Alan Greenspan Opposes Extending ALL Of The Bush Tax Cuts!!!

Pardon my incredulity! Alan Greenspan just taped an interview with Judy Woodruff for broadcast tomorrow and over the weekend. This Bloomberg News story quotes him saying, “They should follow the law and let them [the Bush tax cuts] lapse.” He believes it is more important at this point to cut burgeoning deficits than to funnel more money to taxpayers. In a telephone interview after the taping, Greenspan acknowledged that this “probably will” slow growth.

My memory of a cold night in early 1981 is still clear. Former Council of Economic Advisers Chair and Reagan adviser Alan Greenspan sat next to OMB Director Dave Stockman and CEA Chair Murray Weidenbaum and hardly uttered a word as Senate Budget Chair Pete Domenici (R-NM) urged them to ease the deficit by cutting the third year of the Roth-Kemp tax cut and to scrap “Rosie Scenario.” Stockman politely told us to get with the program, and so we helped pass the Roth-Kemp tax cuts, cutting the first year in half. The FY83 deficit peaked at a peacetime high of 6% of GDP (See CBO’s Table F-2), and we spent the next decade wrestling the deficit.

Recall also, in 2001, Fed Chair Alan Greenspan’s crucial testimony in support of the Bush tax cuts. That gave Congress the high sign that the Fed wouldn’t choke off that much fiscal stimulus.

This is another example of the adage that if you live long enough you’ll see everything, including Alan Greenspan getting religion on the federal deficit.

About Pete Davis 99 Articles

Affiliation: Davis Capital Investment Ideas

Pete Davis advises Wall Street money managers on Washington policy developments that affect the financial markets. President of his own consulting firm since 1992, Davis Capital Investment Ideas, he draws on 11 years of experience as a Capitol Hill economist with the Joint Committee on Taxation (1974-1981), the Senate Budget Committee (1981-1983), and Senator Robert C. Byrd (1992). He worked in the House and Senate, and for Republicans and Democrats.

Davis brought the first computer policy model, the Treasury Individual Income Tax Model, to Capitol Hill in early 1974, when he became a revenue estimator on the Joint Committee on Taxation. He formulated the 1975 rebate, the earned income tax credit, the 1976 estate tax rates, the 1978 marginal tax rates, and the Roth-Kemp tax cut. He left Capitol Hill in 1983 for the Washington Research Office of Prudential-Bache Securities, where he advised investors for seven years.

Davis has long written a newsletter on the Washington-Wall Street connection for his clients; Capital Gains and Games is his first foray into the blogosphere.

Visit: Capital Gains and Games

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