Greenspan was asked how he would come up with the decade-long cost of $1 trillion to pay for extending the 2001 and 2003 individual tax cuts. "I would argue strenuously that it should be taken out on the expenditure side," he answered.

Greenspan, chairman of a commission that recommended solutions to a Social Security funding crisis in 1983, said he has felt for a long time that the promised program benefits greatly outweighed the government's ability to pay for them.

He recommended two items for study in terms of trimming benefits: linking the retirement age to the population's longer life spans and tying annual cost of living benefits in Social Security to a less-generous inflation index than the Consumer Price Index.

Greenspan came out in support of the administration on the idea of permanent tax cuts, even in the face of deficits estimated to reach a record $521 billion this year.

At a critical point three years ago, the Fed chairman also endorsed the president's first tax cut, at a price of $1.35 trillion, as a good way to handle surpluses that were then projected to total $5.6 trillion over the next decade.

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