Monday, September 24, 2007
Washington Post's Novak points out Greenspan's lies
The Maestro's False Notes
By Robert D. Novak
Monday, September 24, 2007; A19
After four decades of Alan Greenspan's nimble maneuvers, it seemed no accident that publication of his long-awaited memoir, "The Age of Turbulence," coincided with global financial turmoil. Instead of examining his frequently suspect management of monetary affairs during 18 years as chairman of the Federal Reserve Board, the political and financial worlds focused last week on Greenspan's self-portrait as a "conservative libertarian" who deplores Republican leaders and their policies.
Greenspan knows that the surest route to praise in Washington is for a purported man of the right to be seen as embracing the left. Although appointed by Republican presidents to four of his five terms heading the nation's central bank, Greenspan in his memoir is markedly more negative about those political benefactors than reviewers have suggested. Only Gerald Ford, the hapless, short-term president, gets passing grades.
But the "Maestro" sounds false notes in a book that probably reveals more than intended. Instead of a detached policymaker, Greenspan comes across as engaged in political games. I have had enough contact with Greenspan to know that in private the central banker is a political junkie, but I had no idea how deeply he was involved with the one Democratic president who appointed him: Bill Clinton.
One veteran Greenspan-watcher, going first to the book's photo section, was surprised that Greenspan had selected an image of himself between Hillary Clinton and Tipper Gore, a place of honor, at President Clinton's first State of the Union address, in 1992. Federal Reserve colleagues had viewed his taking that seat as undermining the central bank's cherished independence. Greenspan's memoir does not mention Clinton's quest to get him to cut interest rates as compensation for tax increases, but the Fed chairman was quite concerned at the time about being seen as the president's pawn. When my column suggested then that his presence in the presidential box played into Clinton's designs, he called me (for the last time) to complain.
In "The Age of Turbulence," Greenspan buys into the discredited depiction of Ronald Reagan (who first named Greenspan to the Fed) as an amiable dunce and does not conceal his contempt for both Bushes (each of whom nominated him). Even more surprising is his adoration of Clinton. While scathing in attacking increased spending by George W. Bush, he ignores massive non-defense spending hikes under Clinton and embraces the Democrat's tax increase "as our best chance in 40 years to get stable long-term growth."
Greenspan's book treats Reagan's tax-cutting, supply-side movement as if it never happened. Seeing no inherent benefits from a lower tax burden, he accepts the Democratic deficit-reduction formula that a dollar of higher taxes is equivalent to a dollar of reduced spending.
With the memoir retreating from his passive endorsement of Bush's 2001 tax cuts, it is hard to tell the Greenspan of this book from a conventional Democrat. He indicates that his favorite colleague in the younger Bush's administration was the dysfunctional Treasury Secretary Paul O'Neill, who opposed the tax-cut strategy while ruining morale in his department.
The tip-off to Greenspan's mind-set is his reference to Democratic Sen. Kent Conrad as a "fiscal conservative." Conrad is an avowed deficit hawk whose advocacy of high taxes and high spending earned him a 16 percent fiscally conservative rating last year from the National Taxpayers Union.
Though Greenspan's memoir makes him a virtual member of the Clinton administration, he describes himself as a reluctant public servant -- which runs counter to my firsthand observations. He writes that he turned down a job in the Nixon administration, but in fact he was rejected by the new president's staff because of his performance as part of the 1968 campaign. (Temporarily exiled to political Siberia, a distraught Greenspan was reduced to scheduling breakfast with me on his trips from New York to Washington.) His book has him reluctantly accepting Reagan's appointment as Fed chairman in 1987, but in fact he aggressively promoted himself for the job. (He approached me at a Washington reception that year to say he had heard I opposed his appointment and asked me why.)
"The Age of Turbulence" lacks the confessional candor of the best memoirs, but it tells enough to leave intriguing questions for a future biographer. Why did three Republican presidents name a Federal Reserve chairman fundamentally opposed to the GOP's economic doctrine? Did Greenspan deceive them?
By Robert D. Novak
Monday, September 24, 2007; A19
After four decades of Alan Greenspan's nimble maneuvers, it seemed no accident that publication of his long-awaited memoir, "The Age of Turbulence," coincided with global financial turmoil. Instead of examining his frequently suspect management of monetary affairs during 18 years as chairman of the Federal Reserve Board, the political and financial worlds focused last week on Greenspan's self-portrait as a "conservative libertarian" who deplores Republican leaders and their policies.
Greenspan knows that the surest route to praise in Washington is for a purported man of the right to be seen as embracing the left. Although appointed by Republican presidents to four of his five terms heading the nation's central bank, Greenspan in his memoir is markedly more negative about those political benefactors than reviewers have suggested. Only Gerald Ford, the hapless, short-term president, gets passing grades.
But the "Maestro" sounds false notes in a book that probably reveals more than intended. Instead of a detached policymaker, Greenspan comes across as engaged in political games. I have had enough contact with Greenspan to know that in private the central banker is a political junkie, but I had no idea how deeply he was involved with the one Democratic president who appointed him: Bill Clinton.
One veteran Greenspan-watcher, going first to the book's photo section, was surprised that Greenspan had selected an image of himself between Hillary Clinton and Tipper Gore, a place of honor, at President Clinton's first State of the Union address, in 1992. Federal Reserve colleagues had viewed his taking that seat as undermining the central bank's cherished independence. Greenspan's memoir does not mention Clinton's quest to get him to cut interest rates as compensation for tax increases, but the Fed chairman was quite concerned at the time about being seen as the president's pawn. When my column suggested then that his presence in the presidential box played into Clinton's designs, he called me (for the last time) to complain.
In "The Age of Turbulence," Greenspan buys into the discredited depiction of Ronald Reagan (who first named Greenspan to the Fed) as an amiable dunce and does not conceal his contempt for both Bushes (each of whom nominated him). Even more surprising is his adoration of Clinton. While scathing in attacking increased spending by George W. Bush, he ignores massive non-defense spending hikes under Clinton and embraces the Democrat's tax increase "as our best chance in 40 years to get stable long-term growth."
Greenspan's book treats Reagan's tax-cutting, supply-side movement as if it never happened. Seeing no inherent benefits from a lower tax burden, he accepts the Democratic deficit-reduction formula that a dollar of higher taxes is equivalent to a dollar of reduced spending.
With the memoir retreating from his passive endorsement of Bush's 2001 tax cuts, it is hard to tell the Greenspan of this book from a conventional Democrat. He indicates that his favorite colleague in the younger Bush's administration was the dysfunctional Treasury Secretary Paul O'Neill, who opposed the tax-cut strategy while ruining morale in his department.
The tip-off to Greenspan's mind-set is his reference to Democratic Sen. Kent Conrad as a "fiscal conservative." Conrad is an avowed deficit hawk whose advocacy of high taxes and high spending earned him a 16 percent fiscally conservative rating last year from the National Taxpayers Union.
Though Greenspan's memoir makes him a virtual member of the Clinton administration, he describes himself as a reluctant public servant -- which runs counter to my firsthand observations. He writes that he turned down a job in the Nixon administration, but in fact he was rejected by the new president's staff because of his performance as part of the 1968 campaign. (Temporarily exiled to political Siberia, a distraught Greenspan was reduced to scheduling breakfast with me on his trips from New York to Washington.) His book has him reluctantly accepting Reagan's appointment as Fed chairman in 1987, but in fact he aggressively promoted himself for the job. (He approached me at a Washington reception that year to say he had heard I opposed his appointment and asked me why.)
"The Age of Turbulence" lacks the confessional candor of the best memoirs, but it tells enough to leave intriguing questions for a future biographer. Why did three Republican presidents name a Federal Reserve chairman fundamentally opposed to the GOP's economic doctrine? Did Greenspan deceive them?
Thursday, September 20, 2007
Greenspan Attempts to Rewrite History to Deflect Blame
September 17, 2007
Op-Ed Columnist--NY TImes
Sad Alan’s Lament
By PAUL KRUGMAN
When President Bush first took office, it seemed unlikely that he would succeed in getting his proposed tax cuts enacted. The questionable nature of his installation in the White House seemed to leave him in a weak political position, while the Senate was evenly balanced between the parties. It was hard to see how a huge, controversial tax cut, which delivered most of its benefits to a wealthy elite, could get through Congress.
Then Alan Greenspan, the chairman of the Federal Reserve, testified before the Senate Budget Committee.
Until then Mr. Greenspan had presented himself as the voice of fiscal responsibility, warning the Clinton administration not to endanger its hard-won budget surpluses. But now Republicans held the White House, and the Greenspan who appeared before the Budget Committee was a very different man.
Suddenly, his greatest concern — the “emerging key fiscal policy need,” he told Congress — was to avert the threat that the federal government might actually pay off all its debt. To avoid this awful outcome, he advocated tax cuts. And the floodgates were opened.
As it turns out, Mr. Greenspan’s fears that the federal government would quickly pay off its debt were, shall we say, exaggerated. And Mr. Greenspan has just published a book in which he castigates the Bush administration for its fiscal irresponsibility.
Well, I’m sorry, but that criticism comes six years late and a trillion dollars short.
Mr. Greenspan now says that he didn’t mean to give the Bush tax cuts a green light, and that he was surprised at the political reaction to his remarks. There were, indeed, rumors at the time — which Mr. Greenspan now says were true — that the Fed chairman was upset about the response to his initial statement.
But the fact is that if Mr. Greenspan wasn’t intending to lend crucial support to the Bush tax cuts, he had ample opportunity to set the record straight when it could have made a difference.
His first big chance to clarify himself came a few weeks after that initial testimony, when he appeared before the Senate Committee on Banking, Housing and Urban Affairs.
Here’s what I wrote following that appearance: “Mr. Greenspan’s performance yesterday, in his first official testimony since he let the genie out of the bottle, was a profile in cowardice. Again and again he was offered the opportunity to say something that would help rein in runaway tax-cutting; each time he evaded the question, often replying by reading from his own previous testimony. He declared once again that he was speaking only for himself, thus granting himself leeway to pronounce on subjects far afield of his role as Federal Reserve chairman. But when pressed on the crucial question of whether the huge tax cuts that now seem inevitable are too large, he said it was inappropriate for him to comment on particular proposals.
“In short, Mr. Greenspan defined the rules of the game in a way that allows him to intervene as he likes in the political debate, but to retreat behind the veil of his office whenever anyone tries to hold him accountable for the results of those interventions.”
I received an irate phone call from Mr. Greenspan after that article, in which he demanded to know what he had said that was wrong. In his book, he claims that Robert Rubin, the former Treasury secretary, was stumped by that question. That’s hard to believe, because I certainly wasn’t: Mr. Greenspan’s argument for tax cuts was contorted and in places self-contradictory, not to mention based on budget projections that everyone knew, even then, were wildly overoptimistic.
If anyone had doubts about Mr. Greenspan’s determination not to inconvenience the Bush administration, those doubts were resolved two years later, when the administration proposed another round of tax cuts, even though the budget was now deep in deficit. And guess what? The former high priest of fiscal responsibility did not object.
And in 2004 he expressed support for making the Bush tax cuts permanent — remember, these are the tax cuts he now says he didn’t endorse — and argued that the budget should be balanced with cuts in entitlement spending, including Social Security benefits, instead. Of course, back in 2001 he specifically assured Congress that cutting taxes would not threaten Social Security.
In retrospect, Mr. Greenspan’s moral collapse in 2001 was a portent. It foreshadowed the way many people in the foreign policy community would put their critical faculties on hold and support the invasion of Iraq, despite ample evidence that it was a really bad idea.
And like enthusiastic war supporters who have started describing themselves as war critics now that the Iraq venture has gone wrong, Mr. Greenspan has started portraying himself as a critic of administration fiscal irresponsibility now that President Bush has become deeply unpopular and Democrats control Congress.
Op-Ed Columnist--NY TImes
Sad Alan’s Lament
By PAUL KRUGMAN
When President Bush first took office, it seemed unlikely that he would succeed in getting his proposed tax cuts enacted. The questionable nature of his installation in the White House seemed to leave him in a weak political position, while the Senate was evenly balanced between the parties. It was hard to see how a huge, controversial tax cut, which delivered most of its benefits to a wealthy elite, could get through Congress.
Then Alan Greenspan, the chairman of the Federal Reserve, testified before the Senate Budget Committee.
Until then Mr. Greenspan had presented himself as the voice of fiscal responsibility, warning the Clinton administration not to endanger its hard-won budget surpluses. But now Republicans held the White House, and the Greenspan who appeared before the Budget Committee was a very different man.
Suddenly, his greatest concern — the “emerging key fiscal policy need,” he told Congress — was to avert the threat that the federal government might actually pay off all its debt. To avoid this awful outcome, he advocated tax cuts. And the floodgates were opened.
As it turns out, Mr. Greenspan’s fears that the federal government would quickly pay off its debt were, shall we say, exaggerated. And Mr. Greenspan has just published a book in which he castigates the Bush administration for its fiscal irresponsibility.
Well, I’m sorry, but that criticism comes six years late and a trillion dollars short.
Mr. Greenspan now says that he didn’t mean to give the Bush tax cuts a green light, and that he was surprised at the political reaction to his remarks. There were, indeed, rumors at the time — which Mr. Greenspan now says were true — that the Fed chairman was upset about the response to his initial statement.
But the fact is that if Mr. Greenspan wasn’t intending to lend crucial support to the Bush tax cuts, he had ample opportunity to set the record straight when it could have made a difference.
His first big chance to clarify himself came a few weeks after that initial testimony, when he appeared before the Senate Committee on Banking, Housing and Urban Affairs.
Here’s what I wrote following that appearance: “Mr. Greenspan’s performance yesterday, in his first official testimony since he let the genie out of the bottle, was a profile in cowardice. Again and again he was offered the opportunity to say something that would help rein in runaway tax-cutting; each time he evaded the question, often replying by reading from his own previous testimony. He declared once again that he was speaking only for himself, thus granting himself leeway to pronounce on subjects far afield of his role as Federal Reserve chairman. But when pressed on the crucial question of whether the huge tax cuts that now seem inevitable are too large, he said it was inappropriate for him to comment on particular proposals.
“In short, Mr. Greenspan defined the rules of the game in a way that allows him to intervene as he likes in the political debate, but to retreat behind the veil of his office whenever anyone tries to hold him accountable for the results of those interventions.”
I received an irate phone call from Mr. Greenspan after that article, in which he demanded to know what he had said that was wrong. In his book, he claims that Robert Rubin, the former Treasury secretary, was stumped by that question. That’s hard to believe, because I certainly wasn’t: Mr. Greenspan’s argument for tax cuts was contorted and in places self-contradictory, not to mention based on budget projections that everyone knew, even then, were wildly overoptimistic.
If anyone had doubts about Mr. Greenspan’s determination not to inconvenience the Bush administration, those doubts were resolved two years later, when the administration proposed another round of tax cuts, even though the budget was now deep in deficit. And guess what? The former high priest of fiscal responsibility did not object.
And in 2004 he expressed support for making the Bush tax cuts permanent — remember, these are the tax cuts he now says he didn’t endorse — and argued that the budget should be balanced with cuts in entitlement spending, including Social Security benefits, instead. Of course, back in 2001 he specifically assured Congress that cutting taxes would not threaten Social Security.
In retrospect, Mr. Greenspan’s moral collapse in 2001 was a portent. It foreshadowed the way many people in the foreign policy community would put their critical faculties on hold and support the invasion of Iraq, despite ample evidence that it was a really bad idea.
And like enthusiastic war supporters who have started describing themselves as war critics now that the Iraq venture has gone wrong, Mr. Greenspan has started portraying himself as a critic of administration fiscal irresponsibility now that President Bush has become deeply unpopular and Democrats control Congress.
