to seniors.

Chairman Greenspan says, as people live longer, the government has to raise the retirement age. He says, the formula used to give those cost-of-living increases has been proven to be too generous.

He was the chairman of the commission that dealt with this issue back in the Reagan administration, so he is starting the debate again. The president tried to start it early in his administration. Political support for changing Social Security collapsed.

The tradition on this issue is if there is to be change, there has to be a bipartisan agreement essentially to hold hands and walk off the cliff together. You will not get that agreement this year, Soledad, and we'll have to wait until after the election.

O'BRIEN: Yes. All right, John King at the White House for us. John, thanks.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.






Aired February 26, 2004 - 07:05   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: Let's turn now to the nation's largest senior citizen's group, the AARP. They're no fan now of Federal Reserve Chairman Alan Greenspan. The group says it is at odds with the chairman after he said yesterday that growing federal deficits will require future cuts in the nation's major retirement programs.
For more on what is already a hot-button political issue, we take you to senior White House correspondent, John King.

Hey, John, good morning.

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: Good morning to you, Soledad.

The Fed chairman, Alan Greenspan, is certainly raising quite a political storm here in Washington. There are 77 members of the baby- boom generation, the first wave of them just four years away from reaching the retirement age. Chairman Greenspan says the government is promising way too much in terms of Social Security benefits and Medicare benefits -- much more than the country can afford, he says. Not exactly what President Bush or his Democratic rivals wanted to hear.

(BEGIN VIDEOTAPE)

KING: The Fed chairman put election-year pressure on both political parties, warning that without difficult choices soon, the looming retirement of the baby boomers will bust the federal budget.

ALAN GREENSPAN, FEDERAL RESERVE CHAIRMAN: We will eventually have no choice but to make significant structural adjustments in the major retirement programs.

KING: By that, Chairman Greenspan means raising the Social Security retirement age and reducing annual cost-of-living increases.

At the White House, quick proof there's a reason they call Social Security the third rail of politics.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: My position on Social Security benefits is this: That those benefits should not be changed for people at or near retirement.

KING: Both leading Democratic presidential candidates rushed to rule out Social Security benefit cuts. SEN. JOHN KERRY (D), PRESIDENTIAL CANDIDATE: The wrong way to cut the deficit is to cut Social Security benefits. If I'm -- if I'm president, we are simply not going to do it.

SEN. JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: The answer is not to cut Social Security benefits for those who need them and depend on them. The answer instead is to stop tax cuts for the wealthiest Americans.

KING: Chairman Greenspan has legendary status in Washington, and both parties looked for election-year advantage in his testimony. To the Democrats' delight, he said growing federal budget deficits eventually threaten long-term interest rates and living standards.

GREENSPAN: It's out somewhere and it's out there in this decade.

KING: Republicans liked his recipe for reducing that red ink. Greenspan did not rule out tax increases, but was adamant that Congress impose strict budget caps and cut spending first.

GREENSPAN: It's an easy solution to a problem where you have a deficit to increase taxes. It's not evident to me that over the long run that actually works.

KING: And Republicans nodded approvingly when Chairman Greenspan said the 10-year Bush tax cuts had helped the economy out of recession, and, in his view, so long as spending is controlled, that those tax cuts should be made permanent.

GREENSPAN: They should be continued, because, I think, over the long run they will benefit this economy.

(END VIDEOTAPE)

KING: It's not that President Bush or leading Democratic voices on budget issues in Congress don't think that the chairman is right and don't think they need someday to address Social Security and even Medicare, Soledad. But what they say is that without a bipartisan consensus, it would be political suicide to do so in an election year.

O'BRIEN: At the same time, John, there are some who say that what Chairman Greenspan is proposing is not going to work. What evidence do those people who have that position have to back up their point?

KING: Well, this is an issue in which there are so many positions. Some say, why raise the retirement age? That's unfair to seniors. Why cut the cost-of-living increases? That's unfair to seniors.

Chairman Greenspan says, as people live longer, the government has to raise the retirement age. He says, the formula used to give those cost-of-living increases has been proven to be too generous.

He was the chairman of the commission that dealt with this issue back in the Reagan administration, so he is starting the debate again. The president tried to start it early in his administration. Political support for changing Social Security collapsed.

The tradition on this issue is if there is to be change, there has to be a bipartisan agreement essentially to hold hands and walk off the cliff together. You will not get that agreement this year, Soledad, and we'll have to wait until after the election.

O'BRIEN: Yes. All right, John King at the White House for us. John, thanks.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.