Date: 2025-01-07 Page is: DBtxt003.php txt00027800
MONETARY POLICY
US 'FED' POLICY
Alan Greenspan: 'It would be a terrible mistake' to raise marginal rates
US 'FED' POLICY
Alan Greenspan: 'It would be a terrible mistake' to raise marginal rates
Original article: https://www.cnbc.com/2019/01/07/alan-greenspan-thinks-the-ocasio-cortez-70percent-tax-plan-is-a-terrible-idea.html
Peter Burgess COMMENTARY
I have not been impressed by either Alan Greenspan or Jerome Powell as the top person in the US Federal Reserve.
To a great extent they are constrained by the institutional framework in which they are working .... but I do not see any intellectual initiative to make the Federal Reserve more effective, In my opinion, the 'Fed' needs a serious rethink about its role and how it helps to 'regulate' the US and the global economy.
I don't think history will look kindly at the role played by the US Federal Reserve during the period from (say) 2020 to 2024!
I wrote the above commentary before I realized that the original was posted in January 2019 ... about 5 years ago ... when AOC was a breath of fresh air in an otherwise very unimpressive congress.
I was fortunate to get a very good education ... something that has been getting more and more scarce over the years. There is more 'education' now than in the past, but the quality of a lot of modern education is of low and questionable quality.
It really bothers me that GDP (Gross Domestic Product) still remains at the center of economic performance reporting. When I was studying economics at Cambridge in the late 1950s one of the agenda items to be addressed was the replacement of this GDP metric with something a lot more meaningful. People like Keynes and Joan Robinson were advocates for a better metric but it has never happened because there are too many powerful players who are beneficiaries of the status quo and its ineffective metrics.
This issue is a critical driver of the TrueValueMetrics (TVM) initiative. Using GDP as a key economic metric at this point in history makes a nonsense of much of the economic analysis and commentary that informs decision makers in almost every sphere of work. The fact that we do not have better critical economic metrics does not reflect well on anyone!
Peter Burgess
Former Fed Chair Alan Greenspan thinks the Ocasio-Cortez 70% tax plan is ‘a terrible idea’
Published Mon, Jan 7 2019 11:18 AM EST ... Updated Mon, Jan 7 2019 2:19 PM EST
Jeff Cox ... @jeff.cox.7528 ... @JeffCoxCNBCcom
Key Points
- Former Fed Chairman Alan Greenspan said an idea floated to tax the richest Americans at 70 percent would be a “terrible idea.”
- Freshman Rep. Alexandra Ocasio-Cortez has proposed the higher levy as a way to pay for a “Green New Deal” aimed at halting U.S. reliance on fossil fuels
Alan Greenspan: ‘It would be a terrible mistake’ to raise marginal rates
Raising the marginal tax rate on the richest Americans to 70 percent would put a major dent in the economy, former Federal Reserve Chairman Alan Greenspan said Monday.
During an interview with the CBS program “60 Minutes” that aired Sunday, freshman Rep. Alexandria Ocasio-Cortez proposed that such a levy be imposed to pay for what she calls a “Green New Deal” to slash carbon emissions and ultimately wean the U.S. off its reliance on fossil fuels.
The tax would apply to those earning more than $10 million a year, a group that currently pays the top marginal tax rate of 37 percent.
Without getting into the details, Greenspan said the move would have dire consequences.
“If you’re willing to take a significant drop in economic activity, I would suggest that,” Greenspan, who was central bank chief from 1987 to 2006, told CNBC’s “Squawk on the Street.”
“Maybe I better make myself clear,” he then added. “I think it would be a terrible mistake.”
Ocasio-Cortez, 29, represents New York’s 14th District, covering parts of the Bronx and Queens, and is the youngest woman ever to serve in Congress. Though she won as a Democrat, she identifies as a democratic socialist. Ocasio-Cortez did not respond to a request for comment.
When it comes to taxes, Greenspan said the measure passed in 2017 “was an excellent tax cut” though Congress failed to come up with a way to pay for it. He noted that the U.S. budget deficit for fiscal 2018 is likely to hit $1 trillion due in large part to entitlement burdens that lawmakers have not addressed.
“Nobody cares about deficits until it grips the economy in an inflationary way,” he said.
As for the general economic outlook, Greenspan remains pessimistic. He recently warned that investors should “run for cover.”
“This is an economy which is reminiscent of the 1970s, which was a period of inflation and economic slowdown,” he said. “That’s the type of system we’re dealing with unless we can confront the issue of entitlements.”