Did Greenspan Kill Bush's Tax Cut Today?
Did Greenspan’s testimony seriously harm the chances for Bush to get his full tax cut, or even $550 billion of it? That is the question in Washington and on Wall Street tonight after the Fed Chairman’s testimony today wherein he stated that although the economy is poised for a rebound, there is no need for a tax cut of any size, unless offset by spending cuts.
Will this firm up the votes of moderates resisting White House and Cato Institute pressure to go along with Bush’s full tax cut? More importantly, will Greenspan’s testimony increase the chances of there being no tax cut at all, since waivering Senators can now hide behind the Chairman's assessment in opposing the White House.
And notice how shrewdly Greenspan poured water on the supply-siders’ recent recantation of the evils of deficit spending by trotting out the Fed’s own study which shows the age-old impact of higher deficits on interest rates. I wonder if the White House knew of such a study before today’s testimony.