Issue #38
Last Update May 19, 2005
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National Translating Greenspan by Sten Grynir Chutzpah is a word Alan Greenspan seems to understand very well. Like the man who killed his parents and pleaded for leniency on the grounds that he was an orphan, Mr. Greenspan helped create the current huge deficit and now pleads for fiscal responsibility when funding Social Security. His former support of the profligate Bush tax cuts destroyed his credibility; there is no reason to listen to him now when seeking to find a method of ensuring the retirements of the baby boom generation.
Having assisted in the looting of our tax revenues for the benefit of the wealthy, Greenspan has the gall to say, “As a nation, we owe it to our retirees to promise only the benefits that can be delivered.” Translation: “Tough luck, suckers. We got to the money before you, and we're going to keep it.” The very act of creating the tax cuts substantially reduced the government's ability to deliver benefits.
“If population over 65 years of age doubles by 2035, federal deficits will substantially increase”, Greenspan told a conference sponsored by the Federal Reserve Bank of Kansas City this month. “But how these deficit trends are addressed can have profound economic effects.” Translation: huge deficits that benefit the top 1% of the economy are stimulatory, but smaller deficits of that benefit the broad population inhibit growth and are bad for the economy. Pressing for benefit formulas to be adjusted to reduce the rise in entitlements, Greenspan noted that “early initiatives to address the economic effects of the bay boom could smooth the transition to a new balance between workers and retirees.” Translation: let the burden stemming from reduced tax revenues fall on workers due for retirement, rather than wealthy individuals who benefited from the transfer of wealth that has taken place in our economy over the last 3 ½ years.
“Increasing payroll tax contributions could make the problems worse, by possibly reducing the incentives for workers to continue working.” Since most workers work because they have to, it's not clear what the translation of this is. The most likely translation is: upping the percentage taken out of worker's paychecks is not politically feasible; but don't you dare remove the income cap (currently $87,000) above which no more FICA is taken out, for fear that high earners will take their marbles and go home. This threat, that even moderate taxation makes people unwilling to work, has been proven false so frequently by history that propounding it is a good indicator of intellectual dishonesty. During the 1950s, for example, marginal tax rates were above 90% once a sufficiently high income level had been achieved, and capital gains rates were much higher than today as well, yet there is no record of stock brokers refusing to work, or of executives retiring because the extra few dollars they would earn in increased compensation weren't worth it. People, especially those at high income levels, work because it's the most exciting game in town; money is just a marker in the game, and gross income gives as good bragging rights as net income, once a certain take-home level has been passed.
Only Mr. Greenspan's undeserved position as Chairman of the Federal Reserve and the power that such a position bestows make it necessary for us to pay any attention at all to his pronouncements on Social Security. Surely his record over the past 3 ½ years has disqualified him as an economist whose views are to be respected.
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