Federal Reserve Apparently Disowns Alan Greenspan
Wed Mar 02, 2005 at 09:02:31 PM PDT
Update [2005-3-3 0:2:31 by Armando]: From the diaries by Armando. I am especially interested in two things here- (1) Is there a split between Greenspan and the Fed on SS?; (2) When Greenspan has spoken on his own behalf only, what has he endorsed? The 2001 tax cuts come to mind, to keep Congress from spending the surplus he said. Ha! One last point - Greenspan was on the SS Commission in 1982-3 that pushed through the big payroll tax hike - in order to save Social Security then, or so they said. Now Greenspan tells us that that was a complete fraud? There really is no Trust Fund? If that's true what Greeenspan is saying is he supported the most regressive shift in tax burden - on to working and poor Americans and off of the rich - in the history of the nation. That's a hell of a thing.
What on earth is going on here? Alan Greenspan testified before Congress today about the supposed financial crisis on the way, and tried to place the blame on squarely on Social Security obligations. He also talked about a number of fiscal restraints that Congress had imposed in the 1990's but left basically unmentioned the effect of the ridiculous Bush tax cuts for the wealthy, the staggering costs of the Iraqi War, and the rising expenditures under the Bush regime on corporate welfare for his political donors. In other words, Mr. Greenspan basically got up in front of Congress and acted as a shill for George Bush, in a way that should embarrass the supposedly independent Federal Reserve Board.
But one aspect of Mr. Greenspan's testimony today was largely ignored or glossed over by the headline writers -- Mr. Greenspan made his remarks on his
own behalf rather than as Fed. Chairman. This is a fairly unusual occurrence; Mr. Greenspan seems to testify expressly on his own his own behalf only when the Bush Administration wants him to push a policy initiative that's in trouble, to shift blame from Bush for a bad economy, or to predict good economic times are just around the corner.
Why did Mr. Greenspan testify only on his own behalf? Did the Federal Reserve Board refuse to be associated with what basically amounted to an attempt by a rabidly partisan Chairman to wade into a political controversy in an economically irresponsible way? And regardless, why does Mr. Greenspan, private citizen, get a Congressional microphone? It would be nice to hear some answers to these questions.
[Update: The diary's been updated to reflect that fact that Greenspan has testified on his own behalf before, but not very regularly. The comments also now have links to that testimony, which seem to show a pattern of when the Chairman testifies on his own behalf.]
[Update 2: There does seem to be at least one big difference between Greenspan's personal views and those of Board. Greenspan favors privitizing Social Security.
Two weeks ago, Mr. Greenspan testified on behalf of the fed and did not endorse private accounts, saying only:
"Beyond the near term, benefits promised to a burgeoning retirement-age population under mandatory entitlement programs, most notably Social Security and Medicare, threaten to strain the resources of the working-age population in the years ahead. Real progress on these issues will unavoidably entail many difficult choices. But the demographics are inexorable, and call for action before the leading edge of baby boomer retirement becomes evident in 2008."
Today, Mr. Greenspan, speaking on his own behalf, said:
"In my view, a retirement system with a significant personal accounts component would provide a more credible means of ensuring that the program actually adds to overall saving and, in turn, boosts the nation's capital stock. The reason is that money allocated to the personal accounts would no longer be available to fund other government activities and--barring an offsetting reduction in private saving outside the new accounts--would, in effect, be reserved for future consumption needs."]
