I guess this is a debate of the Greenspan legacy. I’ll be upfront with IMHO that the Greenspan Fed seemed to be doing a pretty good job of steering the economy (controlled inflation and growth) until the “irrational exuberance” speech of 1997. He saw and then did not deflate the looming High Tech bubble, then he ignited the property market to prevent the bursting bubble from impacting the economy. Now no real levers left to push.
From Bloomberg: Greenspan saved his harshest analysis for the current president. Soon after Bush took office in 2001, the president set about implementing a campaign promise to cut taxes, a policy Greenspan said he believed at the time wasn’t well conceived. Little value was placed on rigorous economic policy debate or the weighing of long-term consequences,'' he wrote. Greenspan also expressed disappointment in Bush's reluctance to antagonize then-House Speaker Dennis Hastert and other congressional Republicans by vetoing spending bills. There is a remedy for legislative excess,‘’ wrote Greenspan, ``it’s called a presidential veto.‘’
RE the “In 2001 testimony before Congress, Greenspan was widely interpreted to have endorsed Bush’s proposed tax cuts. In the book, he characterized his testimony as politically careless and said his words were misinterpreted.”
I think Greeny pulled a Collin Powell. If anyone could stand up to the American public and say that tax cuts, lack of offsetting budget cuts and massive war spending was a bad idea, it was Greenspan. He didn’t, and that was a political cave in. Even though the Fed Chairmanship outlasts Presidents. Greenspan was famous in the financial markets for the exactness of his words, and clearly 100% cognizant of how his speeches could move markets around the world. IMHO, Greenspan screwed the pooch.
What an act of political courage, standing up to Bush six years later, after the Greenspan housing bubble has popped, Bush’s poll ratings are in the toilet, and when Greenspan’s reputation is headed south too!
Greenspan could have made himself perfectly clear to Bush and the world at the time. He didn’t. There’s no reason to believe that was just a matter of thinking he’d spoken clearly when he hadn’t.
Especially since he had a second chance in 2003, to speak out against Bush’s next round of tax cuts, on capital gains and dividends. Did he make sure then that he expressed his opposition in clarion-clear terms?
No.
Fuck Greenspan with a rusty piece of rebar. We’ll add his comments to the burgeoning record on what a wretched President we have, but speaking out now rather than then doesn’t rate Greenspan one iota of redemption.
Facts … living in the real world. What interesting times we had in the Clinton administration!
Conversely, he asserts that the Repubs lost the last election, and deserved to. “The Democrats came to power in the Congress because they were the only party left standing.” Can’t disagree with that.
But I do agree with the criticism that Greenspan should have been brave enough back in the early days of Bush II to make some of these points in a much more rigorous, conspicuous way.
This is not retroactive courage, this is blatant ass-covering.
Greenspan did nothing to put the brakes on the administration’s excesses and was widely seen (not “misinterpreted”) to be giving whole-hearted support to the Bush policies. Setting aside such claims as Senator Reid’s reference to him as a “political hack” as simply its own version of political hyperbole, there have been many references from more neutral commentators to the way that Greenspan politically supported GWB in ways that he never supported Bush’s father or Reagan.
I don’t really have anything to add to this or what others have said here. It really really pisses me off that Greenspan is saying this now. We ought to rename this policy folly the “Bush-Greenspan tax cuts” since his interpretted endorsement of them was crucial in giving them an air of respectability rather than the fiscal recklessness that they were!
This is actually worse than what Powell did in the sense that Greenspan had more independence than someone serving directly in the Administration has. I can see absolutely no justification whatsoever for Greenspan allowing the Bushies to use his words to support their tax cuts, whereas Powell could at least make the argument that if he openly broke with the Administration on Iraq, he would have had to resign and would have thus lost any influence he did have in trying to be a voice of semi-sanity in the asylum!
But, the folly was not in the tax cuts. It was in the continual expansion of government in all aspects. Sure the Iraq war is messed up. I’m not in public office, so I can say it.
But in '95, the GOP was also right. A federal Department of Education? I’m pissed that my daughter’s teacher has to listen to some asshole down the hall? In Washington? WTF? Why should any department have control over anything to do with education?
But Bush felt the need to more than double the federal education budget from Clinton. A real conservative there.
Medicare prescription drugs. Another "limited’ government idea.
Build a bridge to nowhere in Alaska. More fiscal discipline.
The guy is a failure on all fronts. He’s not conservative, he’s not liberal, he’s not even right.
But the tax cuts were and are a good thing. We need more of them. The more money in mine and your bank accounts mean more FREEDOM for us. Doesn’t anyone understand that?
Money can’t buy happiness. Of course it can’t. But this isn’t a religious argument. It’s a freedom thing.
If you have money in your pocket, then you can PURSUE happiness as you see fit, and so can I with my money. Is the government your master or is it your boss as in my situation. If I won the lottery I could tell him to go get fucked. Money IS power…
Clinton failed in this, and Bush would have succeeded in this had he done the other side of the math…
Yes, it was. The government has jobs it needs to do; jobs that people want it to do. It needs money to do those jobs.
Because otherwise you’ll have schools all over the country teaching garbage; whatever nonsense the local pressure groups want. Creationism comes to mind immediately.
Because it’s not true. There are all sorts of things that you, as an individual, can’t do. All sorts of problems you can’t handle. The point of making government small isn’t to help you; it’s to make you an easy victim for the wealthy and the corporations, and anyone else with power.
I don’t really have a dog in this fight other than to say the Fed Chairman’s job is a tough one-- trying to control inflation and not mess up the economy with essentially one lever to pull. Bush and the Republican Congress just went wild on the spending side. It’s unclear to me that Greenspan could have known that would happen back in '01.
The average annual growth in federal spending under Bush has been 5%. It was 2% under Clinton, 2% under Bush I, and 3% under Reagan. I don’t think we have a revenue problem-- we have a spending problem.
Can you explain what specifically the DOE has done to prevent creationism from being taught in schools? If anything, the DOE is more likely to encourage that sort of thing, under someone like Bush. Same-same for abstinence only sex ed, etc.
Oh…I think he could have had a better idea. There were plenty of people, like the Center for Budget and Policy Priorities [CBPP] who were arguing that the projected budget surplus was largely a fantasy… or, at the very least, fraught with a high degree of uncertainty (see, for example, here and here).
Besides which, Greenspan endorsed a plan to cut taxes that gave most of the gains to the rich. As such, he seemed to be incorporating his own political preferences into the mix.
Your first cite still projects a surplus, though, and I can’t really figure out what the second cite says other than that there is a high degree of uncertainty in projecting budgets. You don’t say!!
Well, there’s political and there’s political. If he endorsed the tax cuts just because he likes Republicans, that’s the first kind of political. But if he actually believes that’s the right thing to do, then that’s also “political”. It’s not clear to me that he was just doing this to help his political party. As early as 2005, while he was still in office, he said it was a mistake (in retrospect) to endorse Bush’s policies. Link
We have both. We spend too much on useless things, and we are unwilling to pay for it.
The simple fact that you don’t have half or more of the schools in this country teaching creation shows that it’s working. As for Bush, the one good thing to come from Iraq is that it’s distracted him from doing as much damage domestically as he might have done.
No, I expect that one reason we spent all that money was to cripple the government and the economy, in order to force the government to cut back on that evil, evil socialistic stuff. It’s called “starving the beast”.
Ahh, holding people indefinitely without charges, denial of habeas corpus, government officials writing serious memos justifying “unusual interrogation” for starters.
I think he’s done plenty of damage. Precedents have been set and precedents are damned hard to reverse.
Greenspan saw it in 1997 & the irrational exeuberance speech followed by no action. maybe LTCB, asian flu & russian crisis were mitigating factors, but he failed to burst the painfully obvious bubble. then when the hi-tech bubble burst, greenspans policies clearly allowed the mortgage refinancing wave. sure it stave
off a mild recession but resulted in a consumer driven economy at the cost of mortgage savings. then the tax cuts for the rich combined with massive increased spending on bigger government and Iraq.
that greenspan couldn’t foresee where we are now & how it’s screwed the US economy for the next 1-2 decades is ludicrous.
So, you’re sure that had Greenspan followed some other policies that we wouldn’t have had other, more serious problems? The sub-prime mortgage problems are a facet of the globalization of the mortgage industry. In the long wrong, that’s probably a good thing, even if it does have some deleterious side effects. As I said in my first post, the Fed has basically one lever to pull out of which 1,000s of possibilities can ensue. What might be good for the overall economy can very well be bad for any given sector.
Can we get a cite for how “screwed” the US economy is going to be for the next 1 to decades? The sub-prime issue is a blip on the radar, from a macro-economic viewpoint.
