Greenspan blames Bush over spending

Discussion in 'Wall St. News' started by Red_Ink_inc, Sep 15, 2007.

  1. AP
    Greenspan Faults Bush Over Spending

    Saturday September 15, 8:20 pm ET
    By Jeannine Aversa and Ann Sanner, Associated Press Writers

    In New Book, Former Fed Chairman Alan Greenspan Bashes Bush Over Spending

    WASHINGTON (AP) -- Former Federal Reserve Chairman Alan Greenspan, in his new book, bashes President Bush for not responsibly handling the nation's spending and racking up big budget deficits.
    A self-described "libertarian Republican," Greenspan takes his own party to task for forsaking conservative principles that favor small government.

    "My biggest frustration remained the president's unwillingness to wield his veto against out-of-control spending," Greenspan wrote.

    And he weighed in briefly but pointedly on the Iraq war: "I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil."

    Bush took office in 2001, the last time the government produced a budget surplus. Every year after that, the government has been in the red. In 2004, the deficit swelled to a record $413 billion.

    "The Republicans in Congress lost their way," Greenspan wrote. "They swapped principle for power. They ended up with neither. They deserved to lose."

    In 2006, voters put Democrats in charge of Congress for the first time in a dozen years.

    Greenspan's memoir, "The Age of Turbulence: Adventures in a New World," is scheduled for release Monday. The Associated Press purchased a copy Saturday at a retailer in the Washington area.

    The book is a recollection of his life and his time as Fed chief.

    Greenspan, 81, ran the Fed for 18 1/2 years and was the second-longest serving chief. He served under four presidents, starting with his initial nomination by Ronald Reagan.

    He says he began to write the book on Feb. 1, 2006, the day his successor -- Ben Bernanke -- took over. A caption under a photo of Bernanke's swearing-in has Greenspan saying he was "very comfortable leaving the post in the hands of such an experienced successor."

    The ex-Fed chief writes that he regrets the loss of fiscal discipline under Bush.

    "`Deficits don't matter,' to my chagrin, became part of Republicans' rhetoric."

    Greenspan long has argued that persistent budget deficits pose a danger to the economy over the long run.

    At the Fed, he repeatedly urged Congress to put back in place a budget mechanism that requires any new spending increases or tax cuts to be offset by spending reductions or tax increases.

    Large projected surpluses were the basis for Bush's $1.35 trillion, 10-year tax cut approved in the summer of 2001.

    Budget experts projected the government would run a whopping $5.6 trillion worth of surpluses over the subsequent decade after the cuts. Those surpluses, the basis for Bush's campaign promises of a tax cut, never materialized.

    "In the revised world of growing deficits, the goals were no longer entirely appropriate," Greenspan noted. Bush, he said, stuck with his campaign promises anyway. "Most troubling to me was the readiness of both Congress and the administration to abandon fiscal discipline."

    Greenspan, in testimony before Congress in 2001, gave a major boost to Bush's tax-cut plan, irking Democrats.

    He argued then that a tax cut could help the economy deal with sagging growth. The economy slipped into a recession in March 2001. The downturn ended in November of that year.

    Surpluses quickly turned to deficits after the bursting of the stock market bubble and the 2001 recession cut into government revenues.

    Government spending increased to pay for the fight against terrorism and receipts declined because of a string of tax cuts.

    The Bush White House defended its fiscal policies in light of the Greenspan book.

    "Clearly those tax cuts proved to be the right medicine for an ailing economy," White House spokesman Tony Fratto said. The 2001 recession was a mild one.

    "Tax cuts contributed a portion to early deficits, but those tax cuts accelerated growth over time," Fratto said. He added: "We're not going to apologize for increased spending to protect our national security."

    Greenspan said he was surprised by the political grip that Bush exerted over his administration.

    The Bush administration turned out to be different from "the reincarnation" of the Ford administration that Greenspan said he had imagined. "Now the political operation was far more dominant." Greenspan was chairman of the Council of Economic Advisers under President Ford.

    Greenspan enjoyed a good relationship with Bush's predecessor, Bill Clinton, "a fellow information hound."

    They also were on the same economic page. During the Clinton administration, budget deficits turned to surpluses.

    Greenspan recalled a conflict with the White House when Bush's father was president. The elder Bush wanted lower interest rates and challenged Greenspan's inclination to raise them because of inflation risks.

    For Bush's father, the economy was his "Achilles' heel, and as a result we ended up with a terrible relationship." The economy went into a recession in the summer of 1990 and emerged from it in the spring of 1991.

    Many supporters of the elder Bush blamed Greenspan's tight-money policies for the recession that contributed to Bush's loss to Clinton.

    Greenspan says in the book he does not lament the loss of America's manufacturing base.

    "The shift of manufacturing jobs in steel, autos and textiles, for example, to their more modern equivalents in computers, telecommunications and information technology is a plus, not a minus, to the American standard of living," Greenspan wrote.

    Greenspan's memoir includes his early years growing up in a New York City neighborhood of low-rise brick apartment buildings filled with families of Jewish immigrants, his stint as a jazz musician and his decades as a Washington policymaker.

    On other topics, Greenspan:

    -- Says he believes looser mortgage terms for "subprime" borrowers -- those with spotty credit histories or low incomes -- raised financial risks. However, he says the benefit of expanded home ownership in the United States was worth the risk.

    -- Questions whether global powerhouse China can continue its economic successes over the long run if it doesn't incorporate democratic processes. However, he predicts that if Beijing continues to move ahead on free-market principles "it will surely propel the world to new levels of prosperity."

    -- Predicts the most important economic decision U.S. lawmakers and courts will confront in the next quarter century will be to clarify rules involving intellectual property -- patents, copyright and trademarks.

    -- Proposes lowering barriers to skilled immigrants and improving education to narrow income inequality.
  2. cstfx


    In Monday's trading, the Dow may go up 200 pts or down 200. But care to guess what will be the major topic of Kudlow's program and who he's going to "chastise"?
  3. Daal


    this goes to show that greenspan is actually a resonable guy not a nuthead that the gold crowd tries to portray him as
  4. nitro


    I consider this a tragedy. There are people that are not meant to sit in front of computers all day long. In fact, probably most people aren't meant to work this way. While they would love to work for a higher standard of living, they wouldn't do it at the expense of working sitting on their ass, thinking all day long without engaging their bodies, sweating, being challenged physically.

    Sadly, it is invariably the people that work sitting on their ass all day long that make the decisions for the people that don't want to sit on their ass and work. The world isn't as it is, it is as you are.

    Remember, economics doesn't tell you what is right or wrong. It just tells you given x, what is the cheapest way to get y. And often, "cheapest" doesn't take into consideration all of the accounting that enter in the equation to get "cheapest". That is, e.g., why we have global warming, and jobs that get outsourced.

  5. Daal


    I dont see the tragedy. whats bad for one person but its great for another and the country as a whole is no bad thing. the farm people who got displaced when techonology made farmers go out of business eventually had to stop crying and get a real job, if you cant adapt and work hard you get displaced and starve, if you can you get rewarded. now thats fairness
  6. nitro


    You are making the same mistake that all of these people make. It is not your fault, you have been brain washed too.

    Carefully read what I wrote. Think about what I am saying. Don't answer right away, but think about it deeply. Ask yourself, if you take the limit of the course that we are on, what the end result is. What are we evolving towards. It is not trivial.

    Once you engage Philosophy into the mix, the answers are clear (at least if you are learned in at least moral philosophy.). If all your system of reason is dominated by economics, you will fall into the same trap. Remember, the goal of economics is not what is right or wrong, but what is the cheapest way to get y from x. Economists don't take human beings into accounting. They are just means of production. Nothing more, nothing less.

    I recommend for non professional philosophers that they start reading here:

  7. Right on Nitro! I'm sitting up here in Canada wondering how long your Country and even ours can continue to dig it's own grave for the only benefit of Economics or more truthfully the Corporations that are controlling the Politicians!

    As for Bush...I can't belief your country voted him in a second time. "Fool me once shame on you...Fool me twice, shame on me!" I guess your country saw him as the lesser evil when his opponent was nothing less then the Ketchup Man...Mr Corporation Himself!
  8. nitro


    I try not to wear my politics on my sleeve.

    That said, I think these people are mostly the same. There are rare few exceptions, but they have no chance.

    Take Al Gore, who's life dedication is to make people aware of Global Warming and to educate people on corporations using the earth as their waste dump. He ran for president on simple messages like this. What happened? Something very fishy in Florida.

    Take Hilary Clinton. She tried to change the health care system completely, a lofty and crucially important goal. It had no chance from the beginning because it meant raising taxes. Now she is running on it again, this time it has a chance of succeeding, at least theoretically.

    I believe these people try to do the right thing, morally first, and economically second. They have almost no chance of winning elections in this country.

    Very smart people with a conscious eventually come to the same realization: vast sums of wealth is irrelevant. Look at Bill Gates and Warren Buffet. How much is enough?

    I remember in the 1970s there were several chess clubs in my area. Now? Zero. Why? Costs too much to rent a hole in the wall to put some tables and chess pieces on them, even if people volunteer their time to run it. What is there now? Place to sell you shoes, clothes, jewlery and more crap so that we can keep the economy going. Be a good consumer and do your part.

  9. gnome


    If you're not a South Park fan, suggest you become one.... very clever.

    There is a classic episode where South Park Elementary School is forced by PETA to change their school mascot... in order to be politically correct.

    The rebellious 4th graders organize the election so that the final choice comes down to "Giant Douche", and "Turd Sandwich".

    One of the boys was exiled due to his refusal to vote...because he couldn't "see the point" of such an election... followed by the classic line, "... elections always come down to the choice between a Douche and a Turd.. they're the only ones who suck up enough to get elected..."

    Such are our choices in Amerika... :(