>>BTW, Greenspan totally agrees with buffon Clinton (:o) that it would be much better to pay down the debt against the wishes of the Republicans, who would favor a tax cut for the rich. I guess that makes him a buffoon also.
You couldn't be more wrong if you tried, Greenspan rejects "buffon" Clinton and, if given a choice, favors the Republicans plan to return money to the people who pay taxes:
July 27, 1999
Truth and Taxes
Ronald Reagan once famously noted that "facts are stubborn things," but that was before the Clinton Presidency. One consequence of Clintonism is that facts have become irrelevant to political debate, as for example in the current fight over tax cuts.
Against tax cuts?
Under the new Clinton Rules, by now imbedded in media coverage, it doesn't matter whether something is true; what counts is whether it works politically. Thus last week Federal Reserve Chairman Alan Greenspan suddenly found himself hailed as a hero of the Democratic Party, allegedly for trashing the House Republican tax-cut bill. Or so the news reports said. We read his remarks, however, and the truth is more interesting.
Mr. Greenspan: "My first priority, if I were given such a priority, is to let the surpluses run."
Rep. John LaFalce (D., N.Y.): "Thank you, Mr. Chairman."
Mr. Greenspan: "As I've said before, my second priority is if you find that as a consequence of those surpluses they tend to be spent, then I would be more in the camp of cutting taxes, because the least desirable is using those surpluses for expanding outlays."
For some reason the press corps never mentioned this spending caveat, as large as it is. We don't know how they missed it, because a short time later the Fed chief said he'd delay tax cutting "unless, as I've indicated many times, it appears that the surplus is going to become a lightening rod for major increases in outlays. That's the worst of all possible worlds, from a fiscal policy point of view, and that, under all conditions, should be avoided.
"I have great sympathy for those who wish to cut taxes now to pre-empt that process, and indeed, if it turns out that they are right, then I would say moving on the tax front makes a good deal of sense to me."
Now, also keep in mind that Mr. Greenspan is a central banker. He runs monetary policy, which means he needs the political running room to raise interest rates from time to time. Like all central bankers, he gets irrationally exuberant about deficits, which he fears could return and complicate this task. Ergo, he'd prefer surpluses to pile up from here to eternity.
Yet, if the surpluses are going to be spent, he'd still rather cut taxes first. And indeed, last week Mr. Greenspan repeated his belief that the revenue-maximizing tax rate for capital gains is "zero" and that he prefers a cut in marginal tax rates.
As it happens, last week the Beltway's media sleuths also ignored some startling facts from the Congressional Budget Office. CBO--historically no friend of tax-cutting--compared Congress's budget proposals with Mr. Clinton's. And it found that, despite its $800 billion tax cut over 10 years, Congress's budget actually reduces the federal debt more than does Mr. Clinton's!
How can this be? Because Mr. Clinton proposes to spend that money instead of use it to retire debt, just as Mr. Greenspan fears. Here's the CBO math on the Clinton proposals:
$111 billion for Medicare, including $168 billion for the new prescription drug bribe less other savings;
$245 billion for USA Accounts, another political handout;
"$328 billion for additional discretionary spending--$127 billion for defense and $201 billion in nondefense programs";
and $142 billion for higher debt service costs because of the higher spending.
The GOP tax cut is about $792 billion, while Mr. Clinton's new spending would amount to $826 billion. In short, Mr. Clinton isn't against the GOP tax cut because he wants to save it for posterity. He's against it because he wants to spend that money instead. Which by Mr. Greenspan's own testimony last week means the Fed chief would endorse cutting taxes first.
And, by the way, don't believe Mr. Clinton when he claims, as he did in his Saturday radio address, that "the GOP tax cut is so large it would require dramatic cuts in vital areas, such as education, the environment, biomedical research, defense and crime fighting." As CBO also shows, since 1990 domestic spending (not including entitlements) has increased by 5% a year; that's roughly double the rate of inflation.
Mr. Clinton has taken to lying with such fluency that his whoppers are barely even noticed. We're not optimistic that anyone else will keep him honest. But we thought our readers would like to know.
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