Former Federal Reserve Chairman, Alan Greenspan is an Ayn Rand,trickle down, supply side economist. I can guarantee that we will not see eye to eye on many issues, but it seems that he is starting to realize the error of his ways, as last week on “Meet the Press” he urgently called for the expiration of all the Bush tax cuts.
Greenspan said, “I think this crisis is so imminent and so difficult that I think we have to allow the so-called Bush tax cuts all to expire. That is a very big number. But having put the rates back to where they were in the Clinton administration, I would argue that everything else should be either cutting spending or taking out the subsidies which are in the tax expenditures.”
We have heard of the “Laffer curve”, invented by Arthur Laffer. This curved diagram simply shows that tax cuts actually pay for themselves by the expansion of the economic baseline. This explains the current crop of Republicans’ fascination with making the Bush tax cuts permanent. Unfortunately the current Republicans have not had the same revelation as Alan Greenspan, who is quoted as saying the last thirty years of tax cuts had not paid for themselves. He added that the U.S. has been funding spending programs and tax cuts with borrowed money. “And at the end of the day that proves disastrous. My view is I don’t think we can play subtle policy here.” Of course you won’t hear this from CATO or Heritage Foundation who still push this regressive agenda.
Mr. Greenspan also said he was “far more optimistic” now that the U.S. will solve its fiscal problems than some months ago, pointing to recent moves by politicians on both sides showing openness to cut entitlement spending.
Alan Greenspan is one of the Reagan insiders that have spoken out against the current Republican plan, the other was David Stockman. Although he is not taking sides in the current debate, he finds faults within both the President’s budget and the Republican budget. Stockman is quoted as saying,
“Republicans used to believe that prosperity depended upon the regular balancing of accounts—in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses, too. But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance—vulgar Keynesianism robed in the ideological vestments of the prosperous classes,”
“If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing….” Stockman continued.
What will it take for the Republicans and the Tea Party to realize they are grasping onto a failed policy?
I am sure Greenspan and Stockman will not grab a hold of the People’s Budget put forward by the Progressive caucus, but they have at least latched onto one of their ideas and that is the expiration of the Bush tax cuts.
Let’s hope Boehner,Cantor and Ryan are listening!