Time now for Business News.
Federal Reserve Chairman Alan Greenspan gave lawmakers on Capitol Hill a fresh warning yesterday. The budget deficit, he said, is on an unsustainable path.
Unless that trend is reversed, at some point, these deficits will cause the economy to stagnate or worse.
Greenspan told members of the Senate Budget Committee that spending on entitlement programs must be restrained and he suggusted that Social Security's finances may not be the biggest problem that federal government faces.
Forecasting the number of Social Security and Medicare beneficiaries is fairly straightforward, so too is projecting future social security benefits which are tied to the wage histories of the retirees. However the uncertainty about future medical spending is daunting. We know very little about how rapidly medical technology will continue to advance and how those innovations will translate into future spending.
Federal Reserve Chairman Alan Greenspan yesterday on Capitol Hill.
Now when Greenspan talks about the uncertainty of future medical spending, it is the impending retirement of the baby boom generation that makes those health costs such a problem. On any given day right now, there are more than a million American seniors living in nursing homes, most of them at taxpayers' expense. Medicare is the single biggest source of payments for long-term care.
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