Republicans to extend the Bush tax cuts without offsetting the costs
elsewhere could end up being "disastrous" for the economy.
In an interview on NBC's "Meet the Press," Greenspan expressed his
disagreement with the conservative argument that tax cuts essentially
pay for themselves by generating revenue and productivity among
recipients.
"They do not," said Greenspan.
"I'm very much in favor of tax cuts but not with borrowed money and
the problem that we have gotten into in recent years is spending
programs with borrowed money, tax cuts with borrowed money," he said.
"And at the end of the day that proves disastrous. My view is I don't
think we can play subtle policy here."
The comments from the former Fed chief were an elaboration of a
position he outlined in an interview earlier in the week. Speaking
with PBS' Judy Woodruff, Greenspan expressed his opposition to passing
legislation that would hold tax rates steady (under law the tax cuts
Bush passed ten years ago are going to expire, thereby bringing rates
back to Clinton-era levels). President Obama has pledged to continue
the tax breaks for those individuals making under $200,000 and those
families earning less than $250,000.
But Republicans want the entire package kept in place. Even so, they
have declined to say how they would pay for it, saying, in part, that
keeping the Bush tax cuts in place will pay for itself.
In addition to throwing cold water on that theory, Greenspan also
weighed in on broader economic issues and trends. The former Fed
Chairman relayed some sobering economic predictions, saying he
expected the nation's unemployment rate to remain at its current
level, mainly because there were few tools left to change it.
--
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