The Clinton administration wants to invest in equities about 15 per cent of the Budget surpluses that are earmarked over the next 15 years for social security, the federally administered retirement system. The government expects budget surpluses to total more than $ 4.8 trillion over the next 15 years, of which $ 2.8 trillion would be used to strengthen social security in the face of heavy demand from aging "Baby Boomers," Americans born between 1945 and 1960.

With 15 per cent of the surplus invested in private sector equities, the remaining 85 per cent would be used to purchase US treasury securities,the same risk-free government bonds the social security system has invested in since its creation in 1935.

"It is possible that institutions could be created that would prevent the (sociaL security) trust fund investments from being subject to political interference," Greenspan said. "But investing the social security trust funds in equities does little or nothing to improve the overall ability of the US economy to meet the retirement needs of the next century. "Given this lack of evident benefit, it is unclear to me why we should take on the risk of interference ..."

Greenspan predicted that transferring social security assets from US treasuries to equities would have no effect on national savings.