Financial analysts and journalists are pouring through former Federal Reserve Board Chairman Alan Greenspan’s new book “The Age of Turbulence: Adventures in a New World” with the fine toothed comb they use to go through his Humphrey Hawkins testimony or other pronouncements when as Fed Chief each of his syllables were examined to give a clue of his take on the health of the economy and markets.
According to early reports the current administration gets low marks while President Clinton gets high marks for his budget constraint. Though surprise, a Wall Street Journal piece today states that Greenspan was just as hard on current Democrats. And that is surely true and many people can rightly ask why he wasn’t a little more verbose as Fed Chairman when the Republican Congress were passing and President George W. Bush was signing these enormous spending bills.
At the time in those early years of 2001 and 2002 the Wall Street editorial page had used the phrase, “deficit hawks” to deride anyone criticizing the current administration’s spending habits. And then and now, the administration was using the war on terror as an excuse for higher spending despite it being widely reported that discretionary non-defense spending was growing at a greater rate than defense spending.
Greenspan is quoted in an online story by Bob Woodward, saying, “Deficits don’t matter, to my chagrin, became part of the Republicans’ rhetoric.”
One wondered why Greenspan, who for so many years preached the benefits of fiscal discipline, had grown so silent. Well he is speaking now and the truth is that deficits do matter.
