-- -Time flies like the wind. Fruit flies like a banana. Stranger things have - -happened but none stranger than this. Does your driver's license say Organ -Donor?Black holes are where God divided by zero. Listen to me! We are all- -individuals! What if this weren't a hypothetical question? steveo at syslang.net
---------- Forwarded message ---------- Date: Wed, 12 Feb 2003 15:16:29 +0000 From: [EMAIL PROTECTED] To: [EMAIL PROTECTED] Subject: Greenspan warns, Congress/White House deaf Greenspan, out of character, warns; Congress/White House deaf In short .. kiss SocSec/Medicare goodbye in 2013 .. Excerpts from Forbes: http://www.forbes.com/business/2003/02/12/cx_aw_0212topnews.html Greenspan, normally a political fence-sitter, .. dared to turn Bush's own words back on the president's domestic economic policy .. Deficits of more than $250 billion in 2003 and 2004 .. "..will end this state of relative budget tranquility in about a decade's time," Greenspan said. .. In fact, in a full page ad in yesterday's New York Times, hundreds of economists, including ten Nobel Laureates, echoed Greenspan's doubt. Greenspan boldly called irresponsible any policy that would bring about "the exhausting of the Social Security trust fund." In Full - Greenspan Shoots Blanks Ari Weinberg, 02.12.03, 7:46 AM ET NEW YORK - Alan Greenspan, the usually reserved chairman of the Federal Reserve, is adapting to life during wartime. In the first day of his semi- annual report to Congress on Feb. 11, the United States' highest economic talking head fired from the fiscal conservative cannon--er, canon. But, no matter the truth of his munitions, he ended up shooting blanks. Overshadowed by the Bush Administration's martial tone and an audiotape cameo by Osama bin Laden, Greenspan's caution on budget deficits, national debt and social security liabilities will most likely go unheeded when the Republican- controlled Congress considers President George W. Bush's budget and fiscal stimulus package. Greenspan, normally a political fence-sitter, played directly to the Democrat's weak hand in his prepared testimony and responses. Not to understate the incredible financial risks caused by Iraq and terrorism, Greenspan dared to turn Bush's own words back on the president's domestic economic policy. He even quoted the recently released White House 2004 budget: "The longer the delay in enacting reforms, the greater the danger, and the more drastic the remedies will have to be." A federal budget that figures in deficits of more than $250 billion in 2003 and 2004 is one of those dangerous delays to correcting the potential toppling of the Social Security and Medicare systems. "Short of an outsized acceleration of productivity to well beyond the average pace of the past seven years or a major expansion of immigration, the aging population now in train will end this state of relative budget tranquility in about a decade's time," Greenspan said. When Greenspan himself begins to doubt the benefit of productivity gains, it's time to buckle up. In fact, in a full page ad in yesterday's New York Times, hundreds of economists, including ten Nobel Laureates, echoed Greenspan's doubt. The ad was sponsored by the Economic Policy Institute, which attempts to speak in favor of low- and middle-income Americans--those who would be most affected by cuts in Social Security and Medicare. Greenspan also expressed worry about the rising tide of national debt to gross domestic product, which grew in 2002 for the first time since 1996 and is on track to rise to 68% from 60% by 2008. Greenspan called such a debt increase sobering, given the demographic pressures. "We are all too aware that government spending programs and tax preferences can be easy to initiate or expand but extraordinarily difficult to trim or shut down," he said. So, what does this have to do with Bush's tax plan? Everything. While Greenspan is in favor of eliminating the double taxation of dividends, he said he'd prefer it be done on the corporate level. This means that dividends could be tax deductible, while collecting those profits at the individual level. Additionally, Greenspan boldly called irresponsible any policy that would bring about "the exhausting of the Social Security trust fund." This implies that the current tax cut plan does little to focus on the inevitable. That's because it can hardly see true budgetary outlays, given the U.S. federal government's cash accounting system. If only, for Greenspan's sake, the government ran itself like a corporation truly beholden to shareholders--albeit after Sarbanes-Oxley and the regulatory crackdown. Greenspan said, in light of new laws, that corporate malfeasance won't be a problem for the immediate future. In fact, he doubted that any new corporate tax scams or revenue tricks would have been initiated at all last year. Recently we have seen corporations take actions that have upset either employees or shareholders in the short term, all for their perceived long-term benefit. Sure, General Electric (nyse: GE - news - people ) employees would rather not pony up for the jump in medical costs. And, to be sure, IBM (nyse: IBM - news - people ) and General Motors (nyse: GM - news - people ) shareholders couldn't have been too thrilled about the pension contributions both companies had to make at the end of the year. Still, these moves were necessary actions to satisfy explicit and implicit agreements--either protecting margins or upholding a corporate contract. For Greenspan, it appears that submitting and passing an unbalanced budget is a step away from that direction for the government. As Senator Jon Corzine (D- N.J.), the former co-chairman and co-chief executive officer of Goldman Sachs (nyse: GS - news - people ) mused about "tax cuts during a great national challenge," it seems that the Federal Reserve, in its interest of long-term national prosperity, is wondering the same thing. But neither the Democrats nor the Federal Reserve's concerns can be heard in the trenches. -- - Chris To unsubscribe, send email to [EMAIL PROTECTED] with body "unsubscribe man-bytes-dog" (the subject is ignored).
