[First of all, an apology to all for falling down on my guest-blogging duties today. It was just one of those warm spring days made for walking the ol' faithful schnauzer in the dappled shade, watching baseball, eating chocolate chip cookies fresh from the oven...you get the picture. But now it's time for one last post while I'm still hogging Ezra's eyeball, as it were.]
Alan Greenspan. Maestro? or Hack?
On the face of it, this seems like a ridiculous question. Don't I remember his hacktacular green-lighting of the Bush tax-cuts in 2001? Surely his belated and weaselly admission that <i>maybe</i> mistakes were made and taxes should go up after all shouldn't absolve him (though DeLong cuts him some slack) of his disingenuously cryptic approval back in 2001. Isn't he trying to eat his cake and have it -- to push through the tax cuts on one hand, <i>and</i> escape blame for the consequences on the other?
...Greenspan had warned then in congressional testimony that the forecast might be wrong and he recommended some 'trigger' mechanism that would limit the tax cuts if certain budget targets were not met. Greenspan said he thinks 'it's frankly unfair' for critics to blame him now for the fact that the Congress chose to 'read half [his] testimony and discard the rest.'
He surely knew that Bush's rational for the tax cuts were bunk, especially given the way they were distributed and structured. But he gave his stamp of approval for them anyhow, while making sure his testimonies are well-larded with qualifiers he can point to later when the shit is about to hit the fan (i.e., now. <i>Gulp</i>). Hack.
The reign of a Fed chairman is long. It is my belief once upon a time, all the way back in the Clinton days, Alan Greenspan did his job admirably well. Now, I wasn't exactly paying attention to the intricacies of central banking back then (being more absorbed with old movies and [ack!] country music) so I can't do any play-by-play analysis of his performance. But the impression I've got is that he was a voice of prudence and an enormously stabilizing force on the markets. He convinced Clinton to raise payroll taxes to prepare Social Security for the onslaught of retiring baby boomers (oh, the irony.) He even provided the cover Clinton needed to push tax increases through Congress, and thus he was arguably responsible for the very surpluses he helped Bush squander (double irony sundae with cherry on top.)
It's too soon to tell whether history will remember the Greenspan that aided Clinton in his efforts to forge a new brand of liberal-flavored fiscal conservatism, or the Greenspan that abetted Bush in plunging the this country back into the black hole of deficits. But prehaps what he <i>should</i> be is a cautionary tale. With the title of "Chairman of the Federal Reserve" comes enormous power. Perhaps too much power for one human to wield responsibly. The temptation to abuse that power in the service of one's ideology is hard enough when one's enemy is in power. It might be well nigh impossible to resist when one is in a position to help friends.
-- Battlepanda, signing off. It's been fun, folks.