Greenspan, Stockman Oppose Republicans' Proposed Tax Cuts

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As Fareed Zakaria explains, extending the Bush tax cuts may sound on its surface like maintenance of the status quo. But, in fact, it is more accurately understood as a radical, expensive tax cut. When President Bush proposed the tax cuts he chose to sunset them to reduce the putative price. Republicans were happy to reap that political benefit, but now they don't want to pay the policy price. If Congress does nothing, the taxes revert to their Clinton-era levels. If you don't remember the Clinton era, it featured record economic growth and a budget surplus. The Bush era that followed the tax cuts had a mixed economic record and a massive increase in the structural budget deficit, which is more attributable to the tax cuts than any other single factor.

With that record—and the traditional conservative concerns about deficits causing inflation—in mind, leading former Republican administration economic experts have been calling on Congress not to extend to the Bush tax cuts for the wealthiest Americans, as Democrats propose. On Sunday it reached fevor pitch with former Reagan Office of Management and Budget Director David Stockman declaring in a New York Times op-ed that the current deficit is primarily the fault of Republican policies, and that the GOP must return to its fiscally responsible roots.

"It is therefore unseemly for the Senate minority leader, Mitch McConnell, to insist that the nation's wealthiest taxpayers be spared even a three-percentage-point rate increase," writes Stockman. "More fundamentally, Mr. McConnell's stand puts the lie to the Republican pretense that its new monetarist and supply-side doctrines are rooted in its traditional financial philosophy."

Meanwhile on NBC's Meet the Press, Alan Greenspan, the former Federal Reserve chairman who famously idolized libertarian Ayn Rand, echoed Stockman's sentiments. "I'm very much in favor of tax cuts, but not with borrowed money, and the problem that we have gotten into in recent years is spending programs with borrowed money, tax cuts with borrowed money," said Greenspan. "And at the end of the day that proves disastrous."

And former George H.W. Bush economic adviser Bruce Bartlett, while endorsing an extension of the tax cuts until the economy has more fully recovered, recently ripped to shreds the GOP contention that the Bush tax cuts did not dramatically decrease federal revenue.

The double-whammy of eminent Republicans attacking the Republican congressional caucus in official Washington's two most high-profile venues may shift the terms of the debate. Greenspan famously endorsed the Bush tax cuts in 2001, and was widely viewed as having given them mainstream respectabliity. Not this time.

Greenspan, Stockman Oppose Republicans' Proposed Tax Cuts | U.S.