Thursday, April 21, 2005

 

This would never have happened if Alan Greenspan were still alive

Pay no attention to that man thoroughly regretting now what he himself allowed to happen then.
Greenspan Renews Warning on Budget Deficits

Bloated budget deficits pose a danger to the nation's long-term economic health, Federal Reserve Chairman Alan Greenspan warned anew Thursday. He issued a fresh call to policy-makers to move swiftly to get the government's fiscal house in order. Greenspan, in prepared testimony to the Senate Budget Committee, only very briefly touched on the economy's current performance, said the persistence of swollen budget deficits in the years ahead "would cause the economy to stagnate or worse" unless the situation is reversed.

Persistently large budget deficits threaten the economy because they would push up interest rates for consumers and businesses. Higher borrowing costs would weigh on consumers' and businesses' willingness to spend and invest -- two important forces that keep the economy going. Rising interest rates also would slow growth in the housing market, Greenspan said.

And, growing budget shortfalls would force the government to borrow more to finance those deficits.

"The federal budget 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.

Greenspan again supported a return to pay-as-you-go budgeting policies that would require Congress to offset future increases in government spending or new tax cuts with reductions in other government programs or tax increases.
Of course, Greenspan was completely in favor of Bush's tax cuts in 2001, never mentioning the extreme likelihood - or even the remote possibility - they would cause the very budget deficits he is now so sincerely decrying.
The Bush administration supports bringing back the pay-as-you-go provision for spending, but not for tax cuts.
Of course not.
A decade-long pay-as-you-go provision expired in 2002.

The administration also has a goal of cutting the deficit in half by 2009.
And I am Marie of Rumania.

(Incidentally, the author of the article, Jeannine Aversa, never mentions that Greenspan was 100% onboard with Bush's tax cuts in 2001 or that he never warned of deficits when the tax cuts were passed. What liberal media?)
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