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Alan Greenspan Downplays Detrimental Economic Effects Of Bush Tax Cuts

by Mike Godfrey, Tax-News.com, Washington

19 July 2002

Federal Reserve Chairman Alan Greenspan on Wednesday downplayed the degree to which President Bush's $1.35 trillion tax cut program has added to the United States' economic woes.

Responding before the House Financial Services committee to a question from Democrat Rep. Barney Frank, who pressed the Fed chief over whether such a large tax cut was wise in retrospect, Mr Greenspan observed that:

'It's turning out that the tax cut is something of a two-edged sword in that respect. One, obviously it reduces the surplus and adds to the deficit.' However, he added that: 'It's not a very large part of it, it's part of it.'

On the other hand though, the Federal Reserve Chairman explained, 'it happened to...occur just when a large pick-up in consumer expenditures would be quite helpful'.

'You have to look at both sides, both receipts and expenditures,' he concluded.

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