For Better Or Worse

Mr. Greenspan talks a lot about cutting expenses and benefits, but says nothing about increasing revenues. Reuters (04.21.05):

"Federal Reserve Chairman Alan Greenspan warned on Thursday that unless lawmakers come to grips with spiraling U.S. deficits, the economy was at risk of stagnation 'or worse.' 'Under existing tax rates and reasonable assumptions about other spending ... projections make clear that the federal budget is on an unsustainable path, in which large deficits result in rising interest rates and ever-growing interest payments that augment deficits in future years,' Greenspan said in testimony prepared for a Senate Budget Committee hearing." Greenspan Warns Deficits Endanger Economy

"'As the latest projections from the (Bush) administration and the Congressional Budget Office suggest, our budget position is unlikely to improve substantially in the coming years unless major deficit-reducing actions are taken,' the Fed chief said." "'In my judgment, the necessary choices will be especially difficult to implement without the restoration of a set of procedural restraints on the budget-making process,' he said." "He repeated that the United States may already be in a position where it cannot meet commitments made to the baby boom generation and urged benefit cuts, if needed, be made as soon as possible." On the other hand, Bloomberg takes note of the revenue side of the equation, and takes a shot at Mr. Greenspan to boot (04.21.05):

"The Fed chairman urged lawmakers to focus on reducing spending and advocated a return to pay-as-you-go budget rules that required any new spending or tax cuts to be offset by spending cuts or tax increases elsewhere in the budget. Those rules, and the booming economy of the 1990s that boosted tax revenue, helped balance the federal budget and bring it into surplus. The rules lapsed in 2002. President George W. Bush's 2001 tax cuts, passed in part because of Greenspan's support [ed. - ding!!], and a recession reduced government revenue. Wars in Afghanistan and Iraq, and Congress's decision not to renew caps on spending have since driven up expenditures." Greenspan Says Budget Deficits May Cause Economy to Stagnate