Greenspan's Deficit Chickens....

....are all coming home to roost:

"I don't doubt, at the end of the day," that taxes will go up in any plan to cut the federal budget deficit, Greenspan told the Senate Budget Committee.

But he quickly added that there is "no way you can raise taxes enough" to cover future spending commitments, including Social Security and Medicare. Greenspan warned that tax increases would hold down economic growth and made clear he would prefer spending cuts to tax increases.

Greenspan is wrong, of course, on the ineffectiveness of raising taxes. There is a lot of lightly-taxed money in the higher-income tax brackets these days. Effective action on health care costs PLUS tax increases on the rich would arrest or reverse the deficit's growth.

Possibly providing ammunition to tax-cut opponents, Greenspan said his support for President Bush's 2001 tax-cut package played a part in turning the federal budget from surplus to record-setting deficits.

With Republicans in Congress declaring in 2001 that they had Greenspan's support, they enacted a $1.35 trillion, 10-year tax cut plan. Congress then passed further tax cuts each of the next two years. Democrats blame the cuts for deficits that have skyrocketed to more than $400 billion a year.

Republicans contend that the cuts helped the troubled economy and staved off a more painful downturn.

Finally, reality is catching up to Greenspan! The downturn may have been blunted by the tax cuts, but the long-term harm to the economy may more than outweigh the benefit.

In his Capitol Hill appearance Thursday, Greenspan for the first time publicly defended himself against critics who put blame on him for the expanding deficits.

It is "frankly unfair" to blame him for the deficits, Greenspan said, because Congress decided to "read half my testimony and discard the rest."

He said that tax-cut advocates ignored his warning in 2001 that forecasts for higher surpluses might be wrong. Congress also ignored his proposal for "trigger" recommendations that would have limited the tax cuts if spending targets were not met and the deficit began to soar, Greenspan said.

Sen. Paul Sarbanes, D-Md., reminded Greenspan that he is well versed in how Congress works and should have been aware that Congress would skip the triggers.

"I plead guilty to that," Greenspan said. "I did not intend it that way."

That's not good enough, Mr. Greenspan. You knew perfectly well what was going to happen. People warned you about it at the time. You pulled the trigger anyway!

The Fed chairman said that controlling government spending is an especially urgent matter because some 76 million baby boomers will begin leaving the work force soon. Then there won't be enough tax revenue coming in for the federal government to meet retirement and health promises to boomers.

"Unless that trend is reversed," Greenspan warned, "at some point these deficits would cause the economy to stagnate or worse."

..."The federal budget deficit is on an unsustainable path, in which large deficits result in rising interest rates and ever-growing interest payments that augment deficits in future years," Greenspan testified.

While the "ramp-up" in spending for defense and homeland security is not expected to continue indefinitely, Greenspan said, he foresees increasing national debt unless the government cuts spending.

The government may have promised too much to its aging population, Greenspan said.

"I fear that we may have already committed more physical resources to the baby-boom generation in its retirement years than our economy has the capacity to deliver," he said.

It's high time Greenspan-the-Fool realized that Congress and the nation are absolutely on the hook for Social Security costs. Everyone should plan accordingly, and not follow Greenspan's failed 2001 example. And his Chicken-Little fear of the coming Baby-Boomer retirement is ridiculous. The money will be there - if he's willing to tax the rich to get it!