In two days of testimony this week, Federal Reserve Chairman Alan Greenspan offered plenty of support for President Bush’s plan to overhaul Social Security and partially replace it with a system of personal accounts.

But Greenspan’s voice probably will have a very limited influence in the still-unfolding debate over the future of the program, analysts say.

Even though Greenspan is a recognized authority on Social Security, given his work helping to engineer the current system of taxes and benefits in the early 1980s, he has lost some of his credibility on fiscal issues in recent years, especially with his endorsement of President Bush’s 2001 tax cut program. At the time he expressed concern about the potential danger of growing federal budget surpluses – a concern that in retrospect appears to have been badly misguided.

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Greenspan also is rapidly becoming a lame duck, with less than a year left in his term on the Fed and plenty of work left to do raising interest rates to keep a lid on inflation.

And Greenspan’s influence is limited by the simple fact that parties on all sides are gearing up for the political donnybrook of a generation over an issue far thornier than the tax-break debates the characterized the domestic agenda of Bush’s first term.

“In the case of the tax cuts it was like a car going downhill,” said Ethan Harris, chief U.S. economist for Lehman Bros. “Getting a little nudge from Alan Greenspan was enough to get it going.”

But after four years of lulling Americans into the belief that budget deficits don’t matter, President Bush faces an uphill struggle just to convince the public that Social Security faces a serious problem, much less that they may have to accept higher taxes and smaller benefits than are currently promised.

Greenspan’s comments this week “will help a little bit,” Harris said. “But his credibility has been damaged by the earlier endorsement. He is just not as powerful a voice in this discussion as he was in the first debate.”

Bill Dudley, chief U.S. economist for Goldman Sachs, agreed. “I would be surprised if his comments change the debate in any meaningful way,” Dudley said. “It’s quite different from 2001 when he endorsed the Bush tax cuts. That was pretty important.”

Under sharp questioning from members of the House and Senate, Greenspan made a major effort to support President Bush’s description of the severity of the Social Security problem and his approach to solving it.

While Greenspan specifically avoided using hot-button words favored by Bush like “crisis” and “bankrupt” he described Social Security’s financing gap as a “very serious problem” that needs to be addressed “well before” the leading edge of the baby boom generation begins retiring in 2008.

Simply by describing the extent of the problem, Greenspan staked out a position in the debate.

Noting that the Social Security trust funds hold about $1.5 trillion in assets, he said that fully closing the gap between promised benefits and expected revenues to an infinite horizon would require a fund of more than $10 trillion.

That is far higher – and sounds far worse – than the $3.7 trillion funding gap over 75 years foreseen by Social Security’s trustees.

Greenspan argued that a 75-year horizon is an “artifice” and nothing more than a “historical convention,” but many professional actuaries strongly object to the use of an indefinite time horizon.

The American Academy of Actuaries, a non-partisan professional group, said in 2003 that such an approach is “likely to mislead anyone lacking technical expertise … into believing that the program is in far worse financial condition than is actually indicated.”

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