Don't Mess With Taxes

Is it just me, or is Alan Greenspan taking over the "Crazy Old Uncle in the Attic" title from Ross Perot?

Lately, the 84-year-old former Federal Reserve chairman has been talking a lot to the press.

And every time I see him or read a story in which he's featured, I also see in my mind's eye that shambling relative at the family reunion who has to loudly include his two-cents in every conversation all the whippersnappers are having.

Now I'm not saying that people of a certain age don't have worthwhile insights to share. I myself am getting to that certain age much more quickly than I'd like.

But there comes a point when the advice of that sweet old aunt or uncle really doesn't add much to the family discourse. Sadly, you start to wonder whether he or she really has anything to say or is just piping up for attention's sake.

It seems to me that might be the case of Uncle Alan as he putters around in retirement.

First, as Congress was fighting over debating financial regulations, Greenspan, despite his close ties to the world's financiers, said he thought more and tighter rules were a good idea.

Last Sunday, he took to a morning news show to comment on the state of the U.S.housing market and its power to produce a double-dip recession.

Now he's chimed in on Dubya's expiring tax cuts. It seems that today Uncle Alan is against them. 

Photo courtesy AlanGreenspan.org

This reversal comes after Greenspan implicitly supported them back in 2001 and 2003 when they were instituted.

After nine and seven years of reflection, Greenspan has decided that deficits do matter.

"I'm in favor of tax cuts, but not with borrowed money," Greenspan told the New York Times in a telephone interview Friday. "Our choices right now are not between good and better; they're between bad and worse. The problem we now face is the most extraordinary financial crisis that I have ever seen or read about."

Wow! The man who was shocked, shocked he said, that Wall Street could be so greedy certainly is seeing things differently since he stepped down from the board that controls money in the United States.

Greenspan is not convinced by arguments from both sides of the political aisle that raising tax rates will stall the current shaky economic recovery. Rather, Uncle Alan says we should just let all of the tax cuts expire on Jan. 1, 2011.

Yep, hike them all, he says, not just the tax rates that affect the highest income earners.

Greenspan also told the newspaper that the tax cuts should have adhered to so-called pay-go rules, which require that any tax cuts or new spending be offset by other taxes or reduced spending elsewhere so as not to add to the federal deficit.

Good luck getting Congress to listen to you like they used to on that one, Uncle Alan.

Greenspan's reputation took a hit after the Fed under his control was oblivious to the real estate bubble and the subprime mortgage lending practices that contributed greatly to the debacle. That came on the heels of the political cover he provided supporters of Dubya's cuts by coming out when that Administration was in the White House for tax cuts in general.

But, notes the Times, Greenspan's "perspective, born of decades of data-crunching, has made him a figure revered by many in the markets. His opinion still carries considerable weight and his views on the tax cuts will reverberate in the debate next month in Congress."

Maybe.

But then again, maybe old Uncle Alan's mutterings are just not what they used to be.

Related posts:

• Tax cuts or total tax reform?
• Implicit support for continuation of the first-time homebuyer credit?
• Alan tells all!
• Economy killing home tax break, redux
• Did the home sale tax exclusion kill the economy?
• IRS could have prevented subprime mess

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