Administration Apologies

It's difficult to read Federal Reserve Chairman Alan Greenspan’s economic recommendations this week as anything other than apologies for the Bush administration’s reckless goal of permanently reducing tax burdens on the wealthy while forcing widespread cuts in critical public programs like Social Security and Medicare. Like Bush, Greenspan uses feats of logic to defend ideological economic positions. In 2001, tax cuts were necessary to reduce government revenue; now permanent tax cuts for the rich are necessary to increase government revenue. In 2001, we could afford large tax cuts and maintain Social Security; now we can only afford permanent tax cuts and must cut Social Security. With President Bush and Chairman Greenspan at the helm, the nation should prepare for a huge transfer of wealth from future retirees to the very rich.

• Tax cuts for the wealthy – not spending – are primarily responsible for the nation's deteriorating financial situation. Both the president and Chairman Greenspan refuse to acknowledge economic reality. Non-security discretionary spending has remained basically flat over the past three years with necessary increases in national security spending to fight the war on terrorism. At the same time, the administration’s three rounds of tax cuts aimed at the top 2 percent of earners have significantly reduced government revenues and will continue to do so far into the future. The declining revenue from the administration’s tax cuts – not spending on domestic needs – is forcing large, sustained budget deficits.
• Tax cuts for the wealthy created the deficit, but Social Security cuts will pay it off. Expressing concern about mounting budget deficits, Greenspan's solution is to cut future Social Security benefits for retirees. But Social Security is an entirely separate and unrelated program that is currently running a surplus. In effect, Greenspan wants to raid Social Security to pay off wealthy families. This may suit the Bush administration and its benefactors just fine, but it spells disaster for America’s future retirees – many on fixed incomes – who will have to pay the price of massive tax refunds to the wealthiest Americans.
• The Bush administration needs to come clean on Social Security. The Bush administration punted on Greenspan's recommendations, recognizing the danger of touching the third rail in American politics. But the administration knows full well that the only way to pay off its permanent tax cuts for the wealthy is to cut spending dramatically and siphon funds from Social Security. The public deserves to know exactly how the administration plans to solve these financial conflicts.

Daily Talking Points is a product of the Center for American Progress, a non-partisan research and educational institute committed to progressive principles for a strong, just and free America.