Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: CYBERKEN who wrote (357659)	2/11/2003 11:13:40 PM
From: steve dietrich	Read Replies (2) \| Respond to of 769667

As for what Greenspan said (and meant),this may break it down to understandable language for you, oh wise Sage: THE BUSH BUDGET GREENSPAN'S REMARKS Greenspan Is Tepid on Tax Cuts, Calls Stimulus Plan Premature Fed Chief Advises White House to Focus On Measures to Address Budget Deficit By GREG IP Staff Reporter of THE WALL STREET JOURNAL WASHINGTON -- Federal Reserve Chairman Alan Greenspan gave scant support to President Bush's proposed tax cuts and implicitly criticized the White House's neglect of the budget deficit. Mr. Greenspan told Congress that new economic stimulus isn't needed yet and called for a return of budget rules that would require offsetting any tax cuts with fresh spending cuts or tax increases elsewhere. While he reiterated his longstanding support for eliminating the so-called double taxation of dividends -- the centerpiece of Mr. Bush's plan -- he conditioned that backing on ensuring that it is paid for with tax increases or spending cuts, which the White House hasn't done. The Fed chairman's remarks brought a reluctant rebuttal from Treasury Secretary John Snow, who prefaced his comments by saying he hadn't heard Mr. Greenspan's testimony. "If there is a disagreement, I would make the bet on boosting the economy now because the economy isn't as strong as we would like," Mr. Snow said. "We shouldn't wait to resolve the uncertainties" dogging the economy because of the conflict with Iraq. Mr. Greenspan's coolness to both White House and Democratic stimulus plans stems from his cautious optimism on the economy. He said data such as the Fed's own weekly tally of industrial production suggest the economy, after slowing sharply last fall, improved in January. Echoing the central bank's statement two weeks ago when it left its short-term interest-rate target at 1.25%, the Fed chief blamed the economy's sluggishness on uncertainty over possible war with Iraq. Geopolitical tensions have created "formidable barriers to new investment and thus to a resumption of vigorous expansion of overall economic activity," he told the Senate Banking Committee in presenting his semiannual monetary-policy report. If that uncertainty fades soon, the Fed would know if "we are dealing with a business sector and an economy poised to grow more rapidly -- our more probable expectation -- or one that is still laboring under persisting strains and imbalances that have been misidentified as transitory." The remarks indicated that the Fed isn't inclined to cut rates as long as it believes a resolution to the Iraq situation is in sight, but would reconsider if a resolution didn't bring stronger growth. For the same reason, it's "probably more sensible to wait to see what happens before we embark upon a number of [fiscal] programs which may, in fact, from a stimulus point of view, not be necessary," Mr. Greenspan said. Senate Democratic Leader Tom Daschle of South Dakota called Mr. Greenspan's brush-off of the 10-year, nearly $700 billion tax-cut plan "the kiss of death." But Senate Finance Chairman Charles Grassley (R., Iowa) said after a White House meeting Tuesday he was more optimistic about the Bush plan's chances, in particular the dividend-tax cut. "We're here in early February," he said. "People are just beginning to look at this." Mr. Greenspan panned a key feature of the Democrats' stimulus plans: aid to strapped state and local governments. Transfers to the states would come too late to help this year, and couldn't easily be targeted to truly deserving states, he said. During the 1990s Mr. Greenspan's vocal advocacy of a balanced budget helped motivate President Clinton to attack the deficit. But in 2001 he backed Mr. Bush's tax cuts, saying projected budget surpluses at the time put the government in danger of paying the national debt down too quickly. Fiscal conservatives and some Democrats castigated him for the change. With projected surpluses transformed into deficits, Mr. Greenspan Tuesday sounded more like the deficit hawk of old, with strident warnings against complacency when the imminent retirement of baby boomers will send Social Security and Medicare costs skyrocketing. Mr. Bush and his advisers have played down their projected deficits, arguing that at 3% of gross domestic product this year and next they are easily managed, won't push up interest rates noticeably, and are best dealt with by restoring economic growth. Mr. Greenspan disagreed with each of those contentions. Deficits of more than 1% to 2% of gross domestic product risk a destabilizing acceleration in the national debt relative to GDP, he said. Mr. Greenspan called for "discipline on both revenue and spending actions" in particular through renewal of Congress's so-called Paygo rule which required each dollar of new spending or tax cuts to be matched with a dollar of spending cuts or tax increases. The White House also has called for the renewal of Paygo, but not until the passage of its latest budget -- with its proposed tax cuts. Paygo expired last year, although the Senate is adhering to it until April.