Alan Greenspan - asshole:

Pardon our French, but we think this guy has gotten away with fiscal-policy murder. Fortunately, for those who want to know the truth, the Washington Post has an article that reviews Greenspan's actions over the last several years as they relate to the passage of the Bush tax cuts. Don't be fooled, this fellow has probably done more damage than any single Republican senator or congressperson. Here are some excerpts (with our comments) from the Post's article, As Budget Deficit Grows, Greenspan Speaks Softly

In January 2001, as President Bush began his term after the disputed election and even allies were saying his proposed $1.6 trillion tax cut was too large, Greenspan unambiguously flashed a green light to Congress to push it through.

Now some members of Congress complain that the Fed chairman flashed no clear red lights as the country's fiscal fortunes changed. Instead, they say, he has equivocated on further tax cuts. Greenspan's stand is all the more striking, they say, because he has always loudly implored policymakers to fight deficits and prepare for the retirement of the Baby Boom generation.

Yup, he's vocal for tax cuts, but says nada when they should be postponed or repealed.

[In January 2001,] the government was projected to be running a $5.6 trillion surplus over the next decade. Greenspan worried that the government would quickly pay its debt and begin accumulating a cash surplus, which it would then have to invest in private-sector stocks and bonds. To Greenspan, the government ran the risk of dangerously distorting the market.

"In today's context, where tax reduction appears required in any event over the next several years, . . . starting that process sooner rather than later likely would help smooth the transition to longer-term fiscal balance," Greenspan said.

That is total nonsense. It was obvious that the surpluses were the result of a stock-market bubble, and any projections going forward that expected the same large tax revenues was bogus. Yet Greenspan allowed the "no bubble here" estimates to be used to determine policy.

[In] November [2002], Greenspan told a Joint Economic Committee hearing that he thought it would be "unwise" to eliminate or postpone portions of the 2001 tax cut that had not yet taken effect, because businesses had already built the changes into their long-term plans.

What an incredibly weak argument. Not only that, but it has the character of a "one way ratchet" which means one can never raise taxes.

... opponents noted that Greenspan repeatedly expressed concern about a growing deficit and said any new tax cut should be offset by spending cuts or equivalent tax increases.     ...     Greenspan knew that his statements would be politically ineffectual, Corzine charged, since neither party had any intention of raising taxes or cutting spending to offset a $350 billion hit to the Treasury.

"With this idea of saying it all needed to be revenue neutral, he was indicating a level of political naiveté that he does not possess," Corzine said.

He's a four-flusher, all right.

... Greenspan is a conservative Republican, a believer in small government and low taxes. His passion for those views led him to believe in the projected surpluses and see a chance to put his political beliefs into practice. "He wanted the tax cut for ideological reasons," [Barney] Frank said. "He didn't want all that money lying around for government to spend."

We totally agree.

On Wednesday [last week before Congress], after the tax cuts had been enacted, Greenspan dwelled on the danger of large and rising deficits, which he said eventually would cause long-term interest rates to rise and damage economic growth.

"There is no question that if you run substantial and excessive deficits over time, you are draining savings from the private sector, and other things equal, you do clearly undercut the growth rate of the economy," he told the Senate Banking Committee.

Leach said such comments are too late. "Congress has acted," he said. "Whether or not he thinks Congress took the right step, it is not helpful for him to now say this was the wrong way to go. How does that help the economy?"

A lame attempt to cover his ass.

posted by Quiddity at 7/20/2003 01:17:00 AM