Thursday, April 21, 2005
( 11:22 AM )
I will be taking a class this coming summer on how to teach economics. I confess I've never been fully comfortable with economic science, though I have read many books and talked with many people who know far more than I do. If you're looking for cogent economic analysis, I HIGHLY recommend Maxspeak. Of course Atrios himself is an economist as well and always has a very concise and understandable spin on things.
Why I bring this up is the news today that Greenspan has now sounded the alarm about our deficits. This appears to me to be very hypocritical. I was wondering a couple of years ago why he hadn't already rung that bell. When Clinton was in office, Greenspan was constantly warning about deficits. But then when Bush took office, Greenspan seemed fine with lowering revenue (taxes) even though it would create much larger deficits. Now it appears that those deficits, which are growing exponentially, are close to being out of control. Time to put on the breaks.
On the fiscal front, Greenspan said the persistence of swollen budget deficits in the years ahead "would cause the economy to stagnate or worse" unless the situation is reversed.
The budget deficit is a problem because it is projected to rise significantly as the first of 78 million baby boomers start to retire in 2008.
Last year, the government produced a budget deficit of $412 billion, a record in dollar terms. The deficit this year is projected to shatter that record, coming in at an estimated $427 billion.
Greenspan's call for fiscal prudence touched a nerve with Democrats who still sting from Greenspan's endorsement of President Bush's $1.3 trillion tax cut in 2001. It was proposed at a time when the government was expecting a decade of budget surpluses, which didn't materialize.
"I was wrong like everybody else on the issue of surpluses," Greenspan said.
I don't really know the practical reason why Greenspan holds so much power when it comes to the country's economics - it seems like a mixture of myth and politics. I don't know if it is all that wise to have one person be able to dictate so much for the country. Especially when he is wrong. Most people could tell 3 or 4 years ago that we were making the wrong choices when it came to how we budgeted money for the country. But Greenspan maintained support for the tax cuts and other decisions made that have increased our debt many times. It does worry me that China holds so much of our debt. It does bother me that we don't really know how many people are unemployed becuase they've changed the rules and people now just drop off the rolls. It bothers me that Americans are still hungry and without basic needs while the Congress tries to push through an energy bill that is full of giveaways to corporate polluters. How we spend our money says a lot about us as a country. It always has. Put when those in charge are simply more concerned about power and their own future with money than they are for the caretaking of their citizens, I doubt that our national budget and financial priorities will ever change much.
The problem is that we see ourselves as all powerful and dictating the economy of the world. While that has been historically true this last century, I wonder how truly true it still is while we've allowed our economic priorities to become so inflated against humanity. But humanity and the rest of the world isn't as enamored of Greenspan and our economic impact as we think they are. I always liked that quote from Argentina's newspaper, the El Cronista after Greenspan had raised interest rates several years ago: "Greenspan Raises Rates a Half Point and the World Continues to Turn."