2013년 4월 9일 화요일

[발췌: Interview with] Alan Greenspan (2007)

출처: NBC News (Sunday, September 23, 2007)

Moderator: Tim Russert


※ 발췌(excerpts): 

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MR. RUSSERT: Let me pick up on some interviews that you've given this week as you've been touring, talking about your book, "The Age of Turbulence." You said this: “I think Bill Clinton was the best Republican president we've had in a while.” Republican?

MR. GREENSPAN: I'm sure he doesn't like that joke, but if you look at his record compared to what I think appropriate policy ought to be, he's for free trade, he's for globalization, he was for welfare reform, fiscal restraint and--true enough, he's not a Republican. I'm sorry, President Clinton, I didn't mean to say that. But I must say, I had to follow an awful lot of your particular guidelines and found them very compatible with my own.


MR. RUSSERT: He did raise taxes.

MR. GREENSPAN: He did raise taxes, and I must say I could have done without that. But, look, democracies are compromise, and you do what you can so that the majority of the people support you.


MR. RUSSERT: You also said this: "The Bill Clinton administration was a pretty centrist party. But they're not governing again. The next administration may have the Clinton administration name but the Democratic Party has moved very significantly in the wrong direction." Hillary Clinton's party is not Bill Clinton's party?

MR. GREENSPAN: All I can say is that they're taking positions which he, as president, veered away from.

MR. RUSSERT: Such as?

MR. GREENSPAN: Whole area of trade, for example, which is a very critical issue because it's not only the issue of trade, it refers to the globalization and how one views what is the driving force in this world which creates prosperity.

MR. RUSSERT: When the book first came out, The Washington Post's Bob Woodward wrote the story, a front page story, and this is how he characterized it: "Alan Greenspan, who served as Federal Reserve chairman for 18 years and was the leading Republican economist for the past three decades, levels unusually harsh criticism at President Bush and the Republican Party in his new book, arguing that Bush abandoned the central conservative principle of fiscal restraint.
"He expresses deep disappointment with Bush. `My biggest frustration remained the president's unwillingness to wield his veto against out-of-control spending. Not exercising the veto power became a hallmark of the Bush presidency. To my mind, Bush's collaborate-don't-confront approach was a major mistake. The Republicans in Congress lost their way. They swapped principle for power. They ended up with neither.'" 
Which bill should the president have vetoed?

MR. GREENSPAN: A whole series of them. First of all, let me just say that remember that if failure to veto is a problem, the real problem are the bills that should be vetoed. My major concern was not with the administration, but what I saw was a deteriorating position with respect to policy on the part of the Congress when both Houses were under Republican rule. And it's that which I found to be extraordinarily debilitating to the outlook. I basically think that the president's failure to veto to try to collaborate and to try to find ways to get compromises on bills, in retrospect, didn't work. And I think the consequence is that, effectively, the Republican Party lost its way.


MR. RUSSERT: The issue of tax cuts is front and center in your book and has been the topic of debate in Washington this week. You write candidly that Senator Kent Conrad, Democrat from North Dakota, Robert Rubin, then President Clinton's economic adviser, came to you and said, "If you testify before the Senate and embrace the Bush tax cut plan, it's going to open up the floodgates and it's going to encourage people to give big tax cuts." And that's exactly what happened, you say, much to your consternation, that you didn't specifically endorse the plan. A frequent critic of yours, Paul Krugman, has weighed in on in this, and this is the way he describes it, and I want to give you a chance to talk about it.
"When President Bush first took office, it seemed unlikely that he would succeed in getting his proposed tax cuts enacted.
"Then Alan Greenspan, the chairman of the Federal Reserve, testified before the Senate Budget Committee. Suddenly, his greatest concern, the `emerging key fiscal policy need,' he told Congress, was to avert the threat that the federal government might actually pay off" "its debt. To avoid this awful outcome, he advocated tax cuts." "The floodgates were opened.
"And Mr. Greenspan has just published a book in which he castigates the Bush administration for its fiscal irresponsibility. Well, I'm sorry, but that criticism comes six years late and a trillion dollars short.
"If anyone had doubts about Mr. Greenspan's determination not to inconvenience the Bush administration, those doubts were resolved two years later when the administration proposed another round of tax cuts even though the budget was now deep in deficit. And guess what? The former high priest of fiscal responsibility did not object. And in 2004 he expressed support for making the Bush tax cuts permanent--remember," those "are the tax cuts he now says he didn't endorse."

MR. GREENSPAN: There are so many questions to--that raises, that I'll try to get them--try to give you short answers. First of all, the notion that I was extraordinarily powerful and my word carried great weight is not in evidence on such issues as Medicare where I, for years, have raised alarms about the size of the problems. My views were wholly disregarded. I could give you a long list of things in which I had strong views, nothing happened. So all of a sudden, I become this powerful force in moving tax policy.

Now, there's a fascinating problem. The 2001 tax cut was a very unusual tax cut in the sense that it confronted, for the first time in 150 years, the possibility that we would actually eliminate the debt in the United States. And it was that concern which creates major problems with respect to accumulating assets. When you have $500 billion surpluses, when the debt is effectively zero, creates huge holdings of private assets by the federal government, and for reasons I express in the book, I think that's very bad idea, and I must say, Bill Clinton agreed with me on that issue.

With respect to the question of whether I changed my mind, the answer is I did change my mind. Because, when it became apparent that the huge surpluses that most every analyst in the business was projecting were disappearing, I went back to my old position, which is namely, I am in favor of lower taxes, lower spending, and specifically a cut in taxes which reduces the double taxation dividends. When that occurred, mainly in 2003 and 2004, I said, yes, I would like to see the tax cuts, but they are contingent on meeting what was then the law, namely PAYGO, which was their mechanism in the 1990 act which required that all budget proposals be neutral. And so, effectively, as a number of congressmen asked me in hearings, well, then, "Do we understand you correctly that you would like the tax cut, but unless it is matched by reductions in spending, you would oppose it," I said, "That is correct. That is my position." I did change my view. It wasn't in 2007; it was a lot earlier than that.

MR. RUSSERT: Do you believe either political party has stepped up to the crisis we face with Social Security and Medicare in the coming years?

MR. GREENSPAN: I do not.

MR. RUSSERT: How big a crisis will that be?

MR. GREENSPAN: Social Security is not a big crisis. We're approximately 2 percentage points of payroll short over the very long run. It's a significant closing of the gap, but it's doable, and doable in any number of ways. Medicare is a wholly different issue because, remember, right now, with the current entitlement, we can afford Medicare. It's easily refunded. We're going to double the size of the retired population. And by all of the analysis I go through in the book, it's very evident to me that we are not able to actually deliver on the Medicare we are promising, and I think that is marginally unethical to immoral because we are promising to people who have not yet retired a fairly significant Medicare package which, if they knew they weren't going to fully get, they would take actions now--maybe retire later, do different things--and I think everybody has been avoiding this issue. We avoided it in the Social Security Commission in 1983, and everyone's done--been doing it since. Then it was more than 20 years before. We're now right at the point where if we don't act we're going to be in very serious problem--trouble.

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MR. RUSSERT: You mentioned housing. There's been a lot of debate about your role with the so-called housing bubble, your whole role in terms of subprime interest rates for housing. This is how Conde Nast, the--Portfolio, wrote about it, John Cassidy. He said this: "In 2004, as the subprime boom was cranking up, Greenspan advised homeowners to switch from fixed-rate mortgages to adjustable-rate loans." "April" of "2005" at "a speech that probably now haunts him, he said, `Innovation has brought about a multitude of new products, such as subprime loans and niche credit programs for immigrants. Such developments are representative of the market responses that have driven the financial services industry throughout the history of our country. Where, once, more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risks posed by individual applicants and to price that risk appropriately.'" Are you responsible for this bursting of the housing bubble?

MR. GREENSPAN: No. Shall I explain? First of all, I did make a speech in February of 2004
in which I explained a fairly interesting analysis by the Federal Reserve staff which said that there were a lot of, a lot of home buyers who would do far better were they to take adjustable-rate mortgages, because they weren't going to live in the home long enough and the price they were paying to get the fixed-rate mortgage was exceptionally high. Now this, incidentally, was not subprime, this was prime adjustable rates. A week later I shows up--show up at the Economic Club of New York, and, with a thousand people asking me all sorts of questions--I shouldn't put a thousand, a thousand people there and a couple people asking me questions, the question that came up right at the top, "Are you, in this--in this day, disparaging the 30-year mortgage?" Because the issue was that vs. adjustable rate. And I said, "No, on the contrary. When I take out a mortgage, I take out a 30-year fixed-rate mortgage." I was referring to a special, small category of people. But it had nothing to do with subprime.

But with the whole housing boom, we're dealing with a world problem. More than two dozen, two dozen nations are experiencing exactly what we are experiencing. In fact, our housing price boom is less than the average, and this is very clear--this very clearly calls for a global explanation, not for an individual explanation of what central banks do. And, indeed, central banks around the world have largely lost their power to affect long-term mortgage rates because it's global forces which are pushing it, and we proved it. We tried to raise the rate in 2004 and we failed. We tried again in 2005 and we failed. And so it's very clear to me that central banks, ourselves, the Federal Reserve, included, had very little control over the extent of that boom.

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