Archive for September 16, 2010

Greenspan: Higher Taxes Are Our Only Hope

September 16, 2010 1 comment

The world has officially turned upside down. Alan Greenspan, former Federal Reserve Board Chairman and advocate of the Bush tax cuts of 2001 and 2003 is now calling for a complete repeal of those tax breaks. All of them. He says we can’t afford them.

Stimulus spending has not worked, he reasons, because American businesses continue sitting on the sidelines with record cash reserves, not hiring or investing in much of anything. They are crippled by fears of what our huge federal deficits could bode for the future and so Greenspan says the best course now is to repeal the tax breaks, make serious spending cuts and reduce the massive federal deficit.

This is all nice in theory but there isn’t a political snowball’s chance in hell that the Bush tax cuts are going to be repealed. Of course they add to the deficit- just like stimulus spending. But they’re popular. People complain when governments ignore pot holes, offer inferior public education, do a lousy job shoveling snow off the streets and fail to provide adequate police and fire protection. They just don’t want to pay for these services. Worry not- they will soon be disappearing. There’s not a solvent government left in the United States.

Now with the November elections coming and massive losses predicted for Democrats, we are headed for divided government, which in the past, hasn’t been so bad. Bill Clinton lost his Democratic congressional majorities in 1994 and he and the Republican-led Congress promptly ended welfare as we know it, passed free-trade legislation (NAFTA), and ended up with record budget surpluses. But something tells me we’re headed for gridlock and nothing resembling bi-partisan government.

The worst thing of all about the coming mid-term elections has nothing to do with the possible results. It’s that it rings in the beginning of the 2012 Presidential election silly-season. We better hope the economy heals itself because it doesn’t look like politicians are going to be acting like mature adults and do much of anything to either reduce deficits or put us back to work.

Hate to be such a bummer but Greenspan, I think, speaks the truth when he says “Our choice is not between good and bad but between terrible and worse.”