This is pretty remarkable. Alan Greenspan, lest you forget, is and always has been a solid Republican. Emphasis mine.
Alan Greenspan, who was chairman of the Federal Reserve for nearly two decades, in a long-awaited memoir, is harshly critical of President Bush, Vice President Dick Cheney and the Republican-controlled Congress, as abandoning their party’s principles on spending and deficits….
Mr. Bush, he writes, was never willing to contain spending or veto bills that drove the country into deeper and deeper deficits, as Congress abandoned rules that required that the cost of tax cuts be offset by savings elsewhere. “The Republicans in Congress lost their way,” writes Mr. Greenspan, a self-described “libertarian Republican.”
“They swapped principle for power. They ended up with neither. They deserved to lose” in the 2006 election, when they lost control of the House and Senate….
He praises President Bush for letting the Fed stay independent of political pressure, saying he was scrupulous in not trying to interfere with monetary policy – which he contrasts sharply with the pressure exerted by his father, George H. W. Bush, in the early 1990s. For years, the first President Bush has blamed Mr. Greenspan for contributing to his defeat in 1992 by failing to prevent a recession by cutting interest rates.
Of the presidents he worked with, Mr. Greenspan reserves his highest praise for Bill Clinton, whom he described in his book as a sponge for economic data who maintained “a consistent, disciplined focus on long-term economic growth.” …
Mr. Greenspan paints a picture of Mr. Bush as a man driven more by ideology and the desire to fulfill campaign promises made in 2000, incurious about the effects of his economic policy, and an administration incapable of executing policy.
But wait — there’s more.
Mr. Greenspan described his own emotional journey in dealing with Mr. Bush, from an initial elation about the return of his old friends from the Ford White House – including Mr. Cheney and Donald H. Rumsfeld, secretary of defense – to astonishment and then disappointment at how much they had changed.
“I indulged in a bit of fantasy, envisioning this as the government that might have existed had Gerald Ford garnered the extra 1 percent of the vote he’d needed to edge past Jimmy Carter,” Mr. Greenspan writes in his memoir. “I thought we had a golden opportunity to advance the ideals of effective, fiscally conservative government and free markets.”
Instead, Mr. Greenspan continued, “I was soon to see my old friends veer off in unexpected directions.” … “[M]uch to my disappointment, economic policymaking in the Bush administration remained firmly in the hands of the White House staff.” He was clearly referring to the political team led by Karl Rove at the White House.
“How much they had changed.” How extraordinary that the Republican party left even Alan Greenspan, a Republican’s Republican, behind. It’s too bad Greenspan didn’t speak out sooner than he did. But at least he’s speaking out.
So much like Colin Powell saying he regretted his lies to get us into the war, Greenspan says it's a shame that when he was in charge of the Federal Reserve with “old friends” installed at the White House, he just couldn't get anybody to listen.
But for someone who'd like to portray himself as swimming against the tide, he seemed to say things like “Those tax cuts might work” an awful lot.
Greenspan says of his fellow Republicans “They swapped principle for power. They ended up with neither.” I guess he at least kept his power.
Two observations
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Observation 1: it has been noted that, when he, as chairman of the FRB, wanted to obfuscate his monitary policy in his testimony before congress, he would resort to use of jargon that was totally incomprehensible. That is preposterous.
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Observation 2: in the early 1980s he was chairman of a commission that suggested huge increases in social security taxes–not only one-time increases, but also automatic increases (the base was automatically increased). The excuse was that the increases would “shore up” the SS system, but the real reason was to ameliorate the reported deficits that were sure to develop as a result of the Reagan “supply side” tax cuts.
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Given the “unitary budget” that the federal government had shifted to, the revenue from SS taxes (as with transportation taxes) would count as revenue that would offset outlays, and hence make the reported operating deficit look lower than it actually was.
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Now, I don’t have a problem with the federal government borrowing from the SS trust fund (yes, there really is one) for current expenses. The objection, though, is that the Fedgov does its borrowing with special IOUs (bonds) that provided for interest that was far below market rates. Thereby screwing the SS trust fund.
The Historians Are Coming! Quick, Salvage Your Legacies!
says David Kurtz at TPM. Greenspan's another guy who went along with a bunch of dumbass ideas who — now that such ideas have predictably been proven dumbass — says that he knew it all along. I'm. Not. Impressed.
PS: That's why you have to call it like you see it, all the time, regardless of the consequences. Too late is too late.
I bet John Kerry and John McCain wish they had followed this advice.
This is the same guy who three short years ago was promoting ARM's over fixed rate mortgages, in a period when interest rates were near all time lows!
Remember back when Greenspan was considered a genius? Now, it's time to try and save that legacy. Good luck.
…was not to save borrowers. His job was to save banks. And, quite frankly, he did a lousy job at both ends.
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At least two banks here in Germany have gone belly-up because of the high-risk mortgage practices in the US(sorry, I refuse to use the euphemism “sub-prime”). And at least one bank in the UK and also a bank in Ireland are going through the same throes.
The greening of Alan, the further blackening of the Bush record. I remember feeling lonely when thinking Bush was the worst president I'd observed both before and after 9/11. Sort of an inept Ronald Reagan, or is that an oxymoron?
Greenspan's jobs was really to keep the economy profitable and the markets stable. He was pretty competent there. That's why predatory lending, however, was a blip on his radar screen.
The Greenspan observations are fascinating but when it came to political courage, like with so many other leaders, he sold short.
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From Woodward’s WaPo column.
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Nice.
Greenspan tries, too late, to remove the taint of his silence in the face of obvious Bushist irresponsibility. But that's not his greatest sin. He always put moneyed interests ahead of the country.
(Drop by and see me.)