September 16, 2007
Is Bush an Economic Conservative? Does He Analyze?
Greenspan says no, on both counts.
From Ip and Steel in the Wall Street Journal:
In a withering critique of his fellow Republicans, former Federal Reserve Chairman Alan Greenspan says in his memoir that the party to which he has belonged all his life deserved to lose power last year for forsaking its small-government principles.
In "The Age of Turbulence: Adventures in a New World," published by Penguin Press, Mr. Greenspan criticizes both congressional Republicans and President George W. Bush for abandoning fiscal discipline.
Mr. Greenspan, who calls himself a "lifelong libertarian Republican," writes that he advised the White House to veto some bills to curb "out-of-control" spending while the Republicans controlled Congress. He says President Bush's failure to do so "was a major mistake." Republicans in Congress, he writes, "swapped principle for power. They ended up with neither. They deserved to lose."
From the NYT:
Though Mr. Greenspan does not admit he made a mistake, he shows remorse about how Republicans jumped on his endorsement of the 2001 tax cuts to push through unconditional cuts without any safeguards against surprises. He recounts how Mr. Rubin and Senator Kent Conrad, Democrat of North Dakota, begged him to hold off on an endorsement because of how it would be perceived.
"It turned out that Conrad and Rubin were right," he acknowledges glumly. He says Republican leaders in Congress made a grievous error in spending whatever it took to ensure a permanent Republican majority.
But the most telling statement comes from Bloomberg:
Greenspan saved his harshest analysis for the current president. Soon after Bush took office in 2001, the president set about implementing a campaign promise to cut taxes, a policy Greenspan said he believed at the time wasn't well conceived.
"Little value was placed on rigorous economic policy debate or the weighing of long-term consequences," he wrote.
In 2001 testimony before Congress, Greenspan was widely interpreted to have endorsed Bush's proposal to cut taxes by $1.6 trillion over 10 years. In the book, he characterized his testimony as politically careless and said his words were misinterpreted. [emphasis added - mdc].
And so it is, despite all the talk of a surge in tax receipts and the (projected) elimination of the budget deficit, the FY2006 full employment budget balance to GDP ratio is 3 percentage points lower than it was in FY2000, the standardized tax revenues to GDP ratio 1.7 percentage points lower, and standardized expenditures 1.3 percentage points higher (see CBO (Aug. '07)).
The view espoused in bold italics is telling. It confirms yet again the central aspect of policymaking in the current Administration. One doesn't have to agree with the economic views of Greenspan to view with alarm the aversion to analysis. From steel tariffs, tax cuts in 2001 and 2003, the defunding of financial regulation (think OTS), Medicare Part D, to energy policy (such as it is), one can see the consequences of this peculiar characteristic of the Bush Administration.
Indeed, it is this characteristic that explains why we remain in "The last throes of Pomo Macro", just like we remain, some two and one quarter years after Cheney's assertion, in the "last throes of the insurgency".
As social scientists, we should try to explain why the current Administration behaves in this manner. One approach is the capture and ideology perspective of Kalt and Zupan (1984). Although not directly applicable (since their study was of legislative actions), the framework is of interest. If policy is captured by economic interests, then analysis is irrelevant. If ideology is paramount, then again analysis is irrelevant.
Admittedly, the approach is limited because it does not explain why analysis and expertise was held in higher regard during other periods and other Administrations. In other words, time variation in the dominance of capture and ideology -- versus the public interest motivation -- is not explained. This survey suggests some possible explanations, and provides this reading about the importance of understanding why "capture" occurs.
A final, important issue to consider is that of costs of capture. Is capture a big problem? On the one hand, capture could have large distributive consequences when it transfers income from, say,consumers tofirms. This could be enough of a reason for the political principal to want to curb capture. Moreover, capture may cause net wealth losses. Measuring these is another area in which more research should be done.
Posted by Menzie Chinn at September 16, 2007 09:18 AMdigg this | reddit
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Panic, thy name is retail: Despite the credit-market uproar, redemptions from money market funds were described as lower than expected at $915.5 million. Bond funds had $368.1 million in net redemptions excluding reinvested distributions, and Canadian ... [Read More]
Tracked on September 18, 2007 10:26 AM
With reference to the previous "Catch the Wave" thread, I find that I cannot prevent my mind from wandering into the lyrics of the title song from the mid-1960s silly movie "Ride the Wild Surf."
"Ride ride ride the wild surf, ride ride ride the wild surf."
What worries me most flows from the line which immediately follows the above.
"Gotta take that one last ride."
My best guess is that BB and his gang are right now thinking, "maybe we CAN take that one last ride."
("Just one more ride ... this time we promise it will be the last one. Trust us, have we ever conned you before?)
Er ... yes.
And with reference to the instant topic, I believe that you can understand Bush/Cheney/Rove et al if you come to the conclusion that the intended beneficiaries of their policies reside in the top decile of the top quartile of the top quintile of the population (as identified by wealth).
As we develop a deeper understanding of Bush/Cheney (for whom I, with great regret, voted in 2000) I submit that we must conclude that the two men are totally without honor or integrity.
And we are still in their incapable hands for the next sixteen months. A great deal can happen in sixteen months.
Posted by: esb at September 16, 2007 05:09 PM
This administration is the most dishonest, greedy, treasonous, power hungry, nasty, unpatriotic, barbaric, egotistical, Machiavellian, fundamentalist, chronyistic, uncaring, unconstitutional, overspending, incompetent bunch of cretins that ever existed in the 231 years of our precious Republic.
They are not fiscally conservative, nor do they represent conservative Christian values. They really are not Republican. The closest subculture they compare to is the Mafia. Why does the Mafia behave as it does? There lies your answer.
Finally, so much for their "permanent Republican majority." They pushed the pendulum so far to the right they broke it. Couple that with an unpopular war and a possible recession ...I expect a Democratic landslide in 2008 and it may take them decades to see a majority in congress again.
Posted by: NoFate at September 16, 2007 11:44 PM
I think I just heard Ayn Rand throwup. (For those who know.)
Posted by: DickF at September 17, 2007 04:40 AM
Greenspan is right to criticize Bush for the profligate spending. But there would have been nothing wrong with the tax cuts had they been accompanied by modest spending cuts, which should have been a natural for a Republican Congress with decent leadership.
Greenspan comes off kind of weasely. I think the afore-mentioned Rand had him pegged correctly as a social climber. (DickF: Who is John Galt?)
Posted by: algernon at September 17, 2007 06:02 PM
As Reagan showed, taxes and spending are two entirely different issues, and should not be linked in any way.
Should spending have been more restrained? Of course. But does that mean that the tax cuts were not needed or successful. No. They were exactly what was needed at that point in time.
Posted by: Buzzcut at September 18, 2007 09:10 AM