Just as the President’s commission on government debt gets going, and showing a suspicious co-ordination with the growing Republican-Wall Street campaign to curtail federal debt and wring more money from Main Street in preference to mounting a new attack to stimulate job growth, up pops Alan Greenspan with another piece of sage advice. According to Bloomberg the former Federal Reserve Chair (1987-2006) testified at a Financial Crisis Inquiry Commission in Washington, that the U.S. may soon face higher borrowing costs (i.e., interest payments) on its “swelling debt.” Bloomberg also quoted from Greenspan’s own article in The Wall Street Journal, where he stated
“The United States, and most of the rest of the developed world, is in need of a tectonic shift in fiscal policy… the federal government is currently saddled with commitments for the next three decades that it will be unable to meet in real terms…. (the) very severity of the pending crisis and growing analogies to Greece set the stage for a serious response.”
This from the very man who contributed most to one bubble after another by borrowing more and more and more money from the major savers of the world (who happened to reside in places like China and Japan), the man who created the financing for Bush II’s wars out of thin air, so Bush did not have to raise taxes, and, the man who indeed approved when Bush cut taxes on the wealthiest, despite warnings from many economists, and severe chastisement from the same Austrian economists who are suddenly so beloved of the Tea Party.
Now he tells he’s worried about all that debt, when back during Bush-times he encouraged Vice-President Cheney to pontificate that “deficits don’t matter.” Do his opinions depend on who is occupying the White House, or has Mr. Greenspan suddenly got religion?
Secretary of the Treasury, Timothy Geithner was also quoted in the same article, as saying that “while fiscal tightening is needed over the ‘medium term,’ governments must reinforce the recovery in private demand.” Translation: if we tighten up and pull back on federal spending at this moment, we will abort the recovery and create a double-dip recession. That is exactly what happened to FDR in 1937, when he caved in to Wall Street bankers, and what had been a healthy turn-around in the economy after the 1929 crash suddenly petered out, hard times returned with a vengeance, to be ameliorated only by the return of deficit spending to fight World War II.
The question of how to pull out of another one of disaster capitalism’s crises, the timing and scope of deficit spending, and the invidious attack on such an effort by those who represent the interests of Wall Street and Big Money, and not the interests of average people on Main Street, was addressed in Obessing About the Deficit vs Opportunity Costs. Mr. Greenspan’s comments, and their being showcased in Bloomberg and The Wall Street Journal, are one more indication of the growing campaign, not to “reduce the deficit” so much as to cut what the right-wing calls entitlements, meaning Social Security and health care, and everything else that helps the average American. It is one more shot in the War Against the Middle Class.
We heard no such heart-felt pleas for fiscal restraint when it was a question of running up the bill for military interventionism in Iraq (that’s “defense” in modern parlance), nor when it came to the desperate necessity of bailing out imprudent and greedy banksters. Oh, no, all of that was either State Secrets or Economic Life and Death. The pain of repairing the damage from the reckless creation of bubbles as wrought by such as Mr. Greenspan is not going to be borne by the Big Moneymen who profited from the bubbles on the way up and again on the way down as they burst—– no, the pain is going to be borne by the victims and the little guy—- it must be that the banksters and the Big Money still think we little mice might have a bit of treasure they can squeeze out of us for the big rats to enjoy).
OR: this will be the case unless the administration makes a better effort to get the other side of the argument out into the public domain, and in a more aggressive way than the pale, mousey words of timid Timothy Geithner.