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April 22, 2005

Grownup Republican Watch: Alan Greenspan

Ah. Nice to see:

washingtonpost.com: Greenspan Says He Expects Tax Increases: "Federal Reserve Chairman Alan Greenspan said yesterday, for the first time explicitly, that he expects tax increases to be part of any eventual agreement to reduce the federal budget deficit. Greenspan... also acknowledged that his support for tax cuts in early 2001... led to policies that helped swing the federal budget from surplus to deficits.... Greenspan reminded lawmakers that government economists at the time predicted budget surpluses 'as far as the eye can see.' Yet Greenspan had warned then in congressional testimony that the forecasts might be wrong, and he recommended some 'trigger' mechanism that would limit the tax cuts if certain budget targets were not met. Greenspan said he thinks 'it's frankly unfair' for critics to blame him now for the fact that Congress chose to 'read half [his] testimony and discard the rest.'

Sen. Paul S. Sarbanes (D-Md.) said he believed it was 'fair to consider how your message would be taken' and that lawmakers saw Greenspan's 2001 remarks as 'providing a green light' for tax cuts, which were enacted without triggers.

'I plead guilty to that,' Greenspan said. 'If indeed that is the way it was interpreted, I missed it. In other words, I did not intend it that way.'... 'The federal budget deficit is on an unsustainable path, in which large deficits result in rising interest rates and ever-growing interest payments that augment deficits in future years,' Greenspan said in his prepared testimony yesterday.... The Fed chief called for 'major deficit-reducing actions' and proposed several procedural steps Congress could implement to restrain the deficit's growth. Greenspan has frequently said he would prefer the deficit be shrunk as much as possible through spending cuts.... But he also implied that reaching a bipartisan agreement to reduce the deficit will require some compromises, saying, 'We can raise taxes, and I don't deny we probably at the end of the day will do them [tax increases] in order to get an ultimate resolution of this.'

Posted by DeLong at April 22, 2005 07:09 PM