By Martin Crutsinger
The Associated Press

WASHINGTON - Federal Reserve chairman Alan Greenspan said Thursday that "employment will begin to increase more quickly before long," and that erecting protective trade barriers was not the answer to the nation's current worries about the loss of jobs to foreign competition.

Wading into the hot-button political issues of job losses and Social Security, Greenspan said erecting protectionist barriers was not the answer to foreign competition and that Congress would at some point have to address the problem of the pending retirement of 77 million baby boomers. He repeated his warning that Congress will have to trim future Social Security benefits.

Greenspan, in response to a question from Rep. Dennis Kucinich - the Ohioan seeking the Democratic presidential nomination - said the government cannot afford to meet all the promises in Social Security and Medicare that have been made to future retirees.

"We do not have enough in real resources to meet the promises that have already been made. We will not be able to fully meet the benefits to the next generation, the baby boomers that are retiring," Greenspan said.

"We have to construct a pattern that the benefits we do promise will be delivered rather than have these people retire in very large numbers and find out that they were betrayed by government," Greenspan said.

His comments about the need to trim retirement benefits provoked criticism when he made them last month, with some charging that Greenspan was urging benefit cuts at the same time that he was urging that President Bush's tax cuts be made permanent.

Greenspan did say Thursday that he thought that some tax increases would be needed to bolster Social Security because the funding gap was so large that it could not be closed entirely by trimming benefits. But he said Congress should start with benefit reductions before moving to tax increases because higher taxes would act as a drag on economic growth.

Kucinich challenged Greenspan to defend his recommendation that the retirement age, which is scheduled to rise gradually to 67, be raised further to reflect longer life spans. Kucinich said that would be unfair because 50 percent of current Social Security beneficiaries chose early retirement at 62, even though it meant reduced benefits. Kucinich said many Americans simply can't work longer because of health problems.

Greenspan said the issue was that government did not have the resources to meet all the retirement benefits currently pledged under Social Security and Medicare and that choices would have to be made and "all the choices regrettably are negative."

On the economy, Greenspan said the nation had reason to be more optimistic that job growth will rebound in coming months.

"As our economy exhibits increasing signals of recovery, jobs loss continues to diminish," he told the House Education and Workforce Committee. "In all likelihood, employment will begin to increase more quickly before long."