Wednesday, March 16, 2005

Greenspan the lackey

Greenspan bashing has become the trendy thing to do among liberals recently. And for good reason. He has contributed hugely to a regressive, hurtful transfer of wealth from the poor to the rich that began with his arguing for the raising of payroll taxes in the 80s, continued with the lowering of income taxes on the wealthy in 2001, and will come to fruition if Social Security is destroyed by the President's considered (but not yet proposed) "reforms."

In the face of huge budget deficits, Greenspan went before the Senate Special Committee on Aging and was forced to defend his endorsement of the tax cuts in 2001 and argued that he only made the same mistake that many budget-watchers were making—namely that huge surpluses were on the way. Given that Greenspan is the chief economic engineer in the country, this is a disingenuous effort to avoid responsibility. Greenspan knew full well the economic picture that the US faced, especially given his central role in shaping the economic future through the Federal Reserve's monetary policies. He simply ought to have known better than to expect budget surpluses forecast on the basis of current trends, which were certain to change given his own policies, to materialize.

Furthermore, Greenspan's support of tax cuts, without seeing the legislation itself, was irresponsible. Greenspan must have known that endorsing the concept of "tax cuts" would be a huge boon to Republican politicians eager to offer their core constituencies (the wealthiest Americans), deep tax cuts, regardless of whether or not they were responsible. Before the committee, Greenspan argued that he wanted tax cuts only if they contained "trigger" clauses that would force Congress to re-evaluate the tax cuts if the budget projections proved wrong. Well, the tax cuts did not include those triggers. And if Greenspan had wanted to emphasize concerns about poor budget projections, he should have emphasized those. For example, Greenspan could have said, "We must hold tax cuts until we are sure that promised surpluses will materialize." But he didn't. He provided a political blank check to irresponsible Republican law-makers. And since those tax cuts, when he has had opportunities to call for their repeal given that surpluses did not materialize, Greenspan has remained mum, or tacitly supportive of the tax cuts. Greenspan is a lackey of the Republican law-makers who are turning our fiscal picture into a portrait of irresponsibility. Congrats.


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