It's time for Alan Greenspan to go.Mr. Greenspan has been the Chairman of the independent Federal Reserve for over a decade. In that time, he has accomplished many things. He stood up to the first President Bush, raising interest rates in 1992 because inflationary pressures threatened the budding economic recovery. The next year, he stood up to the newly-elected President Clinton, forcing a tax increase that eventually resulted in the longest expansion in American history and a balanced budget.
Over the past few years, however, Chairman Greenspan has lost his way. First, he advocated large tax cuts, based on murky projections, and at a time when they could only lead to the enormous deficits we now have. Then, he refused to demand that this president raise taxes, suddenly preferring huge deficits to fiscal prudence. Now, he blames this deficit on Social Security, a fund which is running an enormous surplus.
It is true that Social Security will be in serious trouble if something drastic is not done to fix it. But to blame the current half-trillion dollar deficit on a fund that has a surplus is irresponsible and incompetent. Chairman Greenspan should know better.
The answer to this deficit and this struggling economy is the same as the answer to the last one eleven years ago. Repeal the Bush tax cuts for the wealthiest Americans. Cut back on record levels of Republican pork-barrel spending. Establish a more cooperative foreign policy to ease tensions around the world, so we can enjoy another "peace dividend." Free up hundreds of billions of dollars per year so that businesses can invest in better infrastructure and growth, creating high-skill, high-paying jobs for Americans.
This was the answer offered by Bill Clinton, and it worked. Unfortunately, the current administration is unwilling or unable to learn from history. Instead of facing up to the facts, President Bush and his team choose to ignore them. Instead of creating solutions to our problems, they choose to create more problems. And instead of being honest with America and the world, President Bush and his coterie choose to lie.
Unfortunately, Chairman Greenspan also chooses to forget history, ignore the facts and avoid real solutions to current problems. He chooses to create a crisis where none exists, diverting attention from a more pressing need. He focuses on a deficit that won't occur for over a decade, and ignores the deficit that is hurting us now.
Why?
Chairman Greenspan also chaired President Reagan's National Commission on Social Security Reform. While his two-year stint chairing this commission resulted in the largest middle-class tax increase ever, we were in a crisis situation at the time -- the Social Security Trust Fund literally went broke. Now, as he nears the end of his career at the top, perhaps he wishes to finish what he started over 20 years ago. And perhaps he should be given that chance.
But we cannot afford to have a Federal Reserve Chairman ignore the serious economic problems we face right now. We cannot afford having the top independent economic voice refuse to stand up to a president when it's vitally necessary. And this means we cannot afford four more years of Alan Greenspan in his current position.
Chairman Greenspan's term ends this June. He should announce that he will not accept another four-year term now, so President Bush and his economic advisors can start the search for a new Federal Reserve Chairman. Once he leaves office, Alan Greenspan can then turn his attention to fixing Social Security. In the meantime, he needs to focus on the deficit we have now, not the one that won't materialize for at least a decade.
For a discussion of possible solutions to the looming Social Security problem, go to www.danjacoby.com/politics on the web, and choose essay #5, "I Want My Social Security".
Copyright 2004, Dan Jacoby
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