Federal Reserve Board Chairman Alan Greenspan said Friday that the only way to rescue the Social Security system is to boost consumer savings.
"Domestic savings must increase," Mr. Greenspan told the Urban League of Philadelphia. "Potential beneficiaries must further abstain from consuming all of their incomes. Enough must be set aside over a lifetime of work to fund the excess of consumption over any nonsocial security income a retiree may still enjoy."
Greater savings fund increased capital spending, which improves productivity and boosts economic growth. This means more income flows into the Social Security trust funds, he said.
Mr. Greenspan said the other options - tax increases and benefit cuts - are probably too contentious to be enacted by Congress.
The Fed chairman also criticized proposals to shift Social Security funds from low-yield Treasury bonds to higher-growth stocks, saying this would hurt private retirement plans.