Alan Greenspan, the former Federal Reserve Chief who served under four Presidents including both Bushes, and, whatever you think of him, one of the most influential people of the last 30 years, has come out of the closet. No, not that closet. This one:
Taxes must rise while fiscal stimulus needs to be wound down in order to reduce the U.S. budget deficit and allow private investment to expand, said former Chairman of the Federal Reserve Alan Greenspan on Wednesday.
“I am in favor for the first time in my memory of raising taxes,” Greenspan told an audience at the Council on Foreign Relations in New York.
He warned that the deficit, swollen by massive stimulus spending, was crowding out capital investment. We “must find a way to simmer down fiscal activism and allow the economy to heal,” he said, adding that that stimulus spending had been far less successful than anticipated.
No surprise Greenspan still hates stimulus funding (i.e., Keynesian economics), even a feeble one like the Obama stimulus spending, but tax hikes? Really Alan? The man who knelt down at the demand of the Bush administration to support massive tax cuts that led to massive deficits? That Alan Greenspan? Apparently so:
Greenspan warned of “very grave problems ahead” if the budget deficit, swollen to around $1 trillion by massive amounts of stimulus spending, is not tackled soon.
On a side note don’t you love how the Obama stimulus spending is always referred to by major media outlets as “massive” as if the problem with the “swollen” deficit was created solely by the $787 billion of stimulus funding and not any of the funding we spend on our bloated military and two wars in the Middle East?
As if 8 years of Bushonomics and tax cuts and deficit spending and Republican and conservative policies which led our country and the world to a nearly fatal economic collapse in the Fall of 2008 and Winter of 2009 had nothing whatsoever to do with the Federal Deficit. Funny how that works, isn’t it?
Well, Alan, thanks for all the help on the issue of raising taxes. And be sure to enjoy watching yourself burned in effigy at the next Tea Party rally (assuming any of them know who you are or what you said).
Ps. Here’s what Greenspan really thinks would solve all our economic woes:
“I’m not saying the stimulus is not working, I’m saying it’s working far less than anyone anticipated,” Greenspan said today at the Council on Foreign Relations in New York.
Greenspan said the “most effective” stimulus would be an increase in stock prices rather than more government spending.
See, stimulus spending to save or increase jobs is sort of okay, maybe, but what we really need to do is jack up stock prices. In other words, Greenspan’s solution is to inflate prices of shares sold on the stock market and create another bubble! No wonder everyone in the Wall Street Casino business loves the guy and hangs on his every word.
Yeah, that’ll do the trick: more money for stock brokers, hedge fund managers and investment bankers. Yee-haw!
[Insert joke about old dog, new tricks here]
Greenspan was a big believer in the gold standard, until he got a cushy job with Chase bank (IIRC.)
Alan Greenspan was an economic disaster on two legs. Cheap credit was the largest cause of the Dow bubble in the 80’s, the Nasdaq bubble of the 90’s and the housing bubble of the 2000’s. Current Fed policy is designed to create yet another bubble.
As for taxes, first let me see the government end its empire abroad. I haven’t the slightest interest in paying for two wars and the threat of war against Iran, Pakistan or whoever.
Greenspan flunks Econ 101.
There is money sitting on the table waiting to be invested when demand picks up. That money is being parked in Treasury bills, which are at the lowest interest rate (I think it’s around 3%) in a generation. That is not a sign of crowding out. Borrowing a trillion dollars at 3% and spending it on infrastructure would get that parked money off the table, increase sales and government revenues, lower the deficit, and cause the T-bill interest rate to rise. Taxing parked money won’t reduce demand at all; it’s parked and that 3% is not cashed out until the T-bill is cashed out or sold.
No wonder he effed up the American economy. He should be sued for malpractice with statements like the one quoted above.
cute. Greenspan seems to always view things about 45 degrees off true north.
Someone who does gritty and has a new article out in Rolling Stone is Matt Taibi. It’s about BP and the extraordinary damage that is in the works with Wall Street & with UK/US relations if BP is allowed to leverage a bankruptcy. Conyers’ Bill has yet to go to the Senate to curtail a bankruptcy.
Do you have a link to the new Taibbi?
I jsut got my subscription today and saw it. Generally it takes a few days after publication before they’ll let it go online, but here’s where you’ll find it
Typical Taibi he doesn’t mince words
well .. they usually have Taibbi up today(since he’s probably the biggest web draw) … but then again .. they fucked up with the McChrystal article .. so who knows
“Normal market forces” – wonder what he means by that, aside from “no regulation or oversight”
Ding, ding, ding, ding, ding
We have a winner. Nothing more than that. Including the business media hyping and everything.
“I am in favor for the first time in my memory of raising taxes,” Greenspan told an audience at the Council on Foreign Relations
What about the big increase in the payroll tax in 1983, Mr. Mitchell?
But, but, but, think about all the Ferraris that could be sold.