Batra argues that Greenspan's policies have been inconsistent and politically motivated, and that Greenspan's reputation is undeserved.
The first example of Greenspan's intellectual fraud was his flip-flop in the early '80's regarding federal budget deficits. While Carter was in office, Greenspan railed relentlessly about the Carter budget deficits. As soon as Reagan was elected Greenspan flip-flopped and whole-heartedly supported the Reagan tax cuts on the wealthy, which had, and could only have had, the effect of raising deficits to record levels.
Then, in 1983, Greenspan pushed for the Social Security law changes. The changes consisted in pre-loading the Social Security trust fund by collecting more revenues than were paid out in benefits. The law was sold to the public with the argument that it would make Social Security solvent many years in the future when benefit payments would begin to outstrip the social security tax revenue. But Greenspan knew, and the law was written in such a way, that the excess tax receipts would simply be used to reduce the general federal deficit. Thus the law had the effect of shifting tax receipts from the progressive income tax to the regressive social security tax. In effect, low-paid workers would take the tax burden from the wealthy. Batra's recommendation is that we should return to the pre-1983 pay-as-you-go system. The system could be made less regressive by exempting the first $10,000 from the tax, and could be made solvent by raising the salary cap. All this without benefit cuts.
Batra points out that since Greenspan has been Fed chairman (beginning in 1987) real after-tax wages have fallen significantly despite significant growth in productivity and GDP. He blames this primarily on the series of tax-cuts enacted for the wealthy, and the system of deficits and debt that Greenspan has supported while Republicans have been President.
As further evidence of Greenspan's intellectual fraud, Batra points out that the fiscal program pushed by Clinton, and passed virtually without Republican support in 1993, achieved the results that Reagonomics / Greenomics failed to achieve during the 1980's. Namely, growth in real wages, significant growth in GDP, and reduction of federal deficits and debt.
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