WASHINGTON – Outgoing Federal Reserve Chairman Alan Greenspan warned Friday that America’s exploding budget deficit and a protectionist backlash against soaring trade deficits could disrupt the global economy. On a day when he was being honored in London for his nearly two decades in the world’s highest-profile economic job, Greenspan restated some familiar worries. He said U.S. deficits are set to soar with the pending retirement of 78 million baby boomers and he suggested that Congress consider trimming Social Security and Medicare benefits because the government probably has promised more than it can afford, especially in health benefits. If something isn’t done to trim benefit costs, the resulting budget deficits would “cast an ever-larger shadow” over the future living standards of Americans, Greenspan said in a taped speech delivered to a conference sponsored by the Philadelphia Federal Reserve Bank. Greenspan was in London to attend his final meeting of finance ministers and central bank presidents of the Group of Seven wealthy industrial countries. The two-day meeting was planned in part as a farewell party for Greenspan, who is retiring from the Fed at the end of January. Before the G-7 discussions started, Greenspan was awarded the Freedom of the City of London honor by Britain’s Treasury chief, Gordon Brown. The award is a symbolic honor dating to medieval times and bestows the rights to drive sheep across London Bridge and to be hanged with a silken cord if sentenced to death. Brown said Greenspan’s 18 years at the Fed had been “the most successful in history” and had been distinguished by Greenspan’s “strength in both good times and in testing times.” In his Philadelphia speech, Greenspan did not outline what benefit cuts should be considered for American retirees, but in the past he has endorsed proposals such as raising the age at which retirees can draw full Social Security benefits. “In the end,” he warned, “the consequences for the U.S. economy of doing nothing could be severe.” In a brief mention of current economic conditions, Greenspan said the economy had delivered a “solid performance” so far in 2005. “And despite the disruptions of hurricanes Katrina, Rita and Wilma, economic activity appears to be expanding at a reasonably good pace as we head into 2006,” he said. 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREBlues bury Kings early with four first-period goals Greenspan repeated his belief that the country’s record trade deficits can be addressed through market forces without any harm to the economy. But he said this benign outcome would be jeopardized if the United States and other nations did not get their budget deficits under control and if they made the mistake of making their economies less flexible by erecting trade barriers. “If, however, the pernicious drift toward fiscal instability in the United States and elsewhere is not arrested and is compounded by a protectionist reversal of globalization, the adjustment process could be quite painful for the world economy,” Greenspan said in a second speech, which he delivered to a conference in London. In contrast to Greenspan’s worries about future threats to the economy, President George W. Bush on Friday went to the White House Rose Garden to highlight a new report showing that the labor market was rebounding strongly from the impact of recent hurricanes, creating 215,000 jobs last month. “We have every reason to be optimistic about our future,” Bush said.