The Ultimate Oligarch

Federal Reserve Chairman Alan Greenspan strayed away from his charter once again to warn about the people’s entitlement programs-Social Security and Medicare- becoming unaffordable. He suggested cuts in benefits to reduce deficits.

In the same breath, Mr. Greenspan urged that Mr. Bush’s tax cuts for the wealthy-a huge cause of the growing federal deficits-be made permanent.

His priorities should come as no surprise, for Mr. Greenspan is the ultimate oligarch.

The hundreds of billions of dollars in corporate welfare giveaways annually, from local to state to federal governments, are not his concern. He is comfortable with this kind of direct and indirect corporate socialism where profits are less taxed and costs are socialized on the backs of individual taxpayers.

Instead, what bothers Mr. Greenspan are the social insurance programs for tens of millions of Americans-most of them the coming elderly. He raises the spectre of social security insolvency because fewer workers will be supporting retirees. He testified that “it is important that we tell people who are about to retire what it is they will have.”

If so, why didn’t the Chairman recall the projections by the Social Security trustees who tell us that the retirement fund is solid until 2042 without any changes or benefit cuts, based on an average GDP growth rate of 1.7 percent annually? The latter figure is very conservative.

For the past 50 years the average GDP growth rate has been well over three percent.

At 1.7 percent, after 2042 without any changes, the decline in benefits would be gradual. At over three percent growth rates, benefitswould continue beyond that date. Curious, isn’t it, that the Chairman would ignore the corporate lobbying causes of the federal deficits, such as corporate tax shelters, loopholes, subsidies, handouts, giveaways and so forth. Why, if corporations and the wealthy were taxed at the rates prevailing in the prosperous 1960s, the deficits would be no more, quite soon.

Medicare is another matter. Its precarious future state is hostage to staggering annual price increases by the health care and drug industries which could be addressed by an efficient single payer health insurance system.

Mr. Greenspan chose not to mention the budget busting corporate bonanzas embedded in the $540 billion ten-year prescription drug deal. The massive drug industry lobbying battalions raised their champagne glasses when they got a ban on Uncle Sam negotiating drug price discounts for medicines paid for by the government. There was no mention of that lurking Niagara of red ink, corporate profiteering by the Chairman.

Mr. Greenspan needs to be more introspective about why he focuses on benefits for the people that stimulate economic demand and ignores budgets and handouts for the corporations. It is not enough for him to pronounce the tautology that the latter stimulate economic growth. For whom? The increasing number of unemployed uninsured and undefended workers, whose white collar and blue collar jobs are being exported to very low wage authoritarian countries? The Chairman has serious trouble criticizing the corporate state, including doing anything about the consumer credit abuses that the Federal Reserve directly is supposed to stop, like predatory lending.

Reaction by the Democrats-John Kerry and John Edwards-was one ofproper outrage to Mr. Greenspan’s remarks. In their mind they may have been regretting why President Bill Clinton renominated the Republican Greenspan to another four-year term in 2000.