Greenspan Says He Expects Tax Increases
Federal Reserve Chairman Alan Greenspan said yesterday, for the first time explicitly, that he expects tax increases to be part of any eventual agreement to reduce the federal budget deficit.</br></br>Greenspan, appearing before the Senate Budget Committee, also acknowledged that his support for tax cuts in early 2001 unintentionally led to policies that helped swing the federal budget from surplus to deficits. In pointed comments, Greenspan addressed recent Democratic critics who have sought to blame him for the return to deficits.</br></br>Greenspan reminded lawmakers that government economists at the time predicted budget surpluses "as far as the eye can see." Yet Greenspan had warned then in congressional testimony that the forecasts might be wrong, and he recommended some "trigger" mechanism that would limit the tax cuts if certain budget targets were not met.</br></br>Greenspan said he thinks "it's frankly unfair" for critics to blame him now for the fact that Congress chose to "read half [his] testimony and discard the rest."</br></br>Sen. Paul S. Sarbanes (D-Md.) said he believed it was "fair to consider how your message would be taken" and that lawmakers saw Greenspan's 2001 remarks as "providing a green light" for tax cuts, which were enacted without triggers.