Greenspan for taxcuts.

January 25, 2001 6:35 AM

Greenspan for taxcuts.
posted by tiaka (5 comments total)

And all was well with the land. And the peasants rejoiced. And ate cookies (coz now they can %##$ afford them.)
posted by sonofsamiam at 7:43 AM on January 25, 2001

If you don't trust the media filter, here's the transcript of Greenspan's testimony. Note that he's still sticking to his guns about debt reduction. The tax cuts quote that the media is throwing around is contained within a context of dealing with the surplus after the debt has been erased (search for the text "1975"). Greenspan doesn't want the government investing all that money in private assets . . . thus, he want tax cuts to deal with the post-debt surplus and if we're going to have tax cut, then, given the possibility of a downturn in the economy, we may as well start sooner than later.
The most recent data significantly raise the probability that sufficient resources will be available to undertake both debt reduction and surplus-lowering policy initiatives. Accordingly, the tradeoff faced earlier appears no longer an issue. The emerging key fiscal policy need is to address the implications of maintaining surpluses beyond the point at which publicly held debt is effectively eliminated.
In today's context, where tax reduction appears required in any event over the next several years to assist in forestalling the accumulation of private assets, starting that process sooner rather than later likely would help smooth the transition to longer-term fiscal balance. And should current economic weakness spread beyond what now appears likely, having a tax cut in place may, in fact, do noticeable good.
So it's really that much of a flip flop, IMHO. I think Greenspan is trying to get rid of debt and then the private assets vs. public policy conflict by getting the money out of the governments hands. Of course, IANAFRBC (I am not a Federal Reserve Board Chairman).
posted by iceberg273 at 8:15 AM on January 25, 2001

I doubt Greenspan would sneeze without first considering the impact on the markets. If he says he's in favor of tax cuts, no matter how much reservation goes along with it, that statement is going to get latched onto by the press and by our self-serving Gov. Bush. So the question is, why is Greenspan towing the Bush line all of a sudden? Is he afraid for his job? Or does he think that the only way to temper the severity of the tax cut is to start guiding it to where he wants it to go?
posted by owen at 5:02 AM on January 26, 2001

I would guess that he's smart enough to get himself running the tax-cut show before opening night.
posted by sonofsamiam at 7:45 AM on January 26, 2001

Greenspan is Chairman through 2004, and his non-renewable term on the board ends in 2006. Everybody knows Bush would be crazy to move against Greenspan -- he can only be removed "for cause" anyway.
posted by dhartung at 8:06 AM on January 26, 2001