Federal Reserve Chairman Alan Greenspan, repeating a message he delivered just last month, told Congress on Thursday that ever-expanding federal government deficits pose a threat to the U.S. economy. The Bush administration estimates that the federal deficit this fiscal year alone will climb to a record $427 billion. There is a real likelihood that deficits will increase for many years to come. "Unless that trend is reversed, at some point these deficits would cause the economy to stagnate or worse," Greenspan warned as he called for cuts in government spending.
While we agree that these kinds of deficits are dangerous, Greenspan shares part of the blame for them. The fact is that Greenspan blessed Bush's mammoth tax-cut package in 2001, tax cuts that, taken together, have been a principal reason for burgeoning federal deficits. If Greenspan wanted to show real courage, instead of calling for cuts in spending that would hurt the most vulnerable in society, he would recommend scaling back tax cuts that benefited mostly wealthy Americans. But that's the kind of straight talk sadly missing in Washington.
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