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Go Greenspan

I don't like the way that Greenspan managed our money supply, encouraging a huge asset bubble, but I really loved the way he dished it to the House Budget Committee yesterday. It was like watching irresponsible children being scolded by a parent.

Greenspan may be the only person in the United States who has the stature to talk down to Congress. He told them that you are all spending too much money and you have to spend less. Some of the Democrats asked him questions about pet programs, and his answer was always something like "all programs are good programs, but you have to put them all on the table together and then select the best, because there isn't enough money to fund everything."

One Democrat asked "why don't we just revoke the Bush tax cuts so we can go back to the big surpluses we had before?" Greenspan patiently explained that the budget surplus was mostly the result of capital gains taxes from the rising stock market. He also warned against raising taxes to cut the budget deficit because that would reduce our economic growth and result in less tax revenue in the future.

From my comments about Democrats, one may get the false impression that Greenspan is a Republican (I don't buy that), or that today the Democrats are the only obstacle to fiscal responsibility (unfortunately the free-spending Republican W is in the White House right now). Greenspan is being a realist; we have promised all of these Social Security and Medicare benefits that we can't afford to pay for once the baby boom generation starts collecting. In 2008, the first members of the baby boom cohort turn 62, the age when people can begin to collect Social Security benefits.

Because it's unlikely that Congress will do anything about the problem until after it becomes a problem, this is yet another reason to be pessimistic about the economic future of the United States.

Link to Washington Post article about Greenspan's remarks.

posted Thursday, February 26, 2004