Greenspan Bashes Bush

George W. Bush is about as popular these days as French philosopher hanging out at a NASCAR barbecue. The deservedly unpopular president lost another aficionado when former Fed Chairman Alan Greenspan blasted Bush this weekend for his fiscally ruinous economic policies. Yes, the economy is supposed to be one of the administration’s bright spots in a record marred by Iraq, Katrina, and Constitutional misrule, but if Greenspan is correct the bottom could soon drop out as the country faces an axis-of-ills: recession, inflation, and a monster deficit.

According to Greenspan, who at onetime gave the green light to Bush’s 1.3 trillion dollar tax cut, in future years the Fed Reserve will be forced to raise interest rates to double digit amounts in order to counteract inflation. Raising rates to fight inflation could not come at a worse time because the United States is already facing a credit crunch and an economic slowdown associated with the housing bubble. Many believe that as foreclosures rise, cash-strapped consumers, unable to use the equity in their homes as an ATM machines, will cut back spending, leading to a recession. Put simply, the average American are as maxed from the mall out as American forces are from Iraq.

This brings us to the Middle East. The Bush administration, in its bottomless wisdom, pushed ahead with its 1.3 trillion dollar tax cut at one of the least propitious moments possible; soon after discovering that the projected surpluses from the Clinton years were not going to materialize after all, and just before launching its disastrous venture in Iraq, which by some estimates could cost $2 trillion or more.

If you want unvarnished economic advice from a trusted authority figure, then perhaps you’ll find Dick Cheney’s assertion, that “deficit’s don’t matter,” reassuring. However, if you want my advice you’d be wise to spend your tax cut now before the sinking dollar depreciates even further.

Greenspan also offered his view on Iraq, confessing that "I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil." Spoken like an honest libertarian (though many less candid libertarians (Cheney, for instance) seem not the least bit apologetic or embarrassed about privatizing warfare).

The Bush administration’s fiscal policies will eventually prove as rash and imprudent as its decision to invade and occupy Iraq. Just as Iraq is a vicious cycle (the invasion has had the effect of driving up the price of oil, which fuels Iran anti-Western forces like Iran and al-Qaeda), so the Bush deficit will push up interest rates, which will hamper economic growth growing forward. Eventually these two vicious cycles will reinforce each other as higher oil prices, higher interest rates, a bigger deficit, and declining dollar lead to slowing economic growth, which will make most Americans poorer and less secure. Well, As Bush once said of his tax cuts, “It’s your money, you paid for it.” At least that sounds more honest than Bush’s latest slogan “return on success.”

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