There's no doubt about it. When Alan Greenspan speaks, it is like when E.F. Hutton speaks: Everybody listens.
They should. Most of the time, the Fed chief is right on the mark. For example, he strongly supported the tax relief plan of President Bush two years ago. He also believes the double taxation of dividends should be removed, as Bush proposes.
But the grenade he dropped (last) week was that he thinks a fiscal stimulus, which the new Bush plan would provide, would be "premature" at this time.
Naturally, the people who want to increase taxes instead of reducing them were ecstatic.
But they reacted too soon. The next day, the sage made it clear that he favors cutting both taxes and spending.
Greenspan, everyone should realize, has inflation phobia. He fears it so much that he raised interest rates back when he thought it might be on the horizon, and probably raised them too far and too fast, possibly helping to bring down the economy. He has lowered them drastically to try and bring it back.
If anything, deflation is a greater threat than inflation at this point.
The modest tax relief proposed would provide a moderate stimulus. It poses little risk of overheating the economy, which is about room temperature right now.
Less revenue also will cool down the spending frenzy Washington has been on since conservative policies balanced the budget.
If Greenspan's words are considered holy writ by the liberals, let us quote one of the most famous Greenspanisms, issued four decades ago. He wrote in Ayn Rand's "Capitalism: The Unknown Ideal," "it is precisely the 'greed' of the businessman or, more appropriately, his profit-seeking, which is the unexcelled protector of the consumer."
America needs a little consumer protection right now, in the form of tax relief.
--Florida Times-Union, Jacksonville
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