Man Without Qualities

Wednesday, February 12, 2003

Mr. Greenspan Reports, Again

The New York Times reports some additional comments from Alan Greenspan:

But where Mr. Greenspan inveighed about the dangers of deficits on Tuesday, he played down those concerns today and asserted that the worst of the budget problems would only arise once the current generation of baby boomers began to retire in 2010.

"Actually, it turns out that we do not really have a fiscal problem of moment until we get beyond the end of this decade," he said.

Mr. Greenspan said the $300 billion deficits projected by the White House for this year and next were "modest" in relation to the size of the economy, and that the country's longer-range budget problems, caused by a projected surge in Social Security and Medicare spending, would occur "with or without the president's program."

Mr. Greenspan was warmer today than on Tuesday about the president's dividend tax proposal. He said that eliminating taxes on most stock dividends would "almost surely increase the aggregate of economic activity" over the long term and might provide a small immediate boost as well.

"I strongly support it," he told the committee.

Mr. Greenspan predictably continues to cleave to his opinion that no short term stimulus is needed, and the White House predictably begs to differ. But the net effect of the dialogue can only be to reduce the significance of the whole "short term stimulus" necessity - a necessity which the Democrats have made the centerpiece of their criticism of the Bush proposals.

The Times also reports Democrats said Mr. Greenspan had refocused the debate on the implications of Mr. Bush's proposal for the budget deficit in the long run, a shift that they said would help them alter the plan to make it smaller, temporary and focused more on lower and moderate income people who needed the help most. That is a preposterous construction of Mr. Greenspan's comments. Those are the same "short term stimulus" considerations that the Democrats have been hawking - exactly what Mr. Greenspan says we don't need. If the question were put to him with directness, I think he would publicly and with as much directness disabuse tthe nation and the media of the Democrats' silly interpretation of his intent.

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