Greenspan testimony points to deepening US fiscal crisis

[joeunderdog]

snip
Even as he put the best possible gloss on the state of the US economy, Greenspan was forced to recognise that the sharp increase in the budget deficit contained dangers both in the short and long term. The deficit, he noted, had risen to $375 billion in the 2003 fiscal year and “appears to be widening considerably in the current fiscal year” with current projections indicating that “very sizable deficits are in prospect in the years to come.”

The imbalance in the federal budgetary situation would soon pose “serious longer-term fiscal difficulties” especially due to the retirement of the “baby-boom generation” in the next few years. “Without corrective action, this development will put substantial pressure on our ability in coming years to provide even minimal government services while maintaining entitlement benefits at their current level, without debilitating increase in tax rates. The longer we wait before addressing these imbalances, the more wrenching the fiscal adjustment will ultimately be.”

snip

BusinessWeek noted that projected deficits over the next decade run to around $2.4 trillion but that if Bush succeeds in his campaign to make the temporary tax cuts permanent, then “the red ink would exceed $5.2 trillion.” In other words, if the tax cuts are made permanent, the deficit will be 100 percent worse than at present.

snip

Greenspan’s vigorous defence of the Bush tax cuts recalls editorial comments made by the Financial Times on the tax cut plan last May. It said that the “lunatics were now in charge of the asylum” with “more extreme Republicans” set on creating a fiscal disaster as way of destroying social welfare programs. “Proposing to slash federal spending,” the editorial noted, “particularly on social programs, is a tricky electoral proposition, but a fiscal crisis offers the tantalising prospect of forcing such cuts through the back door.”

http://www.wsws.org/articles/2004/feb2004/gpan-f16.shtml

[Sagan]

1. Ah, yes... Fiscal crisis...

Funny, I don't remember a fiscal crisis when Chimpy was selected President. We had a surplus.

Now, we are reduced to listening to old man Greenspan tell us we have to make the reckless tax cuts for the wealthy permanent and pay for it by slashing social security.

Awful convenient fiscal crisis.

[joeunderdog]

2. Check your blue chips. Many are down >50% of their market cap.

The stock surge is just a blip, and there's a long way to go on most, especially the NASDAQ (->60%). Debt is at Depression level highs and wages are decreasing by significant margins. job loss is tied to political policy rather than an unexpected short-term issue. It's a house of cards, and the next pres will be left to shuffle.

I'm waiting for the housing bubble to burst before buying in. Call me chicken little, but I think the financial sky will fall within a year.

[Newsjock]

3. And where it lands

I think the financial sky will fall within a year.

Right onto the head of the next Democratic president. Don't think the BFEE hasn't considered this.

[neverforget]

4. Next month starts the fall of the stock market at least according a

family friends newsletter he receives. The author of the newsletter has been very accurate of the rise and fall of the markets according to my family friend. Anyway, he thinks that the market will fall to around 7000 and that gold will skyrocket. For what it's worth.....

[kysrsoze]

5. Too bad Greenspin no longer has the balls to call a spade a spade

He wasn't like this before - they must have gotten to him too.

[Womblestuffer]

6. Hey Dont Worry ..Be Happy!

its all gonna get better