Greenspan Wary of Stock Plan; U.S. Role in Investing Social Security Funds Raises Alarm
President Clinton's surprise proposal to link the fate of Social Security more closely to the stock market began to stir doubts yesterday about how his initiative would affect the U.S. economy and prompted potent criticism from Federal Reserve Chairman Alan Greenspan.</br></br>A day after Clinton made an overhaul of Social Security the centerpiece of his State of the Union address, his plan raised fundamental questions about whether the federal government should assume an unprecedented role in the workings of private enterprise.</br></br>Greenspan, reflecting a wave of criticism that surfaced yesterday, contended that by pouring billions of dollars in Social Security reserves into Wall Street for the first time, the government inevitably would mingle politics into its investment decisions and would not produce the kind of returns that the administration hopes for. He also raised concerns about whether the government would end up in the business of picking which American companies are worth investing in.</br></br>"There is really no strong evidence to suggest any positive aspects of moving Social Security funds into equities," Greenspan, the chief architect of the government's last major revisions to Social Security 16 years ago, told members of the House Ways and Means Committee.</br></br>Such skepticism arose as Clinton moved swiftly into full campaign mode to sell his Social Security plan to the public at a rally that attracted an overflow crowd in Buffalo.