Greenspan: Recession Odds Have Grown

Former U.S. Federal Reserve chairman Alan Greenspan, is seen in his office in Washington, D.C, in this Sept. 6, 2007 file photo. Former U.S. Federal Reserve chairman Alan Greenspan said it is possible that the euro could replace the U.S. dollar as the reserve currency of choice. According to an advance copy of an interview to be published in Thursday's, Sept. 20, 2007, edition of the German magazine Stern, Greenspan said that the dollar is still slightly ahead in its use as a reserve currency, but added that "it doesn't have all that much of an advantage" anymore. (AP Photo/J. Scott Applewhite) (J. Scott Applewhite - AP)

WASHINGTON -- Alan Greenspan said the odds of a recession have grown since earlier this year, even though "the economy is not doing badly at this stage."

In an interview with The Associated Press on Monday, the former Federal Reserve chairman put the odds of a recession at greater than one in three. "But best I can judge, it is less than 50 percent," he said.

Greenspan's one-in-three prediction earlier this year rocked Wall Street, which has been suffering through a period of turbulence. A deepening housing slump and a spreading credit crunch have raised fears on Wall Street, on Capitol Hill and on Main Street about the country's economic health.

Many analysts are counting on the Federal Reserve to lower interest rates on Tuesday to provide some relief.

On other issues, Greenspan said the United States must look at ways to reduce gasoline use both as a matter of national security and to protect the environment.

Greenspan said he favors a tax on gasoline to help curb demand. But recognizing that this could be an "undue burden" on poor people, he suggested a rebate of some sort. There is a national gas tax of 18.4 cents a gallon.

The interview with Greenspan dovetails with the release and promotion of his new book, "The Age of Turbulence: Adventures in a New World."

In the interview, Greenspan also expressed fresh frustration about expanding social programs, especially at a time when a wave of 78 million baby boomers will start to retire next year, putting a huge burden on the country's resources. He singled out Medicare, which is projected to go bust by 2019 unless something is done.

"The whole slew of candidates _ it's mainly Democrats, but some Republicans _ want to add to it more," Greenspan said. "Nobody wants to ... look at the issue and come up with a rational solution. This is, I regret to say, irresponsible."

In his book, Greenspan suggests Medicare benefits would have to be cut substantially for the affluent, whom he envisions having copayments approaching 100 percent.

His concerns come as Democratic presidential candidate Hillary Rodham Clinton on Monday unveiled a health care plan built around universal coverage. The price tag: about $110 billion a year. Other Democratic candidates also have their own health care proposals.

Greenspan ran the Fed for 18 1/2 years, under four presidents, until early 2006. His utterances can still move markets, even though he's no longer at the central bank and now runs his own economic consulting firm.