Alan Greenspan: Increase taxes

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The U.S. federal budget deficit is so large that the nation must
consider tax increases, including a value-added tax, former Federal
Reserve Board Chairman Alan Greenspan said Friday.
Former Fed Chairman Alan Greenspan is worried about the debt. (Getty
?I don?t like the value-added tax, but it?s the least worst
way? to raise revenue, Greenspan said at forum sponsored by the
Atlantic magazine and the Aspen Institute. He said introduction of a
VAT, or national sales tax, could be paired with broader tax reform
and cuts in federal spending.
Medicare, a federal health program for older Americans, is one source
of budget strain, and Greenspan suggested significantly increasing
co-payments for wealthier Medicare recipients as a way to curb federal
Greenspan expressed concern about the ever-expanding owing borrowing
by the U.S. government, predicting that if it isn?t checked, the
value of the U.S. dollar, compared to gold and others currencies, will
Greenspan doesn?t see inflationary signs yet, but cautioned that the
Fed eventually will have to start unwinding massive financial aid to
U.S. markets that has doubled the size of assets on its balance sheet.
While disinflationary effects of the recession are likely to linger
until sometime next year, giving the Fed some leeway, Greenspan said
the central bank can?t wait too long, ?because that will create a
major increase in inflation? probably in 2012.
?There?s no doubt what has to be done and people at the Fed are
very acutely aware of this,? he said.
Turning to the recent market meltdown, Greenspan said it demonstrated
that capital standards for financial companies were too low and must
be raised. But, he said regulators should not be expected to forecast
or prevent future financial meltdowns, since ?what happens in a
crisis cannot be anticipated? even by the best-informed regulators.
Greenspan defended the use of derivative instruments such as credit
default swaps as an important hedging tool, while urging changes in
the way they are traded and tracked. He also urged policy-makers to
eliminate federal protections for financial firms deemed to be too
large or too important to be allowed to fail, or failing that, to
impose fees or taxes on such firms.
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Saw Peter Peterson on the Charlie Rose show a few months ago.
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spending is truly out of control.
Reply to
Denis G.
========== Dr. Greenspan should stick to playing the saxophone, which from all reports he does quite well.
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From his public statements it appears he continues to be an avid and dedicated ideologue, with his foundational source of inspiration a work of fiction by Ayn Rand [Atlas Shrugged].
Dr. Greenspan was Chairman of the FRB from Aug 1987 through Jan 2006. During this period of time he was unable to recognize *ANY* financial bubble until it collapsed. During his tenure as FRB Chairman, no use was ever made of the power of the FRB to set margin requirements to limit speculation.
Occurring on his watch, with no apparent ameliorative FRB actions or corrective measures [or even notice]:
* Collapse of LTCM hedge fund
* The inflation and collapse of the dot com bubble
The inflation and collapse of residential and commercial real estate bubbles
* proliferation and wide sale of CDOs and derivatives
explosion of "covenant lite" bonds, many PIK [compound interest balloon notes]
* proliferation of "high yield securities" aka "junk bonds, many used in leveraged buy outs and going concern rendering
And many others areas of accountability for a central banker.
It is also well to remember that the VAT is a highly regressive tax in that the people with the least income must spend it all for goods and services necessary to live, while the people on the other end of the income spectrum have traditionally saved much of their incomes, which is not normally covered by the VAT.
Another, even more pernicious problem with the VAT is that it shifts ever more to the cost of government to the individuals and away from the corporations. The corporations elbowed their way to the head of the line when the recovery payments such as TARP were being handed out, but now want their employees and customers to pay their share of taxes...
Unka' George [George McDuffee] ------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?
Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).
Reply to
F. George McDuffee
Taxes WILL go up.
The question is which ones and how high.
I remind everyone that George Bush should have raised taxes and did not.
He left America a 1.3 TRILLION deficit after starting with a surplus of ~1.3 billion.
This was BEFORE the bottom falling out of the economy.
Knowing that taxes WILL be going up, which ones SHOULD go up?
There never was a surplus. And the economy was starting a downward spiral in October, before Bush took office. Bush harmed us by not vetoing excess spending bills.
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The least worst way to get revenue would be a purchase tax. That way, the bureaucrats would have to pay their "fair share", and the "rich" would be deprived of their loopholes. It's the only "fair" tax - if you don't like the tax, don't buy the stuff!
Of course, grocery store food and anything from a thrift shop or liquidator wouldn't be taxed.
But this makes entirely too much sense for anyone in power to even consider it.
Cheers! Rich
Reply to
Richard the Dreaded Libertaria
snip some good supporting points which I agree with
Greenspan should just STFU. The debt is at least partially from trying to stave off the economic collapse his policies nearly created.
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