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Boom soon

Business | Higher payroll taxes isn't the way to fix Social Security, according to Fed chairman Alan Greenspan

Issue: "2004 Election: Dubyafest," Sept. 11, 2004

With 77 million baby boomers nearing retirement age, few people believe the nation's Social Security system will be able to provide them with the same level of funding that their parents received. Among those calling for changes is Federal Reserve Chairman Alan Greenspan.

"If we have promised more than our economy has the ability to deliver, . . . as I fear we may have, we must recalibrate our public programs so that pending retirees have time to adjust through other channels," Mr. Greenspan said on Aug. 27. "If we delay, the adjustments could be abrupt and painful."

But Mr. Greenspan cautioned against simply trying to close the funding gap through higher payroll taxes, saying higher taxes would hurt job creation. Instead, the 78-year-old Mr. Greenspan suggested that the age of retirement be tied to future increases in life expectancy.

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The current retirement age for receiving full benefits is already scheduled to rise from 65 to 67. While the United States faces a major problem, analysts say the situation is even worse in Europe and Japan.

Birth rates overseas have declined further than in the United States, and the Europeans and Japanese have received less help in bolstering their labor forces with new immigrants.

Fault for fat

According to the Centers for Disease Control and Prevention, 64 percent of Americans over the age of 20 were overweight in 2000, marking the third straight decade for a nearly 10 percent increase. "Obesity is a critical public-health problem in our country that causes millions of Americans to suffer unnecessary health problems," said Health and Human Services Secretary Tommy Thompson. But who's to blame? Two lawsuits last year targeted McDonald's but were dismissed.

Now the fast-food industry is fighting back through the legislative process. Already this year, a dozen states have enacted legislation that bars people from seeking damages from food companies for weight gain and associated medical conditions, including heart disease and diabetes.

"Most people don't see any reason to impose liability for an individual's inability to push himself away from the dinner table," said State Rep. Patricia Lantz of Washington, where support for the state measure was nearly unanimous.

But class-action lawyers will find ways around the state laws, says John Banzhaf, professor of public-interest law at George Washington University. Mr. Banzhaf believes companies could be vulnerable for failing to tell customers how much fat is in their food.

"If we pick our plaintiffs carefully, the guy who eats there every day, we can make our cases stick," Mr. Banzhaf said.

Balance Sheet

  • The $11.4 billion merger of Belgium's Interbrew SA and Brazil's AmBev creates the world's largest brewer by volume, although the new company, InBev, still trails U.S.-based Anheuser-Busch in terms of revenue. That's why CEO John Brock said the new company is looking "at all markets and all countries with equal interest, with an eye on opportunities that may emerge."
  • U.S. airlines have asked Congress to review the effect of high oil prices on their industry and whether the government should tap its Strategic Petroleum Reserve. Both United and American Airlines recently stated they expect to pay $1 billion more for fuel this year. The Air Transport Association says federal government aid for airlines since Sept. 11, 2001 "could be wiped out by the feverish speculation in the oil markets."
  • After a slowdown in June, the Commerce Department said consumer spending jumped 0.8 percent in July. The jump in spending was the largest since May.

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