Greenspan Vs. McCain
“The issue of economics is not something I’ve understood as well as I should,” McCain said. “I’ve got Greenspan’s book.”
Unfortunately, he doesn’t seem to have read it all that closely:
Former Federal Reserve Chairman Alan Greenspan said the country can’t afford $3.3 trillion of tax cuts proposed by Republican presidential nominee John McCain without corresponding spending reductions.
Greenspan, a lifelong Republican and longtime friend of McCain, said today on Bloomberg Television’s “Political Capital With Al Hunt that “I’m not in favor of financing tax cuts with borrowed money.”
Needless to say, given that we’re already running a substantial budget deficit, there’s no realistic way to add enormous new tax cuts without borrowing money to cover the cost.
45 Responses to “Greenspan Vs. McCain”
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September 14th, 2008 at 12:27 pm
“Greenspan, a lifelong Republican and longtime friend of McCain, said today on Bloomberg Television’s “Political Capital With Al Hunt that “I’m not in favor of financing tax cuts with borrowed money.”
Flippity-flop.
Greenspan was a strong supporter of financing tax cuts for the rich with borrowed money in 2001.
Ayn Rand’s horn player is perhaps the worst institution in Washington.
September 14th, 2008 at 12:29 pm
I’m generally in favor of people flip-flopping from clearly incorrect to clearly correct positions, rather than blindly not admitting mistakes.
But that’s just me.
September 14th, 2008 at 12:29 pm
Greenspan, a lifelong Republican and longtime friend of McCain, said today on Bloomberg Television’s “Political Capital With Al Hunt that “I’m not in favor of financing tax cuts with borrowed money.”
What Petey said.
Also, so he is never in favor of tax cuts? Because that’s how they’ve always been financed.
September 14th, 2008 at 12:46 pm
In the Post today, Donald Luskin, a McCain economic advisor, published an editorial in which he repeats the “mental recession” line and maintains that “things aren’t that bad.”
Luskin: “This would suggest that anyone who says we’re in a recession, or heading into one — especially the worst one since the Great Depression — is making up his own private definition of ‘recession.’”
Greenspan says there is a 50-50 chance of a recession occurring.
Luskin closes with this doozy of a line: “… the majority is plenty pessimistic right now. That suggests that we’re on the brink not of recession, but of accelerating prosperity. Maybe this will turn out to be the best of times — at least since the Great Depression.”
Greenspan: This is a “once in a half century, probably once in a century type of event.”
Whoops. Excellent timing there, Donald.
September 14th, 2008 at 12:49 pm
Put this in the time capsule: Greenspan was a wicked, fawning toadie who helped ruin the country. In these dread, latter days of the Republic there seems to have been no stint of stupid leaders with immense confidence and incredible influence. No need to name “Cheney”, but, there, you dragged it out of me. Cheney’s and Greenspan’s influence will not be easy to explain to the future.
September 14th, 2008 at 1:03 pm
“no realistic way to add enormous new tax cuts without borrowing money to cover the cost.”
What cost? Tax cuts doesnt cost anything. Its not an expenditure. Spending, that costs something. Tax cuts is not spending. Tax cuts is letting me keep more of what I earn.
And, speaking of spending, when someone is proposing more spending, why doesnt anyone say something along the lines of “no realistic way to add enormous new spending increases without borrowing money to cover the cost”? Why sdoesnt anyone aks the question, “how are we going to pay for this”, when someone, anyone proposes more spending?
September 14th, 2008 at 1:11 pm
Greenspan is really awesome at publicly supporting the intellectually defensible position in the abstract, and then quietly throwing his weight behind the irresponsible particular proposal.
He supported the hikes in payroll taxes in the 80s; then he used the soc. sec. surplus as a reason to cut income taxes in the early 2000s; now the ensuing deficit is according to Greenspan the reason why we must cut soc. sec. benefits. He seems to have a lifelong agenda of undermining and weakening social security.
Still, MY’s last line doesn’t seem to make sense. The fact that we’re currently borrowing money to finance *past* tax cuts doesn’t make it impossible to have new, revenue-neutral tax cuts by cutting spending.
September 14th, 2008 at 1:15 pm
“Why sdoesnt [sic] anyone aks [sic] the question, “how are we going to pay for this”, when someone, anyone proposes more spending?”
Good question, Trey. Why didn’t Bush ask “how are we going to pay for this?” when he ordered the invasion of Iraq. Why isn’t Bush asking “how are we going to pay for this?” when he ordered the surge? Why isn’t Bush ask “how are we going to pay for this?” as he coninues the US military occupation of Iraq.
You see, Trey, grownups understand that taxes are the income America uses to pay for what it wants. Grownups understand that if you cut your source of income (taxes), you have to identify what spending you’re going to cut to match the reduction in income, because otherwise tax cuts cost the next generation a bundle–they will pay for your bills *and* the interest on the money the tax-cutters borrowed.
“Tax cuts is letting me keep more of what I earn.”
While taking more away from the next generation’s earnings.
Smarter trolls, please.
September 14th, 2008 at 1:26 pm
Funny, what comes to mind is Woodward’s fawning tribute to Greenspan, the “Maestro”. Wrote that book a little early, no?
Colatina is right. Think Paul Volcker vs. Alan Greenspan and you won’t have any problem understanding the financial mess we’re in now.
McCain’s an easy target. But not when Greenspan is the sniper. Pots, kettles, etc.
September 14th, 2008 at 1:27 pm
Greenspan and wife Andrea Mitchell are an interesting pair about now. I’ve noticed her a bit sharp ever since the Palin pick.
With Palin as prospective VP you have a divide between those who are fundamentally serious and those who are not. Among the neocons, you have David Frum who is aghast, while old bottomless trickster Bill Kristol took a moment to spin, spin, spin. These people were once in alliance for wicked ideals, but they were sound ideals. Now you’re seeing the reactions to someone completely unfit for the office.
Mitchell and, I think, Greenspan are spooked.
September 14th, 2008 at 2:05 pm
None of this chickenshit snark matters — what matters is there has been a MASSIVE shift in public opinion AWAY from Obama to in FAVOR of John McCain as the man best able to fix this country’s problems.
See “5 Reasons why McCain pulled Ahead” –at
http://news.yahoo.com/s/politico/13422
That David Plouffe allowed a 24 year Republican Senator — one of the Keating 5 — to fool the public this badly this close to the election shows political malpractice” on the scale of the John Kerry 2004 campaign.
What in the FUCK is the matter with these people?
September 14th, 2008 at 2:08 pm
And don’t give me bullshit about “don’t fire till you see the whites of their eyes”.
The public mind starts closing down in October — they get tired and bored of the campaign news, the barrage of political ads,etc and they start switching the TV channel, dumping Emails in the bit bucket,etc whenever approached with a political message.
Time’s run out.
September 14th, 2008 at 2:20 pm
Er, BHO is also calling for “tax cuts” for 95% of taxpayers and big increases for 5%. Of, course the 5% includes most of the family-owned businesses that create the majority of new jobs. Show me the list of economists who support this who aren’t with the Obama campaign.
September 14th, 2008 at 2:32 pm
Here’s a link to AARP’s take. Not clear that SMALL business owners suffer from the broad strokes that have been stated so far – unless E O’Neal has some actual cites with links.
September 14th, 2008 at 2:42 pm
“Of, [sic] course the 5% includes most of the family-owned businesses that create the majority of new jobs.”
Got a cite for this, O’Neal, or is this more of your baffelgab?
September 14th, 2008 at 2:45 pm
And we see that E. O’Neal can parrot the McCain talking points. Does he know anything? Hardly likely. He’s just in it for the cool McCain branded Depends.
September 14th, 2008 at 2:47 pm
The public mind starts closing down in October — they get tired and bored of the campaign news, the barrage of political ads,etc and they start switching the TV channel, dumping Emails in the bit bucket,etc whenever approached with a political message.
And this lame theory is supported by what facts?
September 14th, 2008 at 2:52 pm
All right, it’s been 3 hours already, Yglesias. Post something.
September 14th, 2008 at 2:54 pm
2 1/2.
September 14th, 2008 at 3:02 pm
Butch, most of the top 1% are successful small and medium-sized family businesses paying taxes at individual rates. The top 1% of taxpayers already pays 40% of federal personal income taxes and the top %5 pays 60%. The bottom fifty percent that will get most of the “tax cuts”, actually just transfer payments from actual taxpayers, pays only 3%. I’m sure you don’t know this, but the shares paid by the top groups are up and the shares paid by the bottom groups are down today compared to the shares during the Clinton administration. The tax code has become MORE progressive through across-the-board tax cuts.
Here are a couple of interesting links. http://www.spectator.org/dsp_article.asp?art_id=13769
http://www.daveramsey.com/etc/cms/butt_scratching_and_bass_fishing_10192.htmlc
September 14th, 2008 at 4:11 pm
Neither of the propaganda pieces you linked to have any evidence to support the assertion that increasing the top marginal rate for income taxes will have *any* effect on small business formation. The reason? No such evidence exists.
Oh, and the fact that the rich are getting richer (and thus paying more taxes) while the poor are getting poorer (and thus paying less taxes) is not what is meant by a “progressive tax code.” A progressive tax code is one that takes a larger percentage from the income of high-income people than it does from low-income people. You really should learn English.
Smarter trolls, please.
September 14th, 2008 at 5:12 pm
I notice, E. O’Neal that in your cite of how the top 1% of taxpayers already pay 40% of federal income taxes and the top (I presume you meant) 0.5% pay 60% you neglected to mention what their share of the national income was. I’m sure you have those figures that put the others in context right on tap, no? After all, when discussing relative numbers context IS important. (Which is why that Spectator article you link to is absolutely hilarious! Thanks for the laugh.)
Also – it is a BIT hard to muster sympathy for a guy with a personal income of $328K or the guy making a lot more to write about. I mean, bully for him that he’s a hard worker and is earning his dough, but I know a number of small business owners myself – and none of them earn anything like what he earns despite working long hours. And they’re going under due to gas prices and the fact that the REAL economy sucks. And they aren’t going to worry much about income or corporate taxes going up – they’d love to be in a position where a major complaint of theirs was their personal or income tax bill.
September 14th, 2008 at 5:43 pm
Joel, every economist knows the axiom, “If you want more of something, subsidize it; if you want less, tax it”. Ninety percent of millionaires today are first-generation due to the explosion of wealth creation in the past quarter-century. Do I really need to prove to you that they’ll work less hard and take fewer risks at the margin, if taxes are taking about half of what they earn? If we return to soak-the-rich policies that penalize work and investment, all economic theory and experience says that we’ll get less of both. The rich, as you imply you want, will be less wealthy and thus will pay less tax. Just who do you think will be taxed more to make up for the shortfall, sucker?
Also, there’s a huge literature in economics on who really pays taxes. It’s not always the party who writes the check or has it withheld. Increasing taxes on small businesses, such as contractors, merchants, and professionals, will cause many of them to raise prices or to reduce pay and benefits to their employees.
The ultimate taxpayer is the one who gets stuck with the higher prices or smaller paycheck, but the suckers don’t understand this. But a lot of the highly paid professionals donating to the Obama campaign do. For instance, a lawyer billing $400 an hour can just tack on another fifty bucks because his competition, facing the same tax increase, will do the same. For small businesses, it’s much tougher to raise prices because they have to compete with bigger and smaller businesses whose tax rates might not change. They’re more likely to lay off employees or to forego expansion.
In one of the debates, Obama said he supported higher rates because of “fairness” considerations even if they fail to increase revenues. He must have picked that up in one of his Marxism courses in college.
September 14th, 2008 at 5:49 pm
Look, if ultra-wealthy people want this country to be a poor, broken-down, perpetually third world crap-hole with shining gated developments divided by crumbling neighborhoods, then follow right wingers’ advice.
But if ultra-wealthy people want to live in a country which has the infrastructure, society, and economy to make them not only wealthy but continually successful under even better positions, then tax them like we did when we developed most, because a real First World nation isn’t paid for by leftover scraps tossed in its direction.
September 14th, 2008 at 6:06 pm
Actually, it’s been quite a while since taxes have taken “about half of what they earn”. Most of RECENT debate (at least in the US) has been about incremental increases or decreases around historically low tax rates.
I’ve not seen any particularly well researched studies showing that show that incremental increases or decreases have significant effects on willingness to work for incremental dollars. Anybody got something?
Oh, and E. O’Neal – if “there’s a huge literature in ecomonics on who really pays taxes”, would it kill you to cite ONE??
September 14th, 2008 at 6:21 pm
Butch, I’ve seen tables on what percentage of national income the top 1% and 5% earn, but I couldn’t find them in a quick Google search. I did find a Wikipedia article on “Household Income in the United States” that says that,” Roughly one third, 32.5%, of all income in the US was earned by those households with an income over $150,000, approximately the top five percent. Approximately one fifth, 20.58%, of all income was earned by the top 2.67%, those households earning more than $200,000 a year.” I’ve linked to that article and to a table of “Who pays Income Taxes” below. Notice how the share paid by the top groups has increased during the Bush administration, while the share paid by the bottom half has fallen from 4% to 3%.
http://en.wikipedia.org/wiki/Household_income_in_the_United_States
http://www.ntu.org/main/page.php?PageID=6
September 14th, 2008 at 6:44 pm
Butch, I’m talking about scholarly articles on topics such as who really pays corporate income taxes. Obviously, corporations aren’t the ultimate taxpayer because they are a legal fiction. Only people can actually pay the taxes — the owners, employees and customers of the corporations. Everyone agrees on this point, but figuring out whose hide they come out of is problematic.
Sales tax is an easier example. The business collects it and pays it to the government, but unless the business is surrounded by competitors in lower tax jurisdictions, it’s the customer who really pays.
Social Security taxes are another example. They’re split 50/50 between employer and employee, but the best analysis IMO is that the entire amount comes out of the employee’s compensation.
September 14th, 2008 at 6:56 pm
Butch, I noticed Wikipedia has a good article on tax incidence, or who ultimately pays particular taxes. http://en.wikipedia.org/wiki/Tax_incidence
September 14th, 2008 at 10:22 pm
E’ O’Neal – your last comment (.28) is interesting – a theoretical treatment that provides no actual or historical numbers. Is this supposed convince me of something in absence an actual historical discussion of effects of tax policy on willingness to earn additional income (one of your previous assertions).
Going back earlier – it is true that people who earn more do get taxed at higher rates – the definition of a progressive taxation system. You have yet to present any information that progressive taxation and variants on that at the current historically low rates has significant effects on people’s willingness to work for an extra dollar.
I, for instance, am already taxed at the top rate for US income taxes. Hasn’t stopped me from seeking higher positions and getting that extra money. Perhaps others are more easily discouraged…
The scholarly articles on who really pays corporate income taxes are cute – and irrelevant – eventually a society pays for the services the populace demands. Quibble about who pays when – but somebody pays.
September 15th, 2008 at 9:59 am
Obama is simply seeking a return to the tax structure that was in place during this “explosion of wealth” that created “90% of millionaires”. The deterrence you propose has been shown to be negligible even at 70% top tax brackets. The major decreases in upper bracket rates have never produced anomolously large growth rates.
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