Like Pete Davis, I was somewhat amazed to see Alan Greenspan tell Judy Woodruff on Bloomberg TV that we should let all the Bush tax cuts expire on January 1.
This is, after all, the man who gave a crucial green light to Bush's 2001 tax cuts, and all the others, and then watched as huge surpluses were replaced by soaring deficits.
But I can't shake the suspicion that Greenspan is throwing a curveball. Having been worshipped as the great wise man of economics for years, Greenspan's reputation has since collapsed almost as quickly as the housing bubble. How better to restore one's luster than by proposing an idea so courageous and iconoclastic that it will never happen?
Republicans will obviously dismiss his idea out of hand, because they have promised to bear any deficit in order to fend off any tax increase. Democrats will reject it too, because they want to make the tax cuts permanent for every family earning less than $250,000 a year.
To be sure, Greenspan has always been a bit iconoclastic, and he hasn’t been on exactly the same page as Republican party leaders for quite a few years.
But his surprising new stance is at odds with his long-held views. Greenspan always argued that the real fiscal problem was too much government spending. Tax increases should only be an absolute last resort. In his recent Wall Street Journal op-ed, Greenspan warned in dire terms about the need to cut spending and barely mentioned higher taxes.
Greenspan's idea is also at odds with what most other economists, regardless of party affiliation, are recommending right now. Given how weak the economy is, I don't hear anyone argue that a huge tax increase on people at every income level would be a good idea.
Greenspan didn’t explain his economic rationale He only said that people “misunderstand’’ the seriousness of the long-term fiscal problem.
Maybe. But what I hear is a risky idea that sounds bold but never has to be tested. If the politicians reject it, as they arguably should, Greenspan can blame them for lacking courage.