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Volume 68, Issue 1, Date

Opinion
 

Greenspan advises Senate to keep Bush's economic plan

Thomas Asma
Opinion Columnist

Democrats chide President Bush for lacking a coherent economic plan, relying simply on the tax cut. Well, they should probably look no further than themselves for incohesien in economic policy, as their sole focus is "postponing" the tax cut to sustain gluttonous spending habits. Postponing is the Democratic euphemism for repeal.

Democrats follow the logic of Rubinomics and say deficits and government borrowing will crowd out private debt and raise interest rates. Therefore, the logic goes that the federal government should take more money from consumers and business and put it into the wasteful hands of the distant Washington budget. Forget about the responsibility of the elected for spending restraint during a time of war and a weak economy.

Senate Majority Leader Tom Daschle plans to shift the focus from war to economics. He will attempt to pin a range of economic woes on Bush, including U.S. job losses, weak growth, declining business investment, shrinking retirement accounts, lagging consumer confidence, budget deficits and of course, executive compensation, as if Bush decides what CEOs are paid.

Fed Chairman Alan Greenspan blasted this lame thinking out of the water in his latest appearance before the House Committee on the Budget. While Greenspan normally avoids the politics of monetary policy, he addressed those issues and gave great credence to Bush's economic agenda.

He indirectly exposed Daschle's obvious political theater, placing the blame of the aforementioned economic problems squarely on "major declines in equity markets, a sharp retrenchment in investment spending, and the tragic terrorist attacks of last September." The effects of which can only be mitigated by tax cuts, not more government spending.

In fact, Greenspan argued that more long-term tax cuts are justified, including the reform of the double taxation of dividends, which Bush is considering. Greenspan reiterated that Bush's tax cut, which he endorsed in front of that same committee early last year, was indeed the right thing to do.

Houston's own soon-to-be-out-of-work Rep. Ken Bentsen asked Greenspan whether he would support delaying the tax cut.

"My own view is, I would prefer not," Greenspan responded.

He noted that it is too late to do so, since businesses large and small have started capital investments and initiated tax strategies on the assumption the tax cut would remain in effect. Daschle incorrectly said Bush is responsible for declining investment, while Greenspan rightly points out that the tax cut has increased such investment, which will boost growth and jobs.

Greenspan exhibited dry mockery for Congress' attempts to circumvent budget rules as "thoughtful initiatives," and said, "The bottom line is that if we do not preserve the budget rules and reaffirm our commitment to fiscal responsibility, years of hard effort could be squandered."

It is crucial to examine his last two points. 

Greenspan calmly asserts the budget should be brought into balance either by limiting spending or increasing revenues, but continues that increasing revenues, delaying the tax cut, is not preferable. Beneath his understated manner lies a clear rebuke to Democratic fiscal strategy and a call to limit spending to control spending, not raise taxes.

House Budget Committee Chairman Jim Nussle pointed out that the House and the president have a budget, while the Democratic Senate lacks a budget but seeks more spending. 

It is amazing that the economy is considered a strong point for Democrats, when their pet policies are the very antithesis of what our economy needs. 

Republicans need to turn this issue to their favor and start convincing the public that Democratic initiatives are indeed bad for the country, and use Greenspan's testimony as support.

Asma, a senior finance major, 
can be reached at thomas_asma@hotmail.com

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