"Just for the record, we were not all wrong, but many people were wrong,"
Posted on 03/15/2005 11:38:36 AM PST by Maria S
WASHINGTON - Alan Greenspan and Sen. Hillary Rodham Clinton clashed briefly Tuesday over rosy surplus forecasts the Federal Reserve Chairman relied on to support President President Bush 's 2001 tax cuts, estimates that turned out to be considerably off the mark.
"It turns out that we were all wrong," Greenspan conceded at a Senate hearing.
"Just for the record, we were not all wrong, but many people were wrong," Clinton, D-N.Y., quickly shot back.
Greenspan lent critical support for Bush's first-term tax cuts, saying they would stimulate the then-ailing economy. Clinton and many Democrats voted against the tax cuts, arguing that they would mainly benefit the wealthy and that federal deficits would balloon.
In early 2001, "we were confronted at that time with an almost universal expectation amongst the experts that we were dealing with a very large surplus for which there seemed to be no end," Greenspan said.
The federal government did produce a budget surplus in 2001. But after that, it has been wracking up record amounts of red ink.
Greenspan, however, didn't take back his support for the 2001 tax cut.
"If confronted with the same evidence we had back then, I would recommend exactly what I recommended then," he said.
The hearing before the Senate Special Committee on Aging mostly dwelled on revamping Social Security.
On that front, Greenspan issued a fresh call to Congress to move promptly to put Social Security on firm financial footing, warning that doing nothing would lead to massive budget deficits and cause the "economy to stagnate or worse."
The looming retirement of 78 million baby boomers will put a huge strain on the Depression-era retirement program and aggravate the country's already bloated budget deficits, he said.
"Unless the trend is reversed, at some point these deficits would cause the economy to stagnate or worse," Greenspan said.
The Fed chief again endorsed a key part of President Bush's Social Security overhaul — to create private investment accounts — and said officials must proceed slowly in setting them up. But Greenspan also said that Congress must move ahead quickly to do other things to fix the retirement program's financing problems.
Congress will need to consider possible benefit cuts and higher tax rates before the baby boomers begin retiring, Greenspan suggested.
But he cautioned that "closing the gap solely with rising tax rates would be problematic" because the high level of taxation that would be required could by itself "severely inhibit economic growth."
Because "benefit cuts will almost surely be at least part of the solution," Greenspan said it is imperative for Congress to let future retirees know as soon as possible that all currently promised benefits won't be forthcoming when they retire.
Greenspan again found himself in the middle of an issue that has raised partisan hackles on Capitol Hill. Bush has been traveling the country to sell his Social Security overhaul plan, although various polls have shown a lukewarm reaction among the public to the idea of personal savings accounts for younger workers. Democrats have vehemently opposed his plan, although they have not offered a unified party counterproposal, and some Republicans who are up for re-election in 2006 are nervous about Bush's push for Social Security changes.
Although recent polls show most Americans are opposed to personal accounts, Bush said he's heartened by figures that show most people recognize Social Security has financial problems. He said he is committed to finding a solution.
"I'm just getting started on this issue," Bush said from the Oval Office Tuesday.
The Fed chief said Tuesday that unless growth in the Social Security as well as the Medicare programs is restrained, these programs will require more and more government resources. Spending on these programs will rise from about 8 percent of the total economy currently to about 13 percent by 2030, he said.
"These projections make clear that the federal budget is on an unsustainable path" in which large budget deficits will push up interest rates, Greenspan said. The government last year produced a deficit of $412 billion, a record in dollar terms.
The president's plan to revamp Social Security would allow workers to divert a chunk of their payroll taxes into personal investment accounts.
The accounts by themselves won't fix the solvency of the retirement program, but they raise the specter of increasing savings, which is extremely low.
Greenspan said that Congress must consider how to achieve solvency as well as boost savings. Focusing solely on solvency, he said, would be a mistake.
Private accounts can be structured by Congress in different ways, Greenspan said. He urged lawmakers to fashion such accounts in a way that would generate savings.
That, he said, must be "at the top of the list of any solution." "Anything that we can do to raise personal savings is very much in the interest of this country," Greenspan said.
In setting up private investment accounts, Greenspan also called for lawmakers to start out "small"_ in an effort to test the waters and see how financial markets react to increased government borrowing needed to bring such accounts about.
Greenspan also suggested resurrecting the notion of sealing off Social Security revenues from other uses. Last year Social Security tax revenues plus interest exceeded benefits by about $150 billion, he said.
"We need, in effect, to make the phantom `lock-boxes' around the trust fund real," he said.
They weren't ALL wrong. The economy recovered, which was right on the mark.
exactly. the economy is screaming, and the opportunistic politicians are telling us it's raining daggers.
"They weren't ALL wrong. The economy recovered, which was right on the mark."
I don't think Mrs. Clinton was referring to that. LOL!!
p.s. we're STUCK with her...let's just face facts. We're stuck with her.
You watch, out of this whole article, and Greenspan's whole testimony, the ONLY thing the MSM and the dems will point to is Greenspan's statement about "making a mistake" although it was in 2001, before much of anything that is facing America now, had happened.
They will also ignore the part where he said that under the same circumstances, he would make the same decisions---
OK....I didn't read but about the first third of this piece.....Was reducing spending addressed, or mentioned at all?
Good to know that the junior senator from New York is now an expert on macroeconomics as well as military strategy and health care management.
She's only had one real job in her whole life, and that was working for a corrupt law firm in Little Rock.
Four more years of having HILLARY! shoved down my throat on a daily basis.. UGHH!!
Although recent polls show most Americans are opposed to personal accounts
B.S.
I'll take Greenspan's opinion over Clinton's opinion any day.
"Just for the record, we were not all wrong, but many people were wrong,"
Smartest Woman in the World. HAH!
I hate her.
it seems the Democrats are making a concerted effort to attack Greenspan as he supports President Bush's social security efforts. Pelosi bashed him on one of the Sunday talk shows in the past few weeks.
Greenspan's opinion and work is well respected - they just look plain foolish.
Being a bonafide sociopath, I`m sure shooting was the utmost on her mind.
Dear me. Whom to believe...Greenspan or Clinton. Greenspan...Clinton. I tell you, I just can't decide. /sarcasm
"Reducing spending..." LoL oh, man you must write for the Simpsons that is hilarious.
"Just for the record, we were not all wrong, but many people were wrong," Clinton, D-N.Y., quickly shot back.
When has this power obsessed b!tch been right about anything? She predicted a losing disaster in Iraq; an economic malaise in the US, a health care crisis, had no vision whatsoever for the Middle East, was an early supporter of the PA and critic of Israel, tried to make the military into a social experiment, claims she is a strong supporter of women and children as long as they are subservient to a powerful Federal Government, was deeply involved in the most corrupt administration in our history, treated those assigned to protect her and work for her like pieces of dirt.
I could go on and on, but this self-serving chameleon should go back to trading cattle futures, her lone documentable claim to real success. Of course, the fact that that success came about because of a rigged system in her favor, we won't get into now. (Oh, you really thought it was the Wall St.Journal that made her trading so profitable, as she has claimed?)
Of course there was that little thing about a WAR starting in 2001, following a devistating, pearl harbor style attack on our executive government, economic infastructure and military leadership.
Ya know, one where the prior administration was asleep at the switch and, knowing the danger, still let our enemy off the hook multiple times anyway, repeatly demonstrating our weakness and vulnerability to terrorist groups, who finally struck in a way they knew we couldn't ignore. Ya know, THAT war---I guess she forgot about it.
I've never watched that show.....but the line was meant humorously. Glad you noticed... : )
FRegards,
Greenspan is kissing Hillery's huge ass? Someone must have thin skin about being called a Hack? Not even his wife defended him. He is gutless. "Meow Whip!"
Just think how well we would be doing if Federal spending only went up with inflation.
It is (or was) the funniest show on tv. Filled with incredibly funny throw away lines.
The budget surplus projections were all based on the figures from the Clinton administration. The primary reason that the surplus projections were so wrong (not discounting the 9/11 attacks) was that the Clinton Administration had been cooking the books.
Their accounting practices were less reliable than Enron's.
They lied.
Well that goes without saying.....IF, the Feral Gob'ment, and the State Gob'ment's were held to the same standards as private/public corporations....There would be alot of ex-con ex-congress critter's.
According to the author of this article, a maximum of 4% is a "chunk". Talk about spin.
"Just for the record, we were not all wrong, but many people were wrong," Clinton, D-N.Y., quickly shot back.
And just for the record Hillary, when were you the one claiming surpluses wouldn't last? All I remember you and your husband crowing about was how the economic cycle had been repealed and how government spending was no forever in check, despite the fact it grew at record rates of 21% of GNP in the late 90s. So when Hillary did you ever predict the current state of affairs, and if you did, did it include an economy growing more robustly than the average GNP growth of the 90s and an unemployment rate about the same at this point of your husband's presidency, all thanks to Bush's tax cutting stimulation of the economy?
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