Fed Chairman Greenspan says tax cuts could do good
Thursday January 25, 10:05 am Eastern Time
Fed Chairman Greenspan says tax cuts could do good
WASHINGTON, Jan 25 (Reuters) - Federal Reserve Chairman Alan Greenspan on Thursday lent clout to President George W. Bush's plan for major tax cuts, saying that if the U.S. economy continued to deteriorate, a cut could do ``noticeable good''.
Greenspan, who had long advocated using surpluses to pay down debt over the second-best choice of tax reduction, said that with sustained productivity gains fueling growing surplus projections, the trade-off between debt and tax reduction no longer existed.
``The most recent data significantly raise the probability that sufficient resources will be available to undertake both debt reduction and surplus-lowering policy initiatives,'' he said. ``Accordingly, the trade-off faced earlier appears no longer an issue.''
In closely watched testimony on ``Evolving Fiscal Challenges'' prepared for delivery to the Senate Budget Committee just days before the next policy-setting meeting of the Fed, Greenspan did not address the interest rate outlook. However he acknowledged that there was a slowdown underway.
``Should current economic weakness spread beyond what now appears likely, having a tax cut in place may, in fact, do noticeable good,'' he said. |
