From Reuters - “Congress should act on entitlements soon”:
Congress should address the growing cost of entitlement programs in the federal budget to assure financial markets and give people time to adjust and plan their retirement, Federal Reserve Chairman Ben Bernanke said on Thursday.Interesting wording there: a key aspect of Social Security/Medicare reform (and responsible government) is that people will prepare accordingly if they’re aware of the changes that must be made. If Americans were told that they’re going to lose 26% of their benefits in 2041, they would save more for retirement. Ignoring this reality will just exacerbate the entitlement problem when the crisis hits.
"It's important to get that going soon, first of all to assure financial markets that Congress will be responsible and secondly, and perhaps more importantly, to give people the time they need to plan for retirement and make provisions based on any changes that you might decide to make," Bernanke told the U.S. Senate Banking Committee in his first appearance before that chamber as Fed chief.
Follow-up - My apologies, but for some reason, the Reuters story was pulled. The text is from the story that appeared earlier (Google News still lists it - go figure).
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In the interest of context, here's the whole story as it appeared earlier today:
WASHINGTON, Feb 16 (Reuters) - Congress should address the growing cost of entitlement programs in the federal budget to assure financial markets and give people time to adjust and plan their retirement, Federal Reserve Chairman Ben Bernanke said on Thursday.
"It's important to get that going soon, first of all to assure financial markets that Congress will be responsible and secondly, and perhaps more importantly, to give people the time they need to plan for retirement and make provisions based on any changes that you might decide to make," Bernanke told the U.S. Senate Banking Committee in his first appearance before that chamber as Fed chief.
Bernanke, in response to a question from the panel, said that if no changes are made and entitlement programs are allowed to consume a growing portion of the federal budget, the economy may be affected.
"The widening deficits over a period of years will reduce national savings, will probably exacerbate the current account deficit, may raise interest rates and will probably inhibit the dynamism of the economy," he said.
"I don't foresee in the near term that these factors are going to substantially affect monetary policy or the way monetary policy functions in the economy, but from a broader perspective, the health of our economy in the long run requires that we achieve a better fiscal situation and higher national savings."
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