We Can Help Karen Tumulty!

Karen Tumulty asks a question:

The Greenspan Book - Swampland - TIME: However, it is worth remembering the central role that Greenspan played in enabling the Bush economic program to happen. In the first days after the 2001 inauguration, Greenspan warned of a danger that the budget surplus (remember the surplus?) could actually become too big and drag down the economy. And thus, Greenspan gave the green light to Bush's tax cuts.

In his book, the NY Times says, Greenspan acknowledges that he was cautioned not to make such an endorsement, by none other than Robert Rubin, the head of that Clinton economic team that he regarded so highly:

Though Mr. Greenspan does not admit he made a mistake, he shows remorse about how Republicans jumped on his endorsement of the 2001 tax cuts to push through unconditional cuts without any safeguards against surprises. He recounts how Mr. Rubin and Senator Kent Conrad, Democrat of North Dakota, begged him to hold off on an endorsement because of how it would be perceived.

“It turned out that Conrad and Rubin were right,” he acknowledges glumly. He says Republican leaders in Congress made a grievous error in spending whatever it took to ensure a permanent Republican majority.

But Greenspan presided over the Fed for another five years. So it seems fair to ask: Why did he wait until he had an $8.5-million book deal to tell us this?

One way that Karen Tumulty could have learned earlier that Greenspan did not intend to give the "green light" to Bush's tax cuts was by listening to or reading Greenspan's testimony:

http://www.federalreserve.gov/boarddocs/testimony/2001/20010125/default.htm In recognition of the uncertainties in the economic and budget outlook, it is important that any long-term tax plan, or spending initiative for that matter, be phased in. Conceivably, it could include provisions that, in some way, would limit surplus-reducing actions if specified targets for the budget surplus and federal debt were not satisfied. Only if the probability was very low that prospective tax cuts or new outlay initiatives would send the on-budget accounts into deficit, would unconditional initiatives appear prudent...

In English rather than Greenspanese, that last sentence means: If there is any chance that the tax cuts will send the budget into deficit, then the tax cuts need triggers that would then turn them off.

And Greenspan explicitly says there is a chance that the tax cuts will send the budget into deficit:

What if... the forces driving the surge in tax revenues in recent years begin to dissipate or reverse...? Indeed, we still do not have a full understanding of the exceptional strength in individual income tax receipts during the latter 1990s... we are making little more than informed guesses of certain key relationships.... [T]he risk of adverse movements in receipts is still real, and the probability of dropping back into deficit as a consequence of imprudent fiscal policies is not negligible.

In fact, Greenspan's testimony is filled with such phrases:

...the highly desirable goal of paying off the federal debt... an extraordinarily rapid and highly undesirable short-term dissipation of unified surpluses... what type of private assets [the government should] acquire and to which federal accounts they should be directed must be [decided] well before the policy is actually implemented... it would be preferable in my judgment to allocate the required private assets to the social security trust funds... a declining level of federal debt is desirable... a budgetary strategy that is consistent with a preemptive smoothing of the glide path to zero federal debt... we should make sure that social security surpluses are large enough to meet our long-term needs... explicit mechanisms that will help ensure that outcome... care must be taken not to conclude that wraps on fiscal discipline are no longer necessary.... provisions that... would limit surplus-reducing actions if specified targets for the budget surplus and federal debt were not satisfied... caution... the tentativeness of our projections... forces driving the surge in tax revenues in recent years [might] begin to dissipate or reverse... we are making little more than informed guesses of certain key relationships... the risk of adverse movements in receipts is still real... the probability of dropping back into deficit as a consequence of imprudent fiscal policies is not negligible... crucial that we develop budgetary strategies that deal with any disappointments... a cautionary note... we need to resist those policies that could readily resurrect the deficits of the past...

A second way she could have learned earlier that Greenspan had not intended to give a green light to unconditional tax cuts would have been from listening to or reading about the exchange between Sarbanes and Greenspan on April 21, 2005. As reported by Nell Henderson:

http://www.washingtonpost.com/ac2/wp-dyn/A6620-2005Apr21?language=printer Federal Reserve Chairman Alan Greenspan said today that his support for tax cuts in early 2001 unintentionally encouraged policies that helped swing the federal budget from surplus to record deficits. In addition, he said for the first time explicitly that he expected tax increases to be part of any bipartisan agreement on deficit reduction.

But Greenspan, responding to questions during a Senate Budget Committee hearing today, said it was unfair for critics to ignore the warnings in his January 2001 congressional testimony that the surplus forecasts might be wrong, and his recommendation of some "trigger" mechanism that would limit tax cuts if certain budget targets were not met.

"I think its frankly unfair" for critics to blame him for the fact that Congress chose to "read half my testimony and discard the rest," Greenspan said, venting his frustration on the issue publicly for the first time, in response to a question from Sen. Paul Sarbanes (D-Md.)

Sarbanes chided the Fed chief that he is well aware of how Congress works, and he should have known lawmakers might not heed all his cautions.

Sarbanes said he believed it was "fair" for lawmakers to see Greenspan's 2001 remarks "as a green light to the tax cuts," which were enacted without any triggers.

"I plead guilty to that," Greenspan said. "I did not intend it that way."

A third way that she could have learned of this before September 15, 2007 would have been to read Ron Suskind's The Price of Loyalty back when it was published in 2003, where Suskind writes:

May 22 [2001]... Greenspan arrived at the Treasury for breakfast with O'Neill.... Greenspan said that wasn't enough. "Without the triggers, that tax cut is irresponsible fiscal policy," he said in his deepest funereal tone. "Eventually, I think that will be the consensus view."

---

Now it is, of course possible that Greenspan was playing a subtle reputation-enhancing game, anxious to give testimony that the administration and its press lapdogs would spin as a green-light endorsement, but in which economists like me and financiers like Robert Rubin would be unable to find any sentence that was truly objectionable.

But let's give the mike to Alan Greenspan, p. 220 ff.:

Bob Rubin phoned.... With a big tax cut, said Bob, "the risk is, you lose the fiscal discipline."...

"Bob, where in my testimony do you disagree?"

There was silence. Finally he replied, "The issue isn't so much what you're saying. It's how it's going to be perceived."

"I cant be in charge of people's perceptions," I responded wearily. "I don't function that way. I can't function that way."

It turned out that Conrad and Rubin were right....

As the hearing ended, I was optimistic that the ideas I had set forth--the risks of excessive surpluses, the glide-path proposal [to a zero national debt], the notion of a trigger [to prevent the reemergence of deficits by shutting off the tax cut if necessary]--would in the long run get attention as the legislative process proceeded. But for the moment, I resigned myself to the idea that my testimony would be politically framed. I later told my wife, "I am shocked, shocked, that there is politics on Capitol Hill....

I'd misjudged the emotions of the moment. we had just gone through a constitutional crisis... which... is not the best time to try to put across a nuanced position based on economic analysis. Yet I'd have given the same testimony if Al Gore had been president...

Comments

[Arthur Cutten]

I'm shocked, shocked to find that there is deception is going on in here!

http://www.timesonline.co.uk/tol/news/world/article2461214.ece

The Sunday Times

September 16, 2007
Alan Greenspan claims Iraq war was really for oil
Graham Paterson

AMERICA's elder statesman of finance, Alan Greenspan, has shaken the White House by declaring that the prime motive for the war in Iraq was oil.

In his long-awaited memoir, to be published tomorrow, Greenspan, a Republican whose 18-year tenure as head of the US Federal Reserve was widely admired, will also deliver a stinging critique of President George W Bush's economic policies.

However, it is his view on the motive for the 2003 Iraq invasion that is likely to provoke the most controversy. “I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil,” he says.

Greenspan, 81, is understood to believe that Saddam Hussein posed a threat to the security of oil supplies in the Middle East.

Britain and America have always insisted the war had nothing to do with oil. Bush said the aim was to disarm Iraq of weapons of mass destruction and end Saddam's support for terrorism.

[Chris]

I tend to agree with Mearsheimer and Walt that the Iraq war was NOT about oil. If it had been about oil the administration would have done what was necessary to create stability in Iraq. Rather it was to destroy a government that Israel thought was a menace to it. And, by the way, does Greenspan pay any attention to this:

http://observer.guardian.co.uk/world/story/0,,2170237,00.html

We know what Bush's attitude is: what me, worry? And I am sure Israel doesn't mind either.

[Chris]

I tend to agree with Mearsheimer and Walt that the Iraq war was NOT about oil. If it had been about oil the administration would have done what was necessary to create stability in Iraq. Rather it was to destroy a government that Israel thought was a menace to it. And, by the way, does Greenspan pay any attention to this:

http://observer.guardian.co.uk/world/story/0,,2170237,00.html

We know what Bush's attitude is: what me, worry? And I am sure Israel doesn't mind either.

[Chris]

Hitler is said to have killed 6 million Jews; if Bush has caused the death of 1.2 million Muslims he still has some way to go but he isn't done yet. I am sure that is a challenge for him and for General Franks, who said "We don't do death counts." Of course not.

[wood turtle]

The testimony was given in 2001, after the stock market went down in 2000. Surely a man of Alan Greenspan's intelligence would have known that the surpluses of the 90's were aberrant, and probably the increase in tax collections was because of the capital gains windfall that the government was receiving. He would have access to the 2000 tax collection data, and they were probably down considerably after a lot of the gains turned into losses.

Based on this, he should have given a much stronger warning not to have tax cuts, that revenues would most assuredly go into deficit if the capital gains windfalls ended.

[rilkefan]

Hopefully some of the evilness above will be moderated away soon.

'"I can't be in charge of people's perceptions," I responded wearily. "I don't function that way. I can't function that way."'

What's the point of "Greenspanese" but to keep charge of people's perceptions? And what's the point of communicating if you don't care how people will interpret your words and use them?

[Rob]

So the man who specifically went out of his way to be as cryptic as possible every other time he spoke before Congress just so happened to phrase he words in such a way that they would be taken as a greenlight. The man whose word moved markets just so happened to speak in a way that could be misconstrued.

Someone is agreeing to be a willing participant in a hoax here.

[CMike]

Maybe there is a first time for everything; I'll go with Tumulty over DeLong on this one.

[jerry]

If an english student wrote in "greenspanese", how would his professors grade him? If a safety engineer wrote his reports in "greenspanese" how would he be judged by his peers? If Feynmann wrote in greenspanese, what would have happened to the Space Shuttle investigation?

Why is it okay for Greenspan to get a pass for being purposefully obtuse?

He should be condemned if for no other reason than how he let his vanity shirk his fiduciary responsibility to communicate clearly.

It doesn't help that the Fed is by it's nature pro-banks and landowners and that Greenspan by nature of his Randian background is that much worse.

"Greenspanese" is otherwise known as bullshit, and you, Professor DeLong, should be condemning it and not rewarding it.

[Chris]

The widespread idea that the US needs to "seize" Middle East oil by force is difficult to understand. Japan and China who need Middle East oil as much as we do don't seem to feel any need to seize it by force. Nor any of the other consumers of Middle East oil. AS Nixon once said, the oil producers have to sell it (they don't have much else to sell) and will always do so. The idea that we must seize it is nonsense.

[A]

If someone misquotes you (e.g. as claiming that you support the tax cuts) publicly, doesn't your public silence imply consent to the misquoted position? (Expressing your misgivings in private isn't enough, and congressional testimony is also widely ignored, especially if not clearly worded.) And Greenspan had 5 years to correct public misconceptions, but he choose to wait until his memoirs now, in a pathetic attempt to rescue his possibly remaining reputation.
Denoting this as "subtle reputation- enhancing game" is most charitable to him

[Chris]

"Gates said it was crucial to reassure allies in the region and "signal potential adversaries that we are not leaving Iraq to their ambitions, and that we will remain the dominant force in the region." [For allies read Israel and for adversaries read Iran and get the "the"; not "a" dominant force but "the" dominant force].

Richard Haas, a former senior State Department official, in comments published this week by the Council on Foreign Relations said he could imagine "an American presence of say 75,000 troops for years, if the costs were not high."

A permanent US colony in Iraq isn't about oil. It is about trying to control a region militarily for the ultimate benefit of Israel, now threatened by Iran. The idea in 2006 that the Democrats were going to change things in the Middle East died the moment Pelosi withdrew, at the behest of Israel, a resolution demanding that Bush consult with Congress before he attacked Iran. Most people don't get it. Not even Greenspan, probably because he didn't want to "get it."
And don't think a new Democrat President will withdraw from our new colony in Iraq. Not on your life. We will be there as long as our money holds out and as long as Israel wants us there. [Greenspan was right, however, when he said US politics is "dysfunctional".]

[Unstable Isotope]

I agree with Rob and A. Greenspan had many, many opportunities to correct the record before the tax cuts became law, but he did not. Now, 6 years later he speaks in clear language? Sorry, but he's just another Republican trying to salvage his reputation. It won't work with me.

[walkingtheline]

I agree with Unstable, A and wood turtle. Greenspan wants us to believe he took a nuanced position and spoke truth. But then why such silence from 2002 until 2008? The man did not lack opportunities to help correct the excesses of the Republican era he helped usher to the public trough.

Unless of course he was concerned about how statements critical of the governing party might be interpreted....

[Robert the Red]

Greenspan-ites believes he served the nation well. At some times he did. Since 2001 he did not. He failed the country.

[Tuco]

Another word for "greenspanese":

duplicity

[david]

"I was optimistic that the ideas I had set forth--the risks of excessive surpluses..."

please. There was no risk, and his worries about big government were Randian nonsense. He greenlighted the tax cuts for ideological reasons, covered his ass for political reasons, and for some reason people who know better now want to help him get off the hook. How often do you get to say Advantage, Tumulty?

[david]

Let's turn the mike over to the Maestro on housing, and see him say very silly things there too (yesterday's NYT):

"Mr. Greenspan generically defends the Fed’s action, writing: “I believed then, as now, that the benefits of broadened home ownership are worth the risk. Protection of property rights, so critical to a market economy, requires a critical mass of owners to sustain political support.”

[christofay]

What Greenspan said, "are must be taken not to conclude that wraps on fiscal discipline are no longer necessary.... provisions that... would limit surplus-reducing actions if specified targets for the budget surplus and federal debt were not satisfied... caution... the tentativeness of our projections... forces"

What George Bush heard, "tax cuts, tax cuts, tax cuts"

[christofay]

Well, it's a grab for our oil as long as it is cycled through American or post-American yet Republican-friendly companies that happenstance will be hiring Cheney in the near future as a senior advisor/consultant/board member/featured speaker. These companies can continue to model independently. Cheney will not necessarily get involved with that. Bush too will be working to replenish the coffers which out-of-left-field coincidentially haven't had a down year yet. We'll be free to pay the market-price (sure to be higher-who predicted $90 / barrel?) at the pump and through the fuel truck the Indians and the Japanese too can buy the oil through the self-same co.'s cause we believe in markets

[bakho]

As if Bush and Congress needed AG to pass tax cuts with no triggers. Republicans decide what it is they want to do and then build the arguments. No matter what AG actually said, they would have spun it to their purpose.

Even today we have all these reports of Democratic Presidential Candidates saying the "surge is working" when none of them are saying that at all. "Fixing the intelligence to support the war" "spinning the statements of opponents to support Republicans" is what they do. These are lessons learned in Bible School where 100s of passages are ignored, but the one verse that supports the belief is taken as the whole truth. Theirs is not a process of rational debate, proper consideration of differing POV and coming to concensus. They are the Daddy Party. Daddy makes the rules and no one questions him.

[christofay]

Whoops, call for $9 / gallon gas, not $90 / barrel. I blew it. We're already at $80 / barrel so the move to $90 is just a burp. From the Cheney perspective what's not good about $80 / barrel energy or $9 / gallon? We still need it and it's legal

[corvid]

Yawn. Greenspan joins the multitude in regretting budget deficits. The news --which most of the mainstream media, unsurprisingly, is missing, though thankfully not the commenters here--is that a former boffin at the highest levels of the power structure admits that the war was about oil.
.
Why is the Times of London the only mainstreamer picking up on this? And think of just how Soviet this is: Here we are, 4 1/2 years into a war with 3,800 Americans dead, many thousands hideously maimed, and several hundred thousand Iraqis dead, all the original, officially stated reasons for the war long since discredited, the people who stated those reasons revealed as liars, the official press discredited, and only now are we officially being told the truth.
.
Some maintain that there's an ironic discrepancy between China's booming capitalism and its communist government. I say the two are perfectly harmonious, exquisitely in tune, and pretty much parellel what we have in the States. Granted, we as citizens here have a little more scope for freedom of speech, but it's mainly speech that doesn't matter.
.
Through a deeply evil and ever-shifting, ever-changing combination of wilfully blind and symbiotically corrupted mainstream journalism and the long-established bread-and-circuses entertainment of seizure-inducing cable/satellite television, our corporate/military/neolib-neocon Kremlin keeps us on a very short leash indeed.
.
Eisenhower's "alert and informed citizenry" can be so only by quietly paying very careful attention to the back pages of Pravda (dribs and drabs on the Internet, the occasional book by the rare conscience-stricken ex-official) and samizdat (blogs). Only in this way may they achieve any clarity.

[Doctor Jay]

I think Greenspan got played and got used in a way that he himself is not sure about. I would feel better, and I think he would too, if he said in simple language: I was wrong. I shouldn't have done that.

He starts to do that, but says he'd have given the same testimony if Al Gore were president. But that's the dumb part. There's less danger if Al Gore is president. He got fooled into believing that George Bush is a reasonable like-minded person.

[leo]

'Chris in Paris' of Americablog.com has a far less sympathetic reaction to Greenspan calling him 'Mr. Bubble'. He goes on:

"It's unfortunate for Greenspan that we lived through that period and when all of the insane GOP policies were being shoved through Congress, he offered no criticism and did nothing to stop the insanity. In fact, Greenspan even went on the offensive against Hillary when she dared to ask questions and criticized the 2001 tax cuts."

http://www.americablog.com/2007/09/mr-bubble-criticizes-bush-and-gop.html

[Hermenauta]

Not being a native english speaker, I'm not sure about the amount of irony going on in this post. But I find this statement:

"I cant be in charge of people's perceptions," I responded wearily. "I don't function that way. I can't function that way."

Totally scaring if it comes from a...central banker.

[leo]

Ugh, if this site actually did html/urls...

Link to cited blog post:

http://tinyurl.com/2w2cyd

[howard]

yes, i did note what greenspan said at the time, but that wasn't how it played, which means that greenspan had many thousands of days and nights in which he could have said: this administration is behaving in a financially irresponsible way.

he never did.

i have no brief against greenspan, but he was fully capable of making a much stronger case against irresonsible tax-cutting in 2001, 2002, 2003, 2004, 2005, and 2006. prof, care to show us when he did that? i mean, explicitly, directly, not subject to any confusion whatsoever? did it the way he did in his book? any evidence of that, prof?

[Barkley Rosser]

It is funny that nobody seems to have focused on what is the likely source of Greenspan's questionable statements. He was into being reappointed by whomever was president at any time (Bush Sr., Clinton twice, Bush Jr.), and every prez had his political/ideological bottom line that needed to be stroked. In Bush's case, it was tax cuts.

Now, it is possible that Greenspan is not lying when he says he would have supported a tax cut even if Gore was in office. There was indeed a case in 2001 for a one shot tax cut: there was a surplus and the economy was going into recession. Given that Bush was all for tax cuts, that made it easy and convenient. The problem was that that first tax cut became the foot in the door for annual tax cuts thereafter. About all I can say for Greenspan is that he did not openly support any of those, even if he did not do what he should have, which would have been to openly oppose them. But, after all, he did want a reappointment, and opposing Bush on his super baby was not the way to do that. Hey, even Bernanke had to kiss the ring/ass or whatever, on this matter to get himself appointed.

As for Greenspan's oil remark, all I can say is really? Was not Saddam in a box and no danger of limiting access to any oil outside of Iraq as of 2003? And, did we get access to oil by invading? Sure, Hunt Oil has finally cut a deal with the Kurds, but the central govenment is declaring it illegal. Of course, the truly conspiratorial would say that the plan was not to secure oil, as Greenspan suggests, but to cause declines in oil output by trashing Iraq. After all, oil company profits rise when oil prices rise, as they have since the war.

[rilkefan]

According to my recollection of the conventional wisdom at the time, Greenspan did not need to accommodate presidents to get reappointed - the markets wouldn't have accepted a change.

[sglover]

Krugman called Greenspan's complicity in the Bush Treasury raid right from the start. This highlighting of poor Alan's caveats and split hairs is the purest kind of economist autism. Pathetic bullshit.

[Kent]

Brad, You should sent this post to your mentor Paul Krugman. He apparently doesn't understand that what Greeenspan said in 2001 had conditionalities in it-- http://www.pkarchive.org/column/020703.html

[Roger Bigod]

Mark Kleiman: " Greenspan, if you'll recall, testified that the tax cuts were A Good Thing because otherwise there was the risk that the federal government would pay off all its debt and have to find a place to invest its spare money. That would then generate the further risk that the government, by owning equities, would wield undue influence over the economy."

[Charles]

"Economic autism" is a good phrase, sglover.

Listening to 'wingers talk about the so-called "subprime crisis" would lead one to believe that they imagine that the economy exists inside of a computer model and will never touch them.

[christofay]

Greenspan is a virtuoso in the economic on the first hand and on the other hand means of expression. At the undergrad level of creative writing class it's called being deliberately obtuse and not good. So let his actions, and results, speak instead of that babble.

He's a serial bubble blower and a Bush supporter. If he was honest he wouldn't have been working for the Kremlin, 3-1/2 trips a week to the White House. Now he's struggling to perserve his chances at the $150 K/babble speech/consultant/special advisor/board member market, none of which especially call for good advice but a big name. C-Y-A wallpaper.

And the correct term of phrase is kiss the Ass Ring.

[Cranky Observer]

> So the man who specifically went out of his
> way to be as cryptic as possible every other
> time he spoke before Congress just so
> happened to phrase he words in such a way
> that they would be taken as a greenlight.

A person I know sat on a Federal Reserve Board of Directors during that period. In the middle of one presentation by Greenspan to that Board, he saw some heads nodding and said "Did you understand that?". When a few people indicated that they had understood Greenspan then said "I will have to be more opaque next time. Ha ha".

That is how he behaved toward a Reserve Bank Board of Directors. But he had no intention of creating misperceptions in the minds of Congress or the public. None whatsoever.

Cranky

[wood turtle]

What did Greenspan say? Economist's View has some more research on the subject.

http://economistsview.typepad.com/economistsview/2007/09/what-did-greens.html#comments

I think it comes out strongly in favor of the view that Greenspan favored tax cuts. I think tax cuts and low interest rates were Greenspan's method of keeping consumer spending up there, and I think he timed it to leave just as the party was over.

If he didn't have those views, then how did those publications all get it wrong too? If Greenspan really didn't feel that way, then why didn't he correct them right away?

If part of Greenspan's job was to be a fiscal watchdog, I think the examples you gave showed that he was whimpering rather than barking.

[christofay]

fiscal weasels whimper more than they bark, turtle

time for a bail in. Can you please Prof Delong call for Greenspan to forgo all socially provided retirement benefits? Or what is the point of providing for a multi-millionaire's daily necessities?

[Neal]

Mr. Greenspan is polishing his reputation, like others from this administration, at a time when it is clear that everything that was sold as shinola is merely shit.

His language structure is pefect for that. I'm sure if you looked closely enough you could find to a recipe for making gold from lead.

However, the fact remains, his tenure at the Fed will be remebered as the period when the American economy was crippled beyond repair.

GWB may be obtuse enough to imagine that history will vindicte him, but Mr. greenspan has seen the futeure and it will not praise anyone who governed on this one way trip to to dust-bin of history.

Now that the outcome is clear, all the parties who could have had significant effect on the public opinion in curent time are coming out with their "hair on fire" stories.

They were opportunistic toadies working for a wilfully ignorant, incompetent and corrupt adminitration. They too will decorate the hall of shame.

How many of these people had the courage to resign due to their principles?

No, it was too easy to remain sucking on the poisoned tit.

Blood on their hands that cannot be washed out.

[chris]

Greenspan could have clarified his opinions at any time in the last 6 years. Why did he wait until now?

As long as the republicans controlled all three branches of the government, Greenspan assumed that the deficit would be paid back by tax increases on the poor and middle class, or by looting the social security trust fund. Now that democrats control congress, and are poised to retake the white house, it's suddenly dawning on Greenspan that the deficit might be repaid (with interest) by himself and his cronies, so, all of a sudden, it seems like a bad idea.

[Kaleberg]

Weird. Why would Israel worry about Saddam Hussein in Iraq? They know where he lives. He might strut and posture, but, as Bill Clinton showed, he knew where his bread was buttered. Anything beyond a token attack on Israel would provoke reprisals and that might set off the powder keg.

[howard]

barkley, just as a quick reminder, gore supported a targeted, smaller tax cut in 2000, so it's almost certainly true that we would have had a tax cut in 2001 no matter what. but the kind of tax cut, how long it would last, those were the questions....

[christofay]

Gore would have been pressured to offer some sort of that tax cut stuff, the equivalent of no money down, 0 % interest competitive offerings from the car manufacturers during the early 2000s recession.

When your crazy brother is offering to jump off the 5th floor, you have to at least offer to jump off the 3rd floor.

Greenspan is on the ground floor giving an interview on why it isn't necessarily suicide to jump off the 5th floor

[Reed Hundt]

Mr. Greenspan, who calls himself a "lifelong libertarian Republican," writes that he advised the White House to veto some bills to curb "out-of-control" spending while the Republicans controlled Congress. He says President Bush's failure to do so "was a major mistake." Republicans in Congress, he writes, "swapped principle for power. They ended up with neither. They deserved to lose."

I paste the above in to highlight how excessively courteous folks are being to Dr. G. What cuts did he favor? What business does the Fed chair have trying to influence budgets? Why did he think his secret advice would be taken? What did he advise? Of course the answer is that he wanted to reduce any number of welfare payments - health care, social security, etc. -- because he's a libertarian. And his views were secret because the overwhelming majority would find them loathsome and they were also politically meaningless; even when he was trying to foster the President's hopeless efforts to cut social security in 2005 he was reasonably low key to protect his reputation. He knew or should have known that the budget spending would not decline, but he supported the tax cuts anyhow.

[bakho]

AG in his 60 min interview said that he would vote GOP in 2008.

"fool me once, shame on — shame on you. Fool me — you can't get fooled again." GW Bush

[leo]

Strange, I just read Krugman {"Sad Alan’s Lament") and he appears to be afflicted with whatever was troubling Karen Tumulty.

Am I missing something?

[christofay]

Well, let's not get fooled by Ally G again. It's distressing to see that supposedly the learned Brad Delong is continually fooled.

[liberal]

Greenspan is full of it.

First, he could have simply advocated repealing the Bush tax cuts when it was revealed (not that unsurprisingly) that they were going to bust the budget. Instead, he blithered on about how he'd much rather spending were cut than taxes were increased.

Second is his BS rationalization that increasing taxes was a no-no because businesses had already factored the lower tax regime into their planning. Under that logic, like so much other right-wing economic logic, taxes will eventually rachet down to zero(*).

((*) Except for taxes on labor, of course---don't forget Greenspan's signing off on higher SS payroll taxes in order to partly prefund the system...even though he now seems to think the SS surplus should be disregarded. What a jerk.)

[rex]

Brad and other economists have been snookered by the fine print in Greenspan's testimony in 2001. Everyone in the country took Greenspan's words as an endorsement of the Bush tax cuts as proposed, not as an endorsement of some other imaginery tax cuts. Greenspan had ample opportunities to say in plain English: I do not endorse these tax cuts, but some other tax cuts. He did not do that. He was one of the most astute politicians of our generation; he knew exactly what the reaction would be to his testimony. To claim now that he was misunderstood is the height of cynicism.
His testimony was the ultimate cover-your-ass maneuver: At one stroke he did the bidding of the White House and the Republicans while being able to say that he didn't. Brilliant! Except, of course, for how it all turned out...

[mq]

Brad is just never going to badmouth a fellow member of the economics fraternity. Not Greenspan, not Feldstein. Safe rule of thumb: if someone has ever presented a paper at Jackson Hole, this blog will be quite civil and even deferential to that person.

That's OK, though, just discount what's said about those folks. Brad's merciless on everyone else's BS.

[wood turtle]

Thanks for clearing that up, mq. Krugman et al will retract very shortly, I am sure, and fall down and worship again.

I did not know that Jackson Hole was such a sacred spot, economics-wise. Economics must be quite clubby.

Well, Brad DeLong could have deleted all the posts that did not worship Alan Greenspan appropriately.

[Ed Pritchett]

Just the the stories of his prior days as an Rand acolyte leads one to doubt the actual intellect of this man. Anyone who actually thinks that a coherent ideology can be derived from "Atlas Shrugged", written in bitterness by an Russian refugee is not on sound intellectually footing by my standards. I agree with the the other posters, he had ample opportunities to clearly advise a responsible economic tax policy but chose not too. As central banker he is at best mediocre. Paul Volcker had a much more daunting situation to contend with and had the courage to implement an unpopular yet nessecary policy

[Carleton Wu]

"I cant be in charge of people's perceptions," I responded wearily. "I don't function that way. I can't function that way."

God's balls, a competent college student should be able to 1)have a point, but 2)understand that that point might be misperceived and then (as if by magic) 3)emphasize or re-state the part that might be misperceived so that it is not, in fact, misperceived.

Claiming literal truth as a defense when you admit that you knew you'd be misinterpreted is tantamount to an admission of deceptive behavior. Pretending that you were incapable of adjusting your argument to prevent misperception is sad.

I mean, no one's asking him to tell a white lie. We just wanted him to say "Look- this part is very important- if the economy dips, these tax cuts could have a huge negative impact on the debt. It would be completely irresponsible for us to embrace these cuts without some mechanism to rescind them if that becomes appropriate". He wasn't obligated by anyone or anything to downplay this reservation. Except his Randite religious requirements, I suppose.