ShareThis Page
News Columnists

Greenspan should shut up

| Sunday, Aug. 15, 2010

Getting tired yet of Alan Greenspan?

First, the former Federal Reserve chairman blamed an allegedly unregulated free market for the housing and financial debacle.

Now he favors repealing the Bush-era tax cuts.

This has a certain sad irony.

Recall that Greenspan once was an associate of Ayn Rand, the philosophical novelist who provided a moral defense of the free market or, as she put it, the separation of state and economy.

Greenspan even contributed three essays to Rand's book "Capitalism: The Unknown Ideal" -- one for the gold standard, one against antitrust laws and one against government consumer protection.

It was slightly bizarre when Greenspan accepted President Reagan's appointment to run the Fed -- maybe he thought that as long as the Fed exists, better someone like him run it rather than one who really believes government should centrally plan money and banking.

Be that as it may, Greenspan went on to pursue an easy-money policy in the early 2000s that is widely credited, along with the government's easy-mortgage policy, for the boom and bust that followed.

During a congressional hearing two years ago, Greenspan shocked everyone by blaming the free market -- not Fed and housing policies -- for the financial collapse.

Greenspan said he favored regulation of big banks, as if the banking industry weren't already a heavily regulated cartel run for the benefit of bankers. Bush-era deregulation is a myth perpetrated by those who would have government control the economy.

Libertarians were distressed by Greenspan's apparent abandonment of his free-market philosophy and his neglect of the government's decisive role in the crisis.

But at least he took a shot at the new controls Congress coveted.

But now Greenspan, going beyond what even President Obama favors, calls on Congress to let the 2001 and 2003 Bush tax cuts expire -- not just for upper-income people but for everyone. He says he supported the 2001 cuts because of pending budget surpluses but now that huge deficits loom, new revenues are needed.

Why• Brian Riedl of The Heritage Foundation says that since the cuts, "The rich are now shouldering even more of the income tax burden." The deficit has grown not because we are undertaxed but because government overspends.

Given the stagnant economy, this is the worst possible time for tax increases. (Is there ever a good time?) Taking money out of the economy will stifle investment and recovery and it's unlikely to raise substantial revenue, even if that were a good thing.

The stupidest thing said about tax cuts is the often-repeated claim that "they ought to be paid for." How absurd. Tax cuts merely let people keep money they rightfully own. It's government programs, not tax cuts, that must be paid for. The tax-hungry politicians' demand that cuts be "paid for" implies the federal budget isn't $3 trillion but $15 trillion -- the whole GDP -- with anything mercifully left in our pockets being some form of government spending. How monstrous.

If cutting taxes leaves less money for government programs, the answer is simple: Ax the programs.

John Stossel is host of "Stossel" on the Fox Business Network. He's the author of "Give Me a Break" and "Myths, Lies, and Downright Stupidity." Brad Bumsted is on vacation.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.

click me