Wed February 25, 2004 10:20 AM ET
By Glenn Somerville
WASHINGTON (Reuters) - Federal Reserve Chairman Alan Greenspan on Wednesday urged Congress to make swift adjustments to ready U.S. retirement and Medicare programs for a coming wave of retirees, saying spending controls were key.
In prepared testimony to the House Budget Committee, Greenspan said that pushing taxes up enough to meet future spending promises under Social Security and Medicare might pose a risk to the overall economy.
"The exact magnitude of such risks is very difficult to estimate, but they are of enough concern, in my judgment, to warrant aiming to close the fiscal gap primarily, if not wholly, from the outlay side," he said.
Greenspan said the nation faces major budget strains beginning as early as 2008 as the huge population of Baby Boomers, born after World War II, begin to retire.
"This dramatic demographic change is certain to place enormous demands on our nation's resources -- demands we almost surely will be unable to meet unless action is taken," he said. "For a variety of reasons, that action is better taken as soon as possible."
Greenspan indicated that lawmakers now have a good opportunity to start tackling the issue because the U.S. economy is healthy.
"The most recent indicators suggest that the economy is off to a strong start in 2004, and prospects for sustaining the expansion in the period ahead are good," he said.
