GREENSPAN: Well, Senator, as you know, I've always been strongly supportive of cuts in the marginal tax rate, and/or reduction or even elimination of the capital gains tax, which I've always thought to be a poor means of obtaining revenue.
In the current environment, the need to introduce tax cuts to get the economy going, clearly is not particularly the first order of business. And as a consequence, I have argued with respect to the surplus, that my ideal economic policy would be to leave it alone, pay down the debt, lower interest rates, long term interest rates as a consequence, and that would, in my judgment, be the most effective.
If it turns out that it is politically inconceivable that these surpluses can be allowed to run, I've argued that then unquestionably, tax cuts are the appropriate means, not spending increases, which are difficult to turn around if they create troubles.
I'm not saying that tax cuts are easy to turn around, but I prefer that that was done because that would be better for the economy. Specifically, I think that it is important to distinguish from an economic point of view the question of whether you're dealing with marginal tax rate cuts or other types of taxes which reduce the tax burden, but not the marginal rates. Clearly, in my judgment, the marginal rate cuts are far superior to the other forms which clearly have advantages in many respects. In a general way, I've never seen a tax cut I oppose in the abstract, and the lower the better."
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