Consilience Productions

« Why is everyone so freaked out about deficit reduction now? | Main | The Recycling Thief. »

Greenspan Says Congress Should Let Bush's Tax Cuts Lapse.
July 16, 2010 2:03 AM

Oh, NOW he says it:

Former Federal Reserve Chairman Alan Greenspan, whose backing of George W. Bush's 2001 tax cuts helped persuade Congress to pass them, said lawmakers should allow the reductions to expire at the end of this year.

"They should follow the law and let them lapse," Greenspan said in an interview on Bloomberg Television's "Conversations with Judy Woodruff," citing a need for the tax revenue to reduce the federal budget deficit.

But where was he in 2001?

In his 2007 memoir, "The Age of Turbulence," Greenspan attacked Bush for abandoning Republican principles on spending and deficits and expressed regret for his 2001 congressional testimony favoring the tax cuts, recounting how former Treasury Secretary Robert Rubin and Democratic Senator Kent Conrad of North Dakota asked him to hold off on an endorsement.

"It turned out that Conrad and Rubin were right," Greenspan wrote in the memoir.

So Greenspan got that one wrong, too, along with this two years ago:

Almost three years after stepping down as chairman of the Federal Reserve, a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending.

"Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself included, are in a state of shocked disbelief," he told the House Committee on Oversight and Government Reform.

In any event, the following represent revenue lost every year to the Federal Government if Bush's asinine tax cuts from 2001 continue next year:

Bush tax cuts that passed in 2001 and 2003 gave middle- income earners a 10 percent rate on couples' first $14,000 in income; subsidies for college expenses, a higher child-care credit and relief from the marriage penalty. Keeping those and other reductions for the 130 million households earning less than $250,000 would cost about $300 billion a year, according to the congressional Joint Committee on Taxation.

In addition to those benefits, high-income households got reduced top marginal rates, elimination of phase-outs for some deductions and personal exemptions, and benefited the most from lower rates on dividends and capital gains. The cost of continuing the tax cuts for the most prosperous Americans would be about $55 billion for one year.

Bottom line: Bush's $1 trillion unfunded 10-year tax cuts, his $500 billion unfunded medicare revamping in 2005, and his $1 trillion unfunded war on Iraq blew a hole through our long-term budget. The only way to begin to address this mess that he left our country is to reinstate the tax rates that existed during the go-go years of the 1990's. That's right: tax rates were higher in the 1990's and the economy flourished because of them.

It's time to do the right thing and let those tax cuts expire like the 10-year law demanded. And by the way, the reason it was a 10-year law instead of a law with no expiration was because they could only pass it through the reconciliation process. Remember that from the Health Care Debate?

Join the discussion: Comments (0) | TrackBack (0) | Email Link to a Friend
Permalink to post: http://www.cslproductions.org/money/talk/archives/001046.shtml
Receive an email whenever this MONEY blog is updated:   Subscribe Here!
Tags: , ,

Share | | Subscribe




Add your comment

Name (required)
Email
Website
Remember personal info? Yes   No
Comments

home | music | democracy | earth | money | projects | about | contact

Site design by Matthew Fries | © 2003-23 Consilience Productions. All Rights Reserved.
Consilience Productions, Inc. is a 501(c)(3) non-profit organization.
All contributions are fully tax deductible.

Support the "dialogue BEYOND music!"

Because broad and informed public participation is the bedrock of a free, democratic, and civil society, your generous donation will help increase participation in the process of social change. 100% tax deductible.
Thank you!


SEARCH OUR SITE:

Co-op America Seal of Approval  Global Voices - The world is talking, are you listening?