Why is Greenspan criticizing Bush's tax cuts now?

[marmar]

from The American Prospect:



....(snip)....

Fed Ex. The big story of the weekend was the publication of former Fed Chairman Alan Greenspan's memoirs, in which he criticizes President Bush's tax cuts. Lovely of him to tell us now. At the time, Greenspan's Delphic testimony could be read as supporting tax cuts or being worried about deficits being too large. But when the deficit question came up, Greenspan invariably chose to warn about public spending, and not about the tax cuts that were then on the legislative table. Democrats repeatedly pressed him to oppose the Bush cuts, and he declined. The support of the prestigious Fed Chairman helped give Bush the necessary cover to get the cuts enacted.

Greenspan's memoir also makes a big deal of deficits per se, and faults Republicans for abandoning their heritage as the party of fiscal discipline. But this contention also misses the point. In the aftermath of the dot-com bust and the attacks of 9/11, the economy needed a big fiscal stimulus in 2001-2003. What was wrong with the policy was not the big deficits -- they were required to get us out of a slump -- but the make-up of those deficits. Far more effective public policy would have been increased public investment and tax cuts for moderate income people. That would have produced more stimulus for the same deficit. In a "60 Minutes" interview promoting the book, Greenspan declared:

"Smaller government, lower spending, lower taxes, less regulation -- they had the resources to do it, they had the knowledge to do it, they had the political majorities to do it. And they didn't."

Less regulation? Bush failing to reduce regulation? Please. Greenspan was also the Great Enabler of both the market collapse of 2000-01 and of the current credit crunch, because his signature was to combine cheap money with scant regulation of its abuses. When a bust came, Greenspan would just bail out the mess with even cheaper money. At some point, this routine runs out of gas. Let's see whether Bernanke will try to repeat the trick, or whether the Bernanke Fed will rediscover the Fed's other responsibility, as a setter of standards.

...(snip)....

The complete piece is at: http://www.prospect.org/cs/articles?article=all_things_fed

[jpgray]

1. Legacy, baby! The purpose of all memoirs.

[Selatius]

2. Greenspan's activity is what I call "bank pillaging."

A perfectly good avenue to adopt, using history as a reference, was a tax hike on wealthy income earners with more tax cuts to working poor people. The extra revenue would go to job training programs, food stamps, poverty relief programs, etc. to help get people back to work. All of this would help stimulate the economy on the demand side, which would cause an up-tick in production/services. The Repub Congress did none of that.