NEW YORK (CNN/Money) - Alan Greenspan may have touched the third rail of American politics this week by calling for cuts in Social Security benefits, but most economists weren't shocked.

Some found his proposals just about right, some thought the whole fuss was much ado about nothing.

But some conservative economists, who believe Social Security needs a drastic overhaul, thought the 77-year-old central bank chief's proposals didn't go far enough.

Some are slamming Federal Reserve Chairman Alan Greenspan for warning that future cuts in Social Security and Medicare spending will be necessary. CNN's John King reports. Play video (Real or Windows Media)

"He's just saying the emperor's naked," Alan Reynolds, senior fellow at the Cato Institute, a libertarian think tank, told CNNfn. "It would be nice to keep this Ponzi scheme going on at least until after the November elections, and they probably will -- but it is a long-term problem."

Greenspan's proposals were not particularly novel, most economists said. He called for raising the age at which benefits begin and for using a smaller index for calculating cost of living increases.

Congress has already hiked the retirement age to 67, a change that is taking place gradually, rising by two months every year from its current 65 years, four months. And lawmakers have raised taxes on some Social Security benefits.

"They've been doing little sneaky things around the edges," Reynolds said.

Because cutting retiree benefits is such a toxic political issue, however, it's unlikely that any action will be taken in a presidential election year.

But if President Bush wins re-election and Congress stays in the hands of Republicans, more dramatic action could come soon, probably in the form of an option to put Social Security into private accounts that invest in stock, bond and other markets. Economists who favor such a move doubt Greenspan's proposals go far enough.

"Both of the benefit reductions he proposed will improve the Social Security numbers somewhat, but they will leave a large imbalance in place," said Cato senior fellow Jagadeesh Gokhale.

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According to recent research by Gokhale, Boston University economist Laurence Kotlikoff and Wharton School economist Kent Smetters, using a longer forecasting period than the government uses, the total unfunded liabilities of Social Security equal more than $7 trillion.

In comparison, Greenspan said Social Security could have saved about $200 billion over the last 10 years by using a different cost of living index. Though such savings would probably rise in coming decades, they'd be a drop in the bucket compared to that whopping $7 trillion number.

Gokhale, Kotlikoff and some analysts believe the only solution is to privatize Social Security, in whole or in part. Otherwise, they believe, investors will eventually come to lose faith in the United States, sparking a selloff of government debt, sending interest rates through the roof and hurting the economy.

"What Greenspan is proposing is far too little, far too late, and what he needs to do is not prod the politicians with a feather but with a cattle prod," Kotlikoff said. "He's actually doing more damage than good by suggesting we can get by with such minor adjustments."

But the road to privatization could be a rocky one politically, no matter who's in charge of the White House. Opponents will likely raise the specter of retirees losing money in private accounts, which would be exposed to stock, bond and real estate markets.

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Some economists who oppose privatization believe proposals similar to Greenspan's are all the system needs.

"As the private pension system is moving towards 401(k)s and IRAs, with workers managing risk themselves, it makes ever less sense for the core layer of financial security to move in the same direction," Peter Orszag, a senior fellow at the Brookings Institution, a centrist, though often left-leaning, think tank, told CNNfn.

"We should shore up the program, but we don't need to destroy it in order to save it."

What's more, the transition to a private program could cost the government more than $1 trillion, according to some estimates, since many workers will put their Social Security money in private accounts, rather than giving it to the government, but the government will still need to pay benefits to retirees who are under the old system.

To make up the difference, taxes may need to be raised -- Kotlikoff suggests a new retail sales tax -- or similar political bullets will need to be bitten during the transition period.

Some economists, in fact, wondered why Greenspan didn't raise this issue back in 2001, when the government had a big surplus and could have earmarked money to transform -- or at least shore up -- the system. After all, it's not as if it's a new subject for him -- he chaired a Social Security reform commission in the early 1980s.

Instead, Greenspan said the government should get rid of the surpluses by cutting taxes.

"Unfortunately, we no longer have the funds that could have been used to provide the seed money for Social Security privatization," said Paul Kasriel, research director at Northern Trust in Chicago. "It seems to me that he dropped the ball."

Other economists, citing Social Security Administration (SSA) studies showing that liabilities can be paid for the next 40 years, say no changes are needed at all, even considering the millions of Baby Boomers who will start retiring in coming years.

"The idea that we have to make cuts imminently because of the Baby Boomer generation is simply not true," Dean Baker, Co-Director of the Center for Economic and Policy Research, a liberal think tank, told CNNfn. "We knew about Boomers and adjusted the program accordingly. Greenspan is really off the mark."

In fact, those SSA studies may be overly conservative, as they're based on the assumption that gross domestic product (GDP), the broadest measure of the economy, will grow no faster than 2.5 percent every year until 2047, while most economists believe potential GDP growth could average something more like 3.5 percent a year.

"I have argued with great futility that this entire argument is based on a flawed premise," said Greg Valliere, political economist with Schwab Washington Research. "If you use a more realistic GDP assumption, based on what we've seen over the past few decades, Social Security won't go bankrupt."