Greenspan Signals Interest Rates to Be Left Unchanged --- Use of Surpluses to Save Social Security Gains Fed Chairman's Support
WASHINGTON -- President Clinton's proposal to use budget surpluses to salvage Social Security got a big boost yesterday as Federal Reserve Chairman Alan Greenspan endorsed the plan.</br></br>The prospect of a sustained budget surplus "is a very useful platform to finally get to a point where the Social Security problem is something which is truly resolvable," Mr. Greenspan told the Senate Budget Committee. That "may not be the case a number of years from now," he warned, adding that "it would be a real tragedy if we failed to employ this particular platform as the beginning of the solution to this problem."</br></br>Meanwhile, Deputy Treasury Secretary Lawrence Summers said yesterday that simply transferring projected federal surpluses into the Social Security Trust Fund, one of several options expected to come under consideration in the coming debate over reforming the retirement system, would delay the fund's depletion by 10 years.</br></br>Offering a preview of administration budget estimates to be released next week, Mr. Summers said surpluses will be projected to be at least $1 trillion over the next 10 years. Every $100 billion transferred into the Social Security fund would extend its life by one year, he said.</br></br>Though Mr. Greenspan has no direct role in the budget process, his tremendous credibility on Capitol Hill has made him an influential voice in such debates in recent years. His remarks were particularly striking in putting Social Security above tax cuts in his menu of priorities, placing him in conflict with many congressional Republicans who are pushing to return projected surpluses to taxpayers.