Greenspan: ‘True Revolution’ to End Welfare State Impasse

The U.S. welfare state has "run up against a brick wall" of economic reality and fiscal book-keeping and only a "true revolution" involving major entitlement overhaul will improve the economy, says former Fed Chairman Alan Greenspan.

In the United States, the rise of the tea party among Republicans coupled with the shift to the left of many Democrats have made it very difficult for the country's leaders to agree on policy.

Look at last year's debt-ceiling fiasco as an example.

"A political tsunami has emerged out of our past in the form of the Tea Party, with its ethos reminiscent of rugged individualism and self-reliance," Greenspan writes in a Financial Times op-ed piece.

The tea party "has so altered the distribution of votes within Republican Party’s House caucus that the party's center has moved closer to the tea party."

Compromise must ensue eventually, and that will likely include reform to entitlement programs like Medicare and Social Security, programs that have expanded without funding to match.

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