Bull Moose writes,
...what planet the Fed Chairman has been living on the past four years.And New Donkey writes,
Federal Reserve Chairman Alan Greenspan descended from the heavens this week to inform us lowly earthlings that we face a deficit crisis. Who would have thunk it? But, in his infinite wisdom, the man who knows all told Congress,
"Unless we do something to ameliorate" rising debt levels, he told the House Budget Committee on Wednesday, "we will be in a state of stagnation."
This is from the man who has granted his blessing on the very tax cuts tilted toward the wealthy that has created this debt mess.
Back in 2001, you may recall, Greenspan endorsed Bush's tax cuts on the bizarre theory that otherwise the national debt might disappear and the federal government would have to start buying equity in private businesses to dispose of excess cash. More recently he has returned to his pre-Clinton administration doomsaying about federal budget deficits. So what does he propose now? Draining more revenues from Washington by creating big, fat tax-free savings vehicles to enable high earners to shelter investment income from taxation.Or to shift the tax burden to a regressive tilt, not progressive. Oh, and for those delusional enough to believe that Greenspan is 110% independent and non-partisan, don't forget my post on May 28, 2004.
To be sure, what Greenspan actually wants is a national consumption tax, and endorses tax-free savings vehicles as a back-door means to that goal. This approach, of course, is a big part of the Grover Norquist "starve the beast" strategy of deliberately engineering large budget deficits in order to force big cutbacks in federal spending, or a shift in the tax base towards wage income or consumption, or all of the above.
Saving the best for last, of course it's Paul Krugman, the columnist that drives the right-wingers crazy, mainly because he's doesn't pull punches, is so often dead-on correct, and perhaps most of all, is not afraid to get inside the heads of the opposition to think like they do and in the process often be a step or two ahead of them, or at least in-step with them motive-wise. He concisely summarizes and reminds us of what these jokers are up to,
When Mr. Greenspan made his contorted argument for tax cuts back in 2001, his reputation made it hard for many observers to admit the obvious: he was mainly looking for some way to do the Bush administration a political favor. But there's no reason to be taken in by his equally weak, contorted argument against reversing those cuts today.Krugman's last line is most scary because it's extremely true -- and yet most Americans don't know a thing about it:
To put Mr. Greenspan's game of fiscal three-card monte in perspective, remember that the push for Social Security privatization is only part of the right's strategy for dismantling the New Deal and the Great Society. The other big piece of that strategy is the use of tax cuts to "starve the beast."
Until the 1970's conservatives tended to be open about their disdain for Social Security and Medicare. But honesty was bad politics, because voters value those programs.
So conservative intellectuals proposed a bait-and-switch strategy: First, advocate tax cuts, using whatever tactics you think may work - supply-side economics, inflated budget projections, whatever. Then use the resulting deficits to argue for slashing government spending.
And that's the story of the last four years. In 2001, President Bush and Mr. Greenspan justified tax cuts with sunny predictions that the budget would remain comfortably in surplus. But Mr. Bush's advisers knew that the tax cuts would probably cause budget problems, and welcomed the prospect.
And the consequence of the failure of the starve-the-beast theory is a looming fiscal crisis - Mr. Greenspan isn't wrong about that. The middle class won't give up programs that are essential to its financial security; the right won't give up tax cuts that it sold on false pretenses. The only question now is when foreign investors, who have financed our deficits so far, will decide to pull the plug.Yup, a ticking time bomb. Although starve-the-beast advocates I suppose assumed the public would just give-in to the argument that with such massive deficits, programs would need to be cut, Krugman proposes the more likely outcome, that the public will vote out the bums and NOT give up that to which they feel entitled. In the meantime, our fiscal fate rests with foreigners, who subsidize our debt via their "generous" buying of our federal securities. Quite a dicey predicament -- relying on the whims of non-Americans -- one that could change faster than many think.
Finally, note that the tide may finally be turning against Norquist and his like -- further providing proof that they (he, GW, etc.) may have greatly misplayed their hand. As a nation, let's hope so as time is running out.