Bloomberg News: Greenspan Suggests Letting Bush Tax Cuts Expire

I am favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible.

Milton Friedman

This is a really bad idea:

Greenspan, in a telephone conversation after his Bloomberg TV interview was taped, said his position is that all the expiring Bush tax cuts should end, for middle-class and high- income families alike.

Ending the cuts “probably will” slow growth, Greenspan, 84, said in the TV interview. The risk posed by inaction on the deficit is greater, he said.

“Unless we start to come to grips with this long-term outlook, we are going to have major problems,” said Greenspan, who led the U.S. central bank from 1987 to 2006. “I think we misunderstand the momentum of this deficit going forward.”

Deficit Difficulty

Greenspan said reducing the deficit is “going to be far more difficult than anybody imagines” after “a decade of major increases in federal spending and major tax cuts.”

The economic recovery recently has shown signs of slowing with June growth in private payrolls below forecasts at 83,000, and retail sales declining for the second straight month. Federal Reserve officials trimmed their forecast for economic growth during a June meeting, according to minutes released yesterday.

Of course, Democrats will run with this statement from Greenspan to push the idea we need higher taxes. But, there is another side to this equation. It is called spending cuts.

If you think government spending is going to help the economy, here is a short video from Milton Friedman:

YouTube Preview Image