Wednesday, September 19, 2007

My Old Pal Al

Former Federal Reserve Chairman, and economic policy wonk, Alan Greenspan has a lot to say lately. So much so, that he has written a book entitled "The Age of Turbulence". In the book, he claims the President's Economic and Budget policies have been "irresponsible".

Not so, says long time friend, Vice President Dick Cheney. In an Op Ed piece
in the Wall Street Journal, VP Cheney, whose fondness for Greenspan is apparent
in the article, remembers a breakfast meeting with then President Elect Bush, in
which Greenspan accurately predicted the burst of the so-called "dot com" bubble,
warning then President Clinton, of the economic slow down that was to come in
the technology sector. President Clinton ignored Greenspan's warnings and the
slow down led to a massive recession.

So is Greenspan's assessment of President Bush's fiscal policies on the mark, or
is Mr Greenspan losing his Midas touch?

In his book, Greenspan makes the case that President Bush lacks discipline
and hasn't been aggressive enough in reigning in spending and reducing tax cuts.
True, the President is far from being the second coming of Reagan, but the
600 pound elephant in the room Mr. Greenspan seems to have completely
ignored, is 9/11.

The economic fall out from 9/11 was unprecedented. Within the proceeding 3
months, one million Americans were jobless. Trading was suspended, vacations
cancelled, retail sales slumped, and thousand of flights were cancelled. The economic
impact was swift, and merciless.

Despite these challenges, Cheney asserts that Bush was prudent, but far from
timid, and certainly not irresponsible. Despite the seemingly insurmountable challenges,
President Bush pushed ahead with his tax cuts, prodding the sagging economy forward,
with income to the treasury at 12 to 15% annual increases, and a six year, unprecedented
economic growth spurt.

To be sure, even before 9/11 there was a chorus of conservative voices accusing the
President of not being aggressive enough on the subject of tax cuts, mine being one of them.
But given the challenges of juggling a budget in the midst of a costly war, President Bush
has succeeded where any other President would have failed.

Mr Greenspan may indeed be the Guru of the Federal Reserve, but as for his recent tome,
he has come in a penny short, and a pound shy.

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