Greenspan's Con Job

[UpInArms]

http://www.thenation.com/doc.mhtml?i=20040322&s=greider

It is not exactly that he lies, but Alan Greenspan certainly ranks among the most duplicitous figures to serve in modern American government. Using his exalted status as economic wizard, the Federal Reserve chairman regularly corrupts the political dialogue by sowing outrageously false impressions among gullible members of Congress and adoring financial reporters. These distortions are not harmless; they become solemn writ for lawmakers and opinionmongers. Greenspan is especially destructive when he opines on public matters outside his supposed expertise as a central banker. His thinking is still anchored by Ayn Rand's brittle social philosophy: Let the strong prevail, let the weak pay for their weakness.

<snip>

Here is the truth: Social Security is not in deficit, not now and not for at least the next forty years. The trust fund will have a surplus next year of $1.8 trillion. In 2011 when, Greenspan warns, the baby boomers will start retiring in large numbers, the surplus will be $3.2 trillion. These stored savings, plus future payroll-tax revenue, are sufficient to pay all retirees the current level of benefits through 2042, according to the fund's very conservative actuaries.

The problem is, the government borrowed this money and has spent it on other projects. But the trust fund, despite what right-wingers like to claim, is not an accounting gimmick. The government is legally obligated to pay back the money (as surely as it is obliged to repay Treasury bonds). The borrowed trillions, in fiduciary terms, belong to the "beneficial owners"-- every worker who has paid higher payroll taxes for the past twenty years.

Greenspan is familiar with the accounting because he was chairman of the bipartisan commission that supposedly "fixed" the Social Security problem back in 1983 by imposing a huge increase in FICA payroll taxes--extra revenue that produced the still-growing surpluses. This historic tax shift (I think of it as the "crime of '83") was most convenient to the Reagan Administration because Reaganomics had just created huge budget deficits by cutting income taxes for the monied interests and pumping up the military budget. The burgeoning surpluses from the Social Security payroll tax would help offset the economic impact of the deficits. Hardly anyone noticed at the time, since Democrats cooperated in the "solution." Now Bush Jr. has done the same thing. And Greenspan is proposing another "fix": Double-cross the workers who paid the extra trillions; don't disturb the new monster tax cuts delivered to the rich. Any con artist would appreciate the bait-and-switch as a nifty piece of work.

...more...

[emulatorloo]

1. I have wondered if Greenspan is doing this to "get" George Bush

If you read Suskind's Price of Loyalty, you will read of many discussions between O'Neill and Greenspan about how to save social security. . .and how to get the Bush Admin to take that on. However, Bush admin was totallly resistant to doing anything about it. So in effect, Greenspan and O'Neill were trying to figure out a way to manipulate admin into doing something. While it is true that both men thought privatizing at least part of SS was the way to go, both O'Neill and Greenspan were very sure of the value and necessity of SS.

So my interp of his comments was that he was calling attention to the problem . . .and that his comments were intended to reflect badly on GWB. JMHO.

[BlueEyedSon]

2. *kick*

:kick: