The economy will continue to grow this year, if inflation is kept on a leash, according to three respected economists who gave an upbeat outlook for 2005 at a panel discussion presented by the Georgia Tech Alumni Association on Jan. 18.

But the economists warned the nearly 150 alumni attending the sold-out event there are “plenty of things” to worry about. The economic outlook at Atlanta’s Capital City Club in Brookhaven was sponsored by Flag Financial Corp. and Morgan Keenan & Co.

Joseph W. Evans, IM 71, chairman and CEO of Flag Financial Corp., moderated the panel discussion featuring Donald Ratajczak, consulting economist for Morgan Keegan & Co. and Regents’ professor of economics emeritus at Georgia State University; Marie Thursby, professor in the College of Management at Georgia Tech, where she holds the Hal and John Smith chair in entrepreneurship; and Robert Eisenbeis, senior vice president and director of research for the Federal Reserve Bank of Atlanta.

In response to a queston about the Social Security program, Ratajczak urged that it be fixed.

"We have a government-sponsored insurance program at the present time that is actuarially in deficit of $12 trillion. That’s a fact," Ratajczak responded.

"Can we solve the Social Security problem now?" he asked. "Yes."

But Ratajczak warned the longer the wait the larger the impact.

"The reality is that Social Security has a problem," he said. "Let's deal with it the way we require IBM, General Motors and GE to deal with their problems. Make it actuarially sound. Make it an insurance program and operate it as one. If that means extending the age, if that means raising taxes — I wrote a column that said, 'Do to Social Security what you’ve done to Medicare.'"

Increasing the retirement age to 70 would come close to solving the Social Security deficit, he said. The $2 trillion surplus in Social Security “should not be invested and paid for by the interest of government debt but run in an actuarially sound basis.”

"We ought to be able to do better than 100 percent investment in government bonds. That is not a fiducially responsible insurance program. Any program in a thriving economy that put 100 percent of its assets into government bonds — those people would be in jail," he said, prompting a laugh from the audience.

"Can we have choice?" he asked. "Yes we can. In 1935, when the act was passed, we didn't have any choice. There wasn’t any alternative tax-deferred program out there. We have tax-deferred programs today. We can allow people to have that choice."

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