Greenspan Tells All - a Little Late

In Hans Christian Andersen's fairy tale, two fraudsters convince a gullible emperor that they are weaving him a beautiful new outfit, when in fact they are weaving him nothing at all. It takes a small, innocent child to point out that the emperor is in fact nude as parades down the avenue.

Well, no one would ever call Alan Greenspan totally innocent, although he is small in stature, although certainly not in influence.  As chairman of the U.S. Federal Reserve for nearly two decades, he has just published a long-awaited memoir that is harshly critical of President Bush, Vice President Dick Cheney and the Republican-controlled Congresses of recent years. He says the GOP abandoned their party’s conservative principles on spending and deficits and harmed the national economy for years to come with continuing deficits.

Well, duh! Hardly a breaking news story, except that it is Greenspan who says it -- but why wait until now, after all those times when he might have made the same point as a means to stop all that orgy of Republican spending and deficits. In the 500-page book, “The Age of Turbulence: Adventures in a New World,” Mr. Greenspan describes the Bush administration as so captive to its own political operation under Carl Rove that it paid little attention to fiscal discipline, throwing out the party's long standing allegiance to balanced budgets and pay-as-you-go spending.

Perhaps Greenspan's toughest criticism: “They [the Republicans] swapped principle for power. They ended up with neither. They deserved to lose” in the 2006 election, when they lost control of the House and Senate, he said.

There is no doubt, based on polls of Republicans, that one of their greatest disappointments in the Bush administration has been the huge deficits and new entitlement programs they proposed, such as the trillion dollar Medicare-Medicaid drug program for seniors. Indeed, President Bush has never vetoed one bill based on excess spending, allowing Republicans in Congress to add thousands of pet project earmarks to numerous appropriation bills, running into many billions of dollars. So rampant has been this spending, the earmarks became a national scandal and political issue skillfully used by the Democrats in the 2006 elections.

Some economists argue that Mr. Greenspan deserves considerable blame for the current deficits, not only because he failed to speak out in a timely fashion, but because the Fed slashed interest rates to rock-bottom lows and kept them there for three years after the stock market collapse and the recession in 2001.

Greenspan has long been known as a libertarian and a Republican, indeed in his youth he was a disciple of the late Ayn Rand, the founder of the so-called "objectivist" movement and a stout defender of the gold standard backing for the U.S. dollar. But once in power at the Fed, he showed great facility for getting along with free spending presidents, without criticizing them. He even endorsed President Bush's tax cuts which undoubtedly have contributed to the massive deficits.

So Greenspan has pointed out, 18 months after leaving office, that the Republican emperor has no clothes when it comes taxes and spending. But where was he when the GOP and the country needed him to speak? No doubt his belated stance will sell books.