Bloomberg News: Bush tax cuts that passed in 2001 and 2003 gave middle- income earners a 10 percent rate on couples’ first $14,000 in income; subsidies for college expenses, a higher child-care credit and relief from the marriage penalty. Keeping those and other reductions for the 130 million households earning less than $250,000 would cost about $300 billion a year, according to the congressional Joint Committee on Taxation.If the tea party patriots had their way, they would do away with their own $300 billion deficit inducing tax cuts. Oops!
The cost of continuing the tax cuts for the most prosperous Americans would be about $55 billion for one year.
Greenspan’s comments on taxes, to be broadcast today and over the weekend, place him in the middle of an election-year struggle over extending Bush’s trillions of dollars of tax cuts.Here's a sample of the Bloomberg interview with Greenspan from Think Progress.
You would never know how wrong Republicans were in calling for the extension of the Bush tax cuts, unless you were to look deeper than the ideological smoke screen presented by the free market conservative leadership. Check out Greenspan admitting how wrong his ideology was, and compare it to the GOP's calls to keep those flaws in place.
In an interview with Bloomberg News’ Judy Woodruff, former Federal Reserve Chairman Alan Greenspan went a step further, calling for all of the tax cuts to expire, essentially sending the tax code back to 2001:
WOODRUFF: On those tax cuts, they are due to expire at the end of this year. Should they be extended? What should Congress do?
GREENSPAN: I should say they should follow the law and let them lapse.
WOODRUFF: Meaning what happens?
GREENSPAN: Taxes go up. The problem is, unless we start to come to grips with this long-term outlook, we are going to have major problems. I think we
misunderstand the momentum of this deficit going forward.
As Matt Yglesias has pointed out, “in 2001 Alan Greenspan warned the country against the prospect of budget surpluses and debt reduction and argued that only large regressive tax cuts could save the country from this specter.” It is “far better, in my judgment, that the surpluses be lowered by tax reductions than by spending increases,” Greenspan said.
Of course, the Bush tax cuts are now one of the biggest drivers of the country’s long term deficits, amounting to more than $3 trillion in deficits over the next ten years.
While Greenspan is now expressing concern that “we misunderstand the momentum” of the deficit, less than a decade ago, he was claiming that we misunderstand the momentum of the surplus. In fact, as the New York Times reported at the time, Greenspan said that “without a tax cut the surplus might be so big that it would force the government to begin buying stocks and bonds on Wall Street in as little as five years, a development he said would be harmful to the free enterprise system.”
In 2005, Greenspan said that “it turns out that we were all wrong” when it came to his 2001 support for the tax cuts (to which then Sen. Hillary Clinton shot back “just for the record, we were not all wrong, but many people were wrong”). He has also famously repented for his deregulatory zeal during the 1990’s, saying “those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.”