Am I the only one who remembers when Alan Greenspan was the darling of the conservatives? He kept being reappointed by both Democratic and Republican presidents because his reputation was solid. Then he came out and said that he might have made some policy mistakes when the economy crashed because of a housing bubble. Editorials at pro-business publications Wall Street Journal and Bloomberg today are reporting that Greenspan thinks the Bush Tax Cuts should expire.
The WSJ piece reports on an ABC [sic] “Meet the Press” appearance on Sunday and then reaches back to an earlier “Meet the Press” interview where Greenspan replied to a question about tax cuts paying for themselves, “’They do not,’ Mr. Greenspan said at the time, adding 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.’” (Note: “Meet the Press” is an NBC program, not an ABC program.)
Bloomberg didn’t give NBC’s highly rated show to ABC, but focused on a different set of remarks by Greenspan. Although they mentioned that Greenspan thinks the Bush Tax Cuts should expire, they focused on his opinion that entitlements need to be fixed.
Certainly the catalyst for a Greenspan appearance on “Meet the Press” yesterday was the looming battle over raising the debt ceiling. Boehner has said that there will be no change in the debt ceiling without some other strong measures. Tea Party members are as supportive of not raising the debt ceiling as they were of a government shutdown. Wall Street Analysts are scared to death of what would happen to financial markets if the debt ceiling is not raised and the U.S. defaults on its debt. Many financial products are pegged to U.S. Treasuries, deemed to be one of the safest investments on the planet. As investment and/or lending risk increases, the spread over Treasuries increases, reflecting the increased risk. A default by the U.S. Government would change the risk profile of U.S. Treasuries, and trigger interest rate increases on Treasuries and on every financial product pegged to them.
This may be the first time that GOP ideology meets reality. Greenspan is right, tax cuts do not pay for themselves. The trend in deficits is alarming. The Bush Tax Cuts have a negative effect on deficits, and have done nothing to create jobs since they were enacted 10 years ago. It is time for them to expire.
The last link in the Homework section today, is an analysis of the events that are contributing to deficits in the economy. It is wonky, but worth your time to read it, if for no other reason than it demonstrates how Heritage Foundation reports on the deficits are misleading. With the influence of Fox News and the Heritage Foundation on conservative thinking, it is no wonder that the Tea Party is misinformed about everything financial, and most things Constitutional.
Homework:
Wall Street Journal Blog About Greenspan
Bloomberg Story About Greenspan's Remarks
June 2010 Analysis of Causes of Deficit
The WSJ piece reports on an ABC [sic] “Meet the Press” appearance on Sunday and then reaches back to an earlier “Meet the Press” interview where Greenspan replied to a question about tax cuts paying for themselves, “’They do not,’ Mr. Greenspan said at the time, adding 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.’” (Note: “Meet the Press” is an NBC program, not an ABC program.)
Bloomberg didn’t give NBC’s highly rated show to ABC, but focused on a different set of remarks by Greenspan. Although they mentioned that Greenspan thinks the Bush Tax Cuts should expire, they focused on his opinion that entitlements need to be fixed.
Certainly the catalyst for a Greenspan appearance on “Meet the Press” yesterday was the looming battle over raising the debt ceiling. Boehner has said that there will be no change in the debt ceiling without some other strong measures. Tea Party members are as supportive of not raising the debt ceiling as they were of a government shutdown. Wall Street Analysts are scared to death of what would happen to financial markets if the debt ceiling is not raised and the U.S. defaults on its debt. Many financial products are pegged to U.S. Treasuries, deemed to be one of the safest investments on the planet. As investment and/or lending risk increases, the spread over Treasuries increases, reflecting the increased risk. A default by the U.S. Government would change the risk profile of U.S. Treasuries, and trigger interest rate increases on Treasuries and on every financial product pegged to them.
This may be the first time that GOP ideology meets reality. Greenspan is right, tax cuts do not pay for themselves. The trend in deficits is alarming. The Bush Tax Cuts have a negative effect on deficits, and have done nothing to create jobs since they were enacted 10 years ago. It is time for them to expire.
The last link in the Homework section today, is an analysis of the events that are contributing to deficits in the economy. It is wonky, but worth your time to read it, if for no other reason than it demonstrates how Heritage Foundation reports on the deficits are misleading. With the influence of Fox News and the Heritage Foundation on conservative thinking, it is no wonder that the Tea Party is misinformed about everything financial, and most things Constitutional.
Homework:
Wall Street Journal Blog About Greenspan
Bloomberg Story About Greenspan's Remarks
June 2010 Analysis of Causes of Deficit
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