Tuesday, August 31, 2004

Greenspan Flip Flops

From progressreport.org

Greenspan's False Choice

Last Friday, Federal Reserve Chairman Alan Greenspan repeated his call
to slash Social Security benefits
and raise the retirement age on America's seniors. He also proposed
reigning in Medicare benefits. Greenspan claims such action must be taken
immediately to avoid unmanageable budget deficits. But he presented a
false choice between raising payroll taxes on workers and reducing
benefits. What Greenspan didn't mention is his support for extending
President Bush's tax cuts for the wealthy indefinitely
-- at a cost of $1.5 trillion over 10 years. This, despite evidence in
the president's own budget analysis
(http://www.govexec.com/dailyfed/0203/021203bb.htm) that his tax cuts
are largely responsible for projected federal budget deficits. According
to the Center for Budget and Policy Priorities, the impact of the
president's tax cuts on the deficits is three times
(http://www.cbpp.org/3-22-04socsec-fact.htm) the impact of the
projected Social Security shortfall.

THE GREENSPAN TAX CUT FLIP-FLOP: Greenspan said in February that we
shouldn't roll back tax cuts because doing so would " pose significant
risks to...the revenue base
" by slowing economic growth. But Greenspan advocated those tax cuts in
January 2001 because he believed they were necessary to reduce federal
revenues. The Washington Post reported on 1/27/01 that Greenspan
"justified his support of tax cuts by focusing on a problem that may not even
emerge until the end of a possible second Bush term -- the government
being forced to buy private assets because it had paid off all the
national debt and still had buckets of cash in return."

THE GREENSPAN BAIT-AND-SWITCH: In 1983, as chairman of the bipartisan
Social Security commission, Greenspan said that the way to ensure that
Social Security remains on sound financial footing in the future is to
make baby boomers pay their benefits in advance. That is why, to this
day, people pay more in Social Security taxes than is paid to
beneficiaries (http://www.taxpolicycenter.org/newsevents/cite_ss_promise.cfm) --
50 percent more in 2004. But, in large part to make up the shortfall
caused by the Bush tax cuts for the wealthy, this money (more than $1.8
trillion) has been used to finance other aspects of government. In other
words, Social Security has been transformed from a retirement program
to a regressive income redistribution program. Lower- and middle-class
workers are not paying for their retirement benefits in advance, they
are paying for tax cuts for those making more than $300,000. For more,
read this American Progress column by Harry J. Holzer
(http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=35306) .

SOCIAL SECURITY IS NOT IN CRISIS: According to a recent report by the
Congressional Budget Office, over the next 75 years, the Social Security
shortfall is projected to be 1 percent of all taxable income. Even at
current levels, Social Security will be able to pay full benefits until
2052 (http://www.cbpp.org/6-14-04bud.htm) .