Blogs > HNN > Greenspan lets the cat out of the bag

Oct 4, 2007 10:01 am

Greenspan lets the cat out of the bag

It's a "now it can be told" moment.

In his stunningly frank and honest memoir Alan Greenspan reveals what the Republican game plan was with tax cuts. And it was just what Democrats all along supposed. Tax cuts were the party's ticket to success at the polls and to hell with the budget consequences.

Greenspan relates a conversation he had with Jack Kemp, the Buffalo congressman who championed tax cuts and ran for vice president with Bob Dole. Kemp admitted in a conversation with Greenspan in the late seventies that large tax cuts would be irresponsible, but said he favored them nonetheless. The Democrats were always being irresponsible, increasing spending to win elections. When the Republicans eventually came to power they'd usually cut spending to balance the budget, earning them respectability but losing them votes. It was time, Kemp told Greenspan, for the Republicans to get a little irresponsible.

Greenspan says he was appalled at Kemp's logic. But few other Republicans were, it would appear. So for 25 years they championed tax cuts and more tax cuts. For much of that time they also won election after election. Tax cutting was very good politics.

You can almost wholly explain Republican success at the polls during that period by tax cuts and two or three other things: the move of the country to the suburbs, the Democratic Party's championship of civil rights, and Ronald Reagan's winning personality.

Thank you Alan for helping us all see more clearly what has been happening.

In fairness Kemp was right about the Democrats' strategy. It was, as Ickes confessed in the 1930s, to spend and spend and elect and elect.

So both parties have adopted politically inspired policies to draw votes.

You're shocked?

Republicans though happened to be wrong that the Democrats were bankrupting the country. Democrats never went that far. While they routinely ran deficits the deficits by and large were relatively small (except during WW II, of course).

Republicans on the other hand ran enormous deficits during two administrations: Reagan's and now Bush's.

Reagan's deficits had to be offset with tax increases starting in 1983 with the largest tax increase ever in American history (up to that time). But of course Reagan didn't call it a tax increase. He called it social security reform. (Greenspan, by the way, headed the commission that drafted the proposals.) Bush I eventually paid the political price for Reagan's deficits by backing the tax increase of 1990 that roiled Republican waters. ("Read my lips. No new taxes.")

Someone is going to have to pay the price for Bush's tax cuts. Who? We'll see.

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