- The Washington Times - Monday, March 7, 2005

When Senate Minority Leader Harry Reid last week referred to Federal Reserve Chairman Alan Greenspan as “one of the biggest political hacks” in Washington, the Nevada Democrat demonstrated just how low the level of political debate has descended in the nation’s capital.

Mr. Reid leveled his political hatchet during a CNN interview on Thursday afternoon, the day after Mr. Greenspan testified about fiscal policy before the House Budget Committee. On Sunday morning, Sen. Richard Durbin, the second-ranking Democrat in the Senate, appeared on NBC’s “Meet the Press.” In 2000, he was among the 39 Democratic senators (and 50 Republicans) who supported Bill Clinton’s second re-nomination of Mr. Greenspan to remain as Fed chairman. Asked Sunday to comment on Mr. Reid’s remarks, Mr. Durbin said, “Well, I will tell you I think he’s gone too far.” But Mr. Durbin wasn’t talking about Mr. Reid. He was talking about Mr. Greenspan.

Messrs. Reid and Durbin clearly were bitter over Mr. Greenspan’s support for personal retirement accounts as part of a reform package to address Social Security’s unfunded liability. If tax increases could solve Social Security’s problems, then there would be no need to re-visit the retirement program two decades after payroll taxes were raised in 1983 to address the issue. In his support for personal retirement accounts, Mr. Greenspan, who headed the bipartisan Social Security commission in 1983, is undoubtedly affected by the long-run deterioration of Social Security barely two decades after increases in both taxes and the retirement age supposedly fixed the retirement system.

What has also upset Messrs. Durbin and Reid was Mr. Greenspan’s support for tax cuts in January 2001. At the time, the Congressional Budget Office was projecting a 10-year cumulative budget surplus of $5.6 trillion. The newly inaugurated President Bush won the election in part on his plan for a 10-year, $1.6 trillion tax cut, which would have returned less than 30 percent of the projected surplus to taxpayers.

Now Messrs. Reid and Durbin are blaming Mr. Greenspan for the budget deficit. Yet, it has been Mr. Greenspan who for years now has repeatedly beseeched Congress to re-instate the deficit-limiting discretionary spending caps and the PAYGO provision for tax cuts and entitlement spending. Both were first implemented in the 1990 Budget Enforcement Act, but they were allowed to expire at the end of fiscal 2002, despite Mr. Greenspan’s plaintive appeal to retain them. PAYGO required offsetting tax increases or spending cuts for any bill that reduced taxes or increased entitlement spending.

It is worth noting that the Bush White House and the vast majority of Republican members of Congress strenuously oppose applying PAYGO to tax cuts. Nevertheless, as recently as Wednesday, in answers to questions from House Budget Committee Chairman Jim Nussle and ranking Democrat Rep. John Spratt, Mr. Greenspan — not once, but twice — emphatically repeated his support for applying PAYGO to tax cuts. That includes not only extending the 2001 tax cuts but also extending the 2003 reduction in the double taxation of dividends, a policy Mr. Greenspan has long endorsed. In both instances, it bears repeating, Mr. Greenspan was advocating policies that the White House and most Republicans strongly opposed. Some political hack.

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