Moral Low Ground

Economy

Greenspan Says U.S. Debt Crisis “Imminent”; Urges Congress to End Bush-Era Tax Cuts

Alan Greenspan, former chairman of the US Federal Reserve, has stepped up calls for Congress to allow the Bush-era tax cuts, which benefited mainly rich Americans, to expire, the Wall Street Journal reports.

Greenspan appeared Sunday on NBC’s “Meet the Press” and opined that the risk of a US debt crisis was too big not to do away with the Bush cuts. The US national debt is currently around $14,275,000,000,000 and growing by a mind-blowing $864 million every day. Much of the money is, ironically, borrowed from China in order to buy expensive military hardware designed, in part, to counter China’s rise. It is a ludicrous situation that is threatening to bankrupt the country.

Greenspan is very worried about a debilitating debt crisis. “The crisis is so imminent and so difficult that I think we have to allow the so-called Bush tax cuts to expire,” he said.

The US Treasury estimates that permanently extending the tax cuts, which most Republicans want to do, will cost $3.6 trillion over the next decade. And while most progressives rally around the cry of “tax the rich,” raising taxes on only the top income earners would merely reduce that $3.6 trillion to $2.9 trillion, the White House says.

The solution? Greenspan says everyone should pay higher taxes.

According to the Wall Street Journal, the International Monetary Fund (IMF) has expressed concerns that the failure of the United States to reduce its budget deficit could result in the bond market losing confidence in its ability to do so, resulting in higher interest rates and the increased prospect of global economic destabilization.

Still, Greenspan told ABC that he was “far more optimistic” that the US will solve its fiscal problems than he was months ago.

Last August, Greenspan appeared on “Meet the Press” and refuted the conservative notion that tax cuts pay for themselves through increased economic activity, including higher consumer spending and business hiring. “They do not,” he said, slamming the US policy of funding spending programs by slashing taxes and borrowing money. “And at the end of the day that proves disastrous,” he said. “My view is I don’t think we can play subtle policy here.”

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