Now, if we balance the budget for next year, it is projected that we'll then have a sizeable surplus in the years that immediately follow. What should we do with this projected surplus? I have a simple four-word answer: Save Social Security first. Tonight, I propose that we reserve 100 percent of the surplus -- that's every penny of any surplus -- until we have taken all the necessary measures to strengthen the Social Security system for the 21st century. Let us say -- let us say to all Americans watching tonight, whether you're 70 or 50, or whether you just started paying into the system, Social Security will be there when you need it. Let us make this commitment: Social Security first. Let's do that -- together.Greenspan was chairman of the Fed then and was surely aware of Clinton's comments. Indeed in his testimony of 4 March 1998, Greenspan endorsed saving Social Security first.
However, we can be more certain that, absent action, the budgetary position will erode after the next decade as the baby boom generation moves into retirement, putting massive strains on the social security and medicare programs. Without question, the task of stemming that erosion will become increasingly difficult the longer it is postponed. Indeed, especially in light of these inexorable demographic trends, I have always emphasized that we should be aiming for budgetary surpluses and using the proceeds to retire outstanding federal debt. In that regard, one measure of how much progress has been made in dealing with the nation's fiscal affairs is that serious discussion of such paydowns has begun to surface. Working down the stock of the federal debt would put further downward pressure on long-term interest rates, which would enhance private capital investment, labor productivity, and economic growth, preparing us better to confront the looming changes in retirement demographics.And yet for some reason in 2001, Greenspan felt that we needed first and foremost to slash government receipts in order to stem the tide of paying off the federal debt too quickly. What happened to Greenspan between 1998 & 2001? And what has happened since then that he is now advising gutting one of the cornerstones of American life?
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