Greenspan's Comments

[Pexster]

In a prepared speech to the Securities Industry Association --

The central bank chairman described in some detail his fears about what he saw as a dangerous deterioration in the federal budget. After posting a budget surplus in 2001, the deficit is likely to approach a record high of nearly $400 billion in 2003.

Though some of the recent deterioration was probably unavoidable, due to the 2001 recession and the need for increased spending on defense and homeland security after the Sept. 11, 2001, terrorist attacks, Greenspan said he saw little sign that the Bush administration and lawmakers were serious about getting their fiscal house in order.

"Recent budget deliberations are not encouraging," he said. "The current debate appears to be about how much to cut taxes or how much to increase spending. No significant constituency seems to support taking the actions that will be necessary to move toward, and one hopes achieve, budget balance."

Greenspan warned that, as Baby Boomers begin to retire and draw down Social Security and Medicare payments within the next decade, the budget picture will get considerably worse, if current tax and spending policies are maintained.

"Such a development could have notable, destabilizing effects on the economy," he said.

Now, has Greenspan become a hated "liberal" too?

[shahani]

Yup.

Bush is simply nailing his coffin tighter.

All we gotta do is sit and watch him on a course of self-destruction.

Unfortunately, in the process, he takes along a lot of good soldiers and common folks who will suffer the effects of unemployment.

And, of course, I'm waiting to hear how this debate is actually gonna make the economy worse. I mean our talking about the economy is gonna keep increasing the deficit and anyone who dares to question Bush and his antics is a traitor.

[willy_ph]

I don't think Greenspan is becoming a hated liberal, but that's how he'll be interpreted. He's merely stating the obvious, that current tax cut levels are too low, and government spending, on such things as the military (that seems like the obvious chunk of government spending, if there are other areas that have a similar budget please forgive my ignorance, I'm Canadian) are too high and will ultimately put the American government in a bad position. IE. they're not looking forward to the future financial stability of the American government and will, in the long run, put many people in a very precarious position - namely those who will depend on government assistance.

[MTAtech]

If you think that is bad, it's not as bad as you think. That $400B number includes the fact that Social Security, which takes in currently more money than it pays out, is subsidizing the deficit. If we exclude the SS surplus, the deficit is more like $560B.

The following is a portion of "This Can’t Go On" by PAUL KRUGMAN,
November 4, 2003, New York Times.

Academic economists often cite Stein’s Law, a principle enunciated by the late Herbert Stein, chairman of the Council of Economic Advisers during the Nixon administration. The law comes with various wordings; my favorite is: “Things that can’t go on forever, don’t.” Believe it or not, that’s a useful reminder.

For we’re now led by men who think that macho posturing makes Stein’s Law go away. On issues ranging from budgets to foreign policy, they insist that we can sustain the unsustainable. And when challenged to explain how, they engage in magical thinking.

The prime example I have hammered on in this column is, of course, the federal budget. Realistic budget projections say that current policies aren’t remotely sustainable. For example, a month ago a joint report of the Committee for Economic Development (a business group), the bipartisan Concord Coalition and the Center on Budget and Policy Priorities concluded that under current policies, federal debt would rise by $5 trillion over the next decade. And then baby boomers will start collecting benefits, and our debt will really explode.

Such explosive growth in debt can’t go on forever, and it won’t. Yet our current leaders and their apologists insist that the problem will magically solve itself. Last year’s deficit came in slightly below forecasts, and we’ve had one quarter of good economic growth — see, we’ll grow out of the deficit!

But we won’t, and there will eventually be a day of reckoning. As Bill Gross of Pimco, the giant bond manager, says, “Sooner, perhaps later, our Asian creditors will wake up and smell the coffee.” (Yes, the federal budget and the value of the dollar now depend on huge purchases of Treasury bills by the governments of Japan and China.) When they do, he predicts “higher import costs, a cutback in spending on cheap foreign goods, rising inflation, perhaps chaotic financial markets, a lower standard of living.” Something to look forward to.

But the day of reckoning seems closer on a different front.

Some Americans may share the views of the Republican congressman who said that progress in Iraq was “a better and more important story than losing a couple of soldiers every day.” (Support the troops!)

But whether or not you think troop losses are important, there’s growing evidence that our Iraq strategy is unsustainable. The immediate issue is manpower. Some politicians are calling for a bigger force in Iraq — but even our current force levels can’t be maintained.

copyright 2003 NY Times

[Pexster]

To this day, I don't understand why, when George Bush kept repeating his simple slogan "It's your money!", Al Gore didn't just reply, "Yes, it IS your money, but guess what folks, you have bills to pay! And responsible people pay their bills before going on a spending spree."

The issue could have been put as plainly as that. Maybe nobody believed that a Democrat could be more fiscally responsible than a Republican?

[shahani]

Yeah, but the point is our mere discussion of this is gonna send the economy in a tailspin.

Just like the Iraq war is heading for further disaster because we are debating it.

[Pexster]

lol - the day they shut you and MTAtech and Theophylact up is the day I'm REALLY gonna' start worrying about this country!

[MTAtech]

Pexster, you are right. Gore mismanaged his campaign in many ways. Gore also didn't adequately respond to Bush's snipes about Bill Clinton's morals. He should have said, "I proud of Bill Clinton and his accomplishments as president. Bill did some things in his personal life, that I didn't approve of but MY wife and I have both been faithful to each other. Do you know something I don't know?" That would have shut up that snide weasel.

[MTAtech]

Originally posted by Pexster
lol - the day they shut you and MTAtech and Theophylact up is the day I'm REALLY gonna' start worrying about this country!

I wouldn't be surprise if John Ashcroft's boys do Google searches to find dissenters like us, I have only three words to say, 'bring'em on.' (or is that two words?)

[M_Six]

[Sarcasm]

Greenspan obviously knows squat about the economy as I have it on good authority from respected members of this board that the economy is not only fine, it's better than it's been in decades.

Greenspan is only prolonging the war and making it easier for the non-Iraqi terrorists who are posing as resistance fighters. If he doesn't like the way GW is handling the economy, maybe he should move. He's probably contributed to overpopulation anyway. Plus I hear he spends way too much time watching movies and therefore contributing to the gay, leftist crowd that runs Hollywood.

[/Sarcasm]