Hackery at the Fed?

Yesterday's news

Democrats, apparently feeling little political pressure to come up with a plan of their own or work across the aisle, remain remarkably united against the main element of Mr. Bush's plan: his call for private investment accounts to be carved out of Social Security payroll taxes.

A USA Today/CNN/Gallup poll published Tuesday showed Mr. Bush receiving his lowest marks on the handling of Social Security since becoming president.

Some Republicans appear unconvinced. After their weeklong recess hearing citizens' complaints and seeing the organized opposition to private accounts, many Republicans returned with a warning that if Mr. Bush wanted action this year, he would have to do much more to convince the nation that Social Security's projected financial gap required immediate, bipartisan legislation.

The White House promised on Tuesday that Mr. Bush planned to do just that.

Today's news:

Greenspan reiterated that he supports President Bush's push for setting up personal retirement accounts by diverting up to 4 percentage points of payroll taxes into the new accounts.

Diverting the payroll taxes into the Social Security trust fund, he said, had merely allowed the government to run larger budget deficits. Greenspan said that switching to the private accounts would be a way to bolster the nation's low savings rate.

In his prepared testimony, Greenspan did not repeat the cautionary message he sent last month: Creation of the accounts should be done slowly to gauge the impact the increased borrowing that will be needed will have on financial markets.

Greenspan did bolster the administration's drive to get something enacted this year by warning Congress that every year it delayed would make fixing the problem harder, especially after the baby boomers begin retiring.

Hmm... Hackery?

Looking forward to yet another Krugman backlash (like this one).