Naomi Klein Debates Alan Greenspan

from Democracy Now!, via AlterNet:


Naomi Klein Debates Alan Greenspan

By Amy Goodman, Democracy Now!. Posted September 25, 2007.


Naomi Klein goes head to head with Alan Greenspan on the Iraq war, Bush's tax cuts, economic populism, crony capitalism and more.



AMY GOODMAN: As the credit crisis continues to grow and the US dollar hits a new low, we turn today to the former Chair of the Federal Reserve, Alan Greenspan. Alan Greenspan headed the central bank in the United States for almost two decades. He was first appointed to this position in 1987 by President Ronald Reagan. Greenspan retired in January 2006, after deciding the fate of national interest rates under four different presidents. Dubbed "the Maestro," he was widely regarded as one of the world's most influential economic policymakers. He has just written a new 500-page memoir; it's called The Age of Turbulence: Adventures in a New World.

Alan Greenspan joins us now on the phone. And in our studio we're joined again by journalist Naomi Klein, author of The Shock Doctrine. We welcome you both to Democracy Now! Welcome, Alan Greenspan.

ALAN GREENSPAN: Thank you very much. I'm delighted.

AMY GOODMAN: It's good to have you with us. You worked with six presidents, with President Reagan, with both President Bushes. You worked with President Ford, and you worked with Bill Clinton, who you have called a Republican president; why?

ALAN GREENSPAN: That was supposed to be a quasi-joke.

AMY GOODMAN: Talk about it.

ALAN GREENSPAN: Well, Clinton?

AMY GOODMAN: Yes.

ALAN GREENSPAN: Well, I stated that I'm a libertarian Republican, which means I believe in a series of issues, such as smaller government, constraint on budget deficits, free markets, globalization, and a whole series of other things, including welfare reform. And as you may remember, Bill Clinton was pretty much in the same -- was doing much that same agenda. And so, I got to consider him as someone -- as he described it, we were both an odd couple, because he is a centrist Democrat. And that's not all that far from libertarian Republicanism.

...(snip)...

NAOMI KLEIN: Well, I would just add that it's quite surprising, actually, that Mr. Greenspan is unaware of this scandal around Iraq's missing billions, because Paul Bremer had to testify before Congress and was asked directly about those missing billions. It's been the subject of very high-level investigations. There is a huge paper trail around it. So this is hardly a secret, and it's hardly just a matter that's confined to Vanity Fair. This is --

ALAN GREENSPAN: Oh, I'm not saying that the losses are not real. I think they are, because, obviously, we can't account for all the oil revenues. I'm just merely saying it's not something which was directly related to any of the actions which the Federal Reserve Bank of New York, to which we were referring, was involved, as far as I know.

AMY GOODMAN: Well, I wanted to move forward to your work as head of the Fed, as head of the Federal Reserve Bank, and ask you about that piece by Paul Krugman called "Sad Alan's Lament," that goes to that issue of supporting President Bush's tax cuts. In his piece, Paul Krugman says, "Mr. Greenspan has just published a book in which he castigates the Bush administration for its fiscal irresponsibility.

"Well, I'm sorry," says Paul Krugman, "but that criticism comes six years late and a trillion dollars short."

He says that "Mr. Greenspan now says that he didn't mean to give the Bush tax cuts a green light, that he was surprised at the political reaction to his remarks. "

He goes on to say the first big chance you had to clarify yourself came a few weeks after your initial testimony in 2001, when you appeared before the Senate Committee on Banking, Housing and Urban Affairs.

He says that, again and again you were offered the opportunity to say something that would help rein in runaway tax-cutting; each time evading the question, often replying by reading from your own previous testimony.

He said, "If anyone had doubts about Mr. Greenspan's determination not to inconvenience the Bush administration, those doubts were resolved two years later, when the administration proposed another round of tax cuts, even though the budget was now deep in deficit. And guess what? The former high priest of fiscal responsibility did not object."

And he goes on from there. He says in 2004, you "expressed support for making the Bush tax cuts permanent -- remember, these are the tax cuts he now says he didn't endorse -- and argued that the budget should be balanced with cuts in entitlement spending, including Social Security benefits, instead. Of course, back in 2001 he specifically assured Congress that cutting taxes would not threaten Social Security."

Your response, Alan Greenspan?

ALAN GREENSPAN: Well, I find it very unfortunate. Paul is a good economist. I have known him for years. He is wrong as fundamentally in many of the facts -- in fact probably all of the ones you've just cited. First of all, I was in favor of tax cuts of any type when it looked as though, according to all the technical experts, we were confronted with very large potential increases in surpluses. If we allowed those surpluses to run when the debt of the United States essentially went to zero, we would find that the federal government was beginning to accumulate huge amounts of assets of corporate business. There was to be no alternative to that. And if you look at the possibilities of what Lyndon Johnson or Richard Nixon would have done under those circumstances, it becomes extremely scary. It was only when it appeared that the forecasts were false, that, indeed, we were not running in -- or not likely to run into these large surpluses, and, indeed, they disappeared.

At that point, I reverted to my older position: namely, I was in favor of tax cuts, but only if they are matched by cuts in spending. And I, therefore, reverted to that position in congressional testimony in 2002 and 2003, in fact, to the point where I recall a number of congressmen asked me, "Do I understand you correctly? You're saying that you are in favor of the tax cuts, but only if spending is cut. If spending is not cut, were we to read from you that you are not supporting the tax cuts?" And I said, "That is correct." So Paul Krugman's view that somehow I didn't change my mind until after I got out of office is factually false. And, indeed, I did change my mind. I changed my mind in 2002 and 2003, largely because the whole notion of which fundamentally got me in favor of significant tax cuts without offsetting expenditures was a very special event which probably had not occurred in the United States for 150 years -- namely, division of our total federal debt effectively going to zero.

AMY GOODMAN: Naomi Klein?

NAOMI KLEIN: Just another piece of the puzzle here that I think is important to remember is that, Alan Greenspan, in your book, you make it clear that you are ideologically very much a supporter of the principle of privatizing Social Security and, in fact, were very disappointed that the Bush administration did not pick this up after the elections in 2000. Even though they hadn't campaigned on privatization of Social Security, you felt that they should have pushed this forward. So doesn't creating a shortfall because of tax cuts bolster the case for privatization of Social Security that you have written you are an ideological supporter of? ......(more)

The complete piece is at: http://www.alternet.org/story/63480/?page=1

Allen Greenspan was on the phone.

Naomi Klein had Greenspan completely confused and off balance. It was indeed great.