I guess there aren’t many economist bloggers, since postings are really light on Greenspan’s semi-annual report to Congress, the first since Bush announced his ruinous deficit-laden budget. As usual, the mainstream press led with the easy non-critical stuff – his comments about the ‘unsettling’ impact of the coming Iraq war on the economy ( But even though Greenspan did waffle in his wording, enough to get the real meat buried on page 27 and ignored by investors (the market actually rose when he said the following), he did get around to saying this:
“There should be little disagreement about the need to re-establish budget discipline.”
“Short of a major increase in immigration, economic growth cannot be safely counted upon to eliminate deficits and the difficult choices that will be required to restore fiscal discipline.”
“At the present time, there seems to be a large and growing constituency for holding down the deficit, but I sense less appetite to do what is required to achieve that outcome.”
I guess now, when the economy goes into free fall and decades of austerity are needed to fix the mess, Greenspan can say ‘I told you so’. But what a weasely way to say it!

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  1. Rayne says:

    As I see it, Greenspan was painted into a corner – and he’s not the only one holding a paintbrush. He cannot come out and be clearly negative about anything the Bush Administration has done or has planned — especially since Bushies espouse removing double-taxation, improving flexibility to which Greenspan subscribes. But he can only suggest greater attention to the deficit because the cure will be fairly difficult to apply during a down/flat economy. Until revenues are up (more income taxes paid by more working people), there isn’t enough revenue to pay down deficits. In spite of Greenspan’s distaste for short-term stimulus (which he implied today), something must give if any headway is to be made on deficits. Resolution of the Iraq situation is the fastest, best bet.

  2. Dave Pollard says:

    Rayne:Yes, as an accountant I can concur with the argument to remove double-taxation, but Bush didn’t need to rack up such a debilitating deficit to fix that. It’s the folly (at least in timing) of all the rest of the giveaways to the rich that Greenspan could have been more clear about. I agree he’s in a corner, though…guess he wants to keep his job.

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