Greenspan's Warning on Deficit Ignore His Role in Its Growth

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That's the only possible reaction to Federal Reserve Board Chairman Alan Greenspan's conclusion last week that the massive federal budget deficit accumulated under President Bush was "unsustainable." Declared Greenspan: "The principle that I think is involved here … that you cannot continuously introduce legislation which tends to expand the budget deficit."

That would be an entirely reasonable — even urgent — warning from someone who didn't bear so much responsibility for the problem he's describing. Greenspan lamenting higher deficits is like New York Yankees owner George Steinbrenner complaining about inflated baseball salaries.

Let's recap. When Bush was elected, the nation had enjoyed three consecutive years of federal budget surpluses under President Clinton. The Congressional Budget Office projected that the government was on track to amass surpluses large enough to pay off the publicly held national debt by 2008. That would make the nation debt free for the first time since the presidency of Andrew Jackson.

Greenspan had reliably supported this fiscal discipline under Clinton. But after Bush's election, Greenspan bent to the prevailing wind. Within days of Bush's inauguration, he gave his seigniorial blessing to tax cuts in testimony before the Senate Budget Committee.

As Bruce Bartlett, a leading conservative economist, wrote at the time: "With Greenspan's support … the last substantive barrier to tax reduction has evaporated." And Congress, with Greenspan's critical reassurance, passed the largest of Bush's massive tax cuts that year.

http://www.latimes.com/news/nationworld/nation/la-na-outlook7mar07,1,1845729.column?coll=la-headlines-nation&ctrack=1&cset=true