StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



Alan Greenspan Opposes Extending ALL Of The Bush Tax Cuts!!!

15 Jul 2010
Posted by Pete Davis

Pardon my incredulity!  Alan Greenspan just taped an interview with Judy Woodruff for broadcast tomorrow and over the weekend.  This Bloomberg News story quotes him saying, "They should follow the law and let them [the Bush tax cuts] lapse."   He believes it is more important at this point to cut burgeoning deficits than to funnel more money to taxpayers.   In a telephone interview after the taping, Greenspan acknowledged that this "probably will" slow growth.

 
My memory of a cold night in early 1981 is still clear.   Former Council of Economic Advisers Chair and Reagan adviser Alan Greenspan sat next to OMB Director Dave Stockman and CEA Chair Murray Weidenbaum and hardly uttered a word as Senate Budget Chair Pete Domenici (R-NM) urged them to ease the deficit by cutting the third year of the Roth-Kemp tax cut and to scrap "Rosie Scenario."   Stockman politely told us to get with the program, and so we helped pass the Roth-Kemp tax cuts, cutting the first year in half.  The FY83 deficit peaked at a peacetime high of 6% of GDP (See CBO's Table F-2), and we spent the next decade wrestling the deficit.
 
Recall also, in 2001, Fed Chair Alan Greenspan's crucial testimony in support of the Bush tax cuts. That gave Congress the high sign that the Fed wouldn't choke off that much fiscal stimulus.
 
This is another example of the adage that if you live long enough you'll see everything, including Alan Greenspan getting religion on the federal deficit.

Not quite

If you read the original article, you will see that Greenspan's change-in-tune is rather more drastic that you suggest - but given the rest of the article I don't see why it benefits you to mislead us - ???. In truth: it would seem that he is opposed to extending ANY (following your own capitalization) of the tax cuts.


Yes, But He Meant "Tax the Little Guy"

There are two broad types of proposal circulating. One, from the right, is to extend the tax cuts. In Kyl's version of that proposal, we don't even need to balance the budgetary cost of doing so, because tax cuts are at least as magical as unicorns. The other proposal is to allow cuts to lapse on those who earn over $250,000/year, and leave them in place for everybody else.

Since the legislative logic in this case allows Democrats to work part of their will without GOP help, tax cuts for high earners will be allowed to expire, and the only question is whether the GOP will act as dog-in-the-manger for the rich, taking the tax break away from those earning less than $250,000. If the GOP really believes that tax cuts are good for the economy (or wish to seem to believe it), then they need to go along with the Democrats on this one.

Greenspan steps in to say "tax the little guy" only when taxing high earners more seems inevitable. What you describe as a sudden new affection for budgetary discipline, even when it involves tax hikes, I see as Greenspan behaving more or less has he has always done. Let's remember that he was all in favor of raising FICA, then all in favor of unbalancing the budget so that breaking Social Security promises became thinkable.


We have seen this before.

We have seen this before. Greenspan has always been a deficit hawk during democratic administrations and a tax cutter during republican administrations. He is a political creature.


And you guys always ignore Greenspans oher advice

He always advises cutting spending too. But you never bother to celebrate that advice.


Surely you meant that

Surely you meant that Greenspan opposed extending ANY Bush tax cuts, not ALL of them.




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