Greenspan Holds Firm

As Bush pushes tax breaks for millionaires that will explode nation’s debt, Greenspan reiterates importance of controlling the deficit

(WASHINGTON, DC) – On the heels of yesterday’s report that budget deficits are $40 billion higher than government projections [CNN, 04/30/03], Federal Reserve Chairman Alan Greenspan stood firm on the importance of avoiding “long-term structural deficits” that jeopardize the nation’s economy. These views come in the midst of an all-out PR campaign by the White House to sell a tax plan that will explode deficits.

“Chairman Greenspan continues to warn against ‘runaway budget deficits,’ yet there is no doubt the Bush plan for massive tax breaks for millionaires will explode our nation’s debt and cost jobs,” said Nancy Duff Campbell, Co-President of the National Women’s Law Center, a co-chair of the Fair Taxes for All Coalition. “Claims that Bush’s reckless tax plan will help the economy don’t pass the laugh test. Even economists working with the White House warn that the deficits caused by tax breaks for the ultra-wealthy will ‘do more harm than good.’”

In an apparent conflict with Bush’s new argument that his tax plan is also a jobs plan that will “give the most oomph to the economy” [Ari Fleischer, 04/22/03], House Financial Services Committee Chairman Mike Oxley (R-OH) conceded “the President isn’t seeking a short-term stimulus” to the economy. Despite the Administration’s recent effort to create an impression that their plan will help the economy now, Oxley argued the tax plan is designed to have a long-term impact. Unfortunately for the American public, the long-term impact will be a drag on the economy and a loss of jobs, according to economists of all political stripes.

“Forget their ‘flood the zone’ strategy,’ proponents of the tax cuts keep moving the goal posts,” said Wade Henderson, President of the Leadership Conference on Civil Rights, a co-chair of the Fair Taxes for All Coalition. “American families are feeling real economic pain, and President Bush has turned a deaf ear in favor of massive tax breaks for the very rich that some now concede aren’t intended to get the economy moving.”

Greenspan: “I haven’t changed my view from where I was at this Committee in February” When Chairman Greenspan last reported to Congress, he “[threw] cold water on Bush arguments for [a] tax cut.” [Washington Post, 02/12/03] What were some of his concerns back then:

  • Greenspan wasn’t “convinced that a new round of tax cuts [was] necessary to bolster the economy,” and urged Congress to “require that any future tax cuts not result in runaway budget deficits.” [Associated Press, 02/11/03]
  • Greenspan said Bush’s tax plan wouldn’t boost the economy enough to reign in deficits, “refut(ing) the idea advanced by some tax cut supporters that the reductions will pay for themselves by boosting economic growth.” [AP, 02/11/03]

    Tax breaks for millionaires will explode the deficit and cost jobs. Yesterday, it was reported that the budget deficit was $40 billion more than predicted by the government. [CNN, 04/29/03] This latest round of tax cuts will further exacerbate already record high deficits forecasted by the Office of Management and Budget. [OMB, Budget of the U.S. Government, Fiscal Year 2004, Historical Tables, Table 1.1, p. 22 (2003). http://www.whitehouse.gov/omb/budget/fy2003/pdf/hist.pdf]

    On the jobs front, Bush’s tax package would actually cost jobs by 2007. According to Macroeconomic Advisers, LLC – the firm that created the computer models used for the White House study –“[Bush’s] tax package would actually do more harm than good…and surging budget deficits [exacerbated by Bush’s tax breaks] would raise interest rates and lower savings rates, while higher investment income would actually discourage job creation.” [Washington Post, 04/29/03]

    Bush tax breaks for millionaires do not get money into the hands of working families. Everyone agrees that American families’ budgets are already stretched thin – additional costs for health care, schools, less income, etc. Unfortunately, half of all income-tax payers would have their taxes cut by less than $100; 78 percent would get reductions of less than $1,000. [New York Times, 02/25/03] Furthermore, only six percent of its tax cuts would be delivered in fiscal year 2003 and only 21 percent by the end of fiscal year 2004. [Center for Budget and Policy Priorities, 04/28/03]

    For more information, please visit the Fair Taxes for All Coalition’s website at www.FairTaxesForAll.org.

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    The Fair Taxes For All Coalition is a massive coalition of coalitions co-chaired by People For the American Way, National Women's Law Center, AFSCME, the Leadership Conference on Civil Rights, USAction, and the Campaign for America’s Future. More than 300 national, state and local groups and coalitions – together representing millions of Americans – have pledged to defeat Bush Administration tax proposals that would take resources from health care, education, Social Security, and homeland security in order to give massive tax breaks to the very wealthiest Americans.

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