Blind Blundering on Tax Cuts


By Gus Tyler

Published February 27, 2004, issue of February 27, 2004.
  • Print
  • Share Share

Once again, Federal Reserve Board chairman Alan Greenspan has proven his genius as a master of what George Orwell called “doublethink.” In one simple sentence, he can predict opposite outcomes and speak the truth at the same time. As our modern Delphic oracle, he might produce a weather forecast in which he says, “It will be a bright sunshiny day unless it rains.” In short, his forecast must turn out to be true, although it is no forecast at all. He might as well have kept his meaningless mouth mute.

Here is an example of how he operates: In his testimony before the Senate Banking Committee earlier this month, Greenspan spoke strongly in favor of Bush’s tax cuts but, aware that the mounting federal debt is bound to wreak endless havoc with the American economy in the not-too-distant future, he insisted that expenditures must be cut to bring the budget into better balance.

In making this suggestion, Greenspan is tacitly admitting that the conventional rationale offered by the administration and its supporters (including Greenspan) in favor of the tax cut was (and is) dead wrong. They forecast that cutting taxes for the richest would enable the economic elite to invest in expanding enterprises and the creation of new jobs to stimulate the economy and thereby help everybody, including Uncle Sam, who, it was touted, would be the beneficiary of greater income as a result.

So, just what expenditures would Greenspan reduce to compensate for the government’s lagging income? He might have suggested that we turn over the job of reconstructing Iraq to the United Nations and start bringing our boys back home. That would be a gargantuan savings. Or he might have proposed that the president proclaim that the political pork with which the budget is heavily loaded is not kosher and should be eliminated. But, here’s the way Greenspan proposes to cut costs, as reported in The New York Times: “Mr. Greenspan urged lawmakers to examine cuts in mandatory entitlement programs like Social Security and Medicare.”

The blind blundering of the Bush administration and its apologist Greenspan is a firm confirmation of the maxim of the American philosopher George Santayana, who said, “Those who do not know the past are condemned to repeat it.” The naughty notion that cutting the taxes of the richest would benefit all was put to the test not so many years ago in the days of Ronald Reagan. When he came into office in 1981, the federal debt was a trillion dollars ($909 billion, to be exact.) Reagan decried this unbearable burden of debt. Purportedly to reduce the deficits and the mounting debt, he cut taxes in almost exactly the same way as Bush has. When he left office in 1989, the federal debt had tripled.

Cutting the taxes of the richest did not, as proclaimed, stimulate the economy and, thereby, enrich the federal coffers. It did just the opposite. It deprived the U.S. Treasury of billions for each of eight continuous years.

Here was a lesson in history that should have guided our present administration. We may assume that this lesson was not learned by Bush. His school years suggest that he is not, unfortunately, a great learner.

But what about Greenspan? He is no fool. He has all the information he needs at his fingertips. He knows what happened under Reagan. So why does he endorse a repeat of the discredited and destructive “drip-down” dunce dance? Can it be that he is less interested in doing what is rational than in finding a politically acceptable rationale?

Find us on Facebook!
  • Undeterred by the conflict, 24 Jews participated in the first ever Jewish National Fund— JDate singles trip to Israel. Translation: Jews age 30 to 45 travelled to Israel to get it on in the sun, with a side of hummus.
  • "It pains and shocks me to say this, but here goes: My father was right all along. He always told me, as I spouted liberal talking points at the Shabbos table and challenged his hawkish views on Israel and the Palestinians to his unending chagrin, that I would one day change my tune." Have you had a similar experience?
  • "'What’s this, mommy?' she asked, while pulling at the purple sleeve to unwrap this mysterious little gift mom keeps hidden in the inside pocket of her bag. Oh boy, how do I answer?"
  • "I fear that we are witnessing the end of politics in the Israeli-Palestinian conflict. I see no possibility for resolution right now. I look into the future and see only a void." What do you think?
  • Not a gazillionaire? Take the "poor door."
  • "We will do what we must to protect our people. We have that right. We are not less deserving of life and quiet than anyone else. No more apologies."
  • "Woody Allen should have quit while he was ahead." Ezra Glinter's review of "Magic in the Moonlight":
  • Jon Stewart responds to his critics: “Look, obviously there are many strong opinions on this. But just merely mentioning Israel or questioning in any way the effectiveness or humanity of Israel’s policies is not the same thing as being pro-Hamas.”
  • "My bat mitzvah party took place in our living room. There were only a few Jewish kids there, and only one from my Sunday school class. She sat in the corner, wearing the right clothes, asking her mom when they could go." The latest in our Promised Lands series — what state should we visit next?
  • Former Israeli National Security Advisor Yaakov Amidror: “A cease-fire will mean that anytime Hamas wants to fight it can. Occupation of Gaza will bring longer-term quiet, but the price will be very high.” What do you think?
  • Should couples sign a pre-pregnancy contract, outlining how caring for the infant will be equally divided between the two parties involved? Just think of it as a ketubah for expectant parents:
  • Many #Israelis can't make it to bomb shelters in time. One of them is Amos Oz.
  • According to Israeli professor Mordechai Kedar, “the only thing that can deter terrorists, like those who kidnapped the children and killed them, is the knowledge that their sister or their mother will be raped."
  • Why does ultra-Orthodox group Agudath Israel of America receive its largest donation from the majority owners of Walmart? Find out here:
  • Woody Allen on the situation in #Gaza: It's “a terrible, tragic thing. Innocent lives are lost left and right, and it’s a horrible situation that eventually has to right itself.”
  • from-cache

Would you like to receive updates about new stories?

We will not share your e-mail address or other personal information.

Already subscribed? Manage your subscription.