Greenspan Is Still Talking. Why Are People Still Listening?

by Thomas Wellborn

Hold onto your stocks, folks, because Alan Greenspan is talking again.  This time he’s being interviewed by ABC’s Jake Tapper where he warns us of deficits and dire consequences, especially if the CBO data is incorrect on the new health care bill costs.  Greenspan enjoys having it both ways: when Republicans are in office, deficit spending is desirable, but during a Democratic presidency they are a big no-no.

JAKE TAPPER: The president signed massive health care reform legislation into law a few weeks ago. You have expressed concern about the legislation, as it was making its way through the process, about whether or not it did enough to contain costs. What did you think about the final legislation? Does it contain costs enough?

ALAN GREENSPAN: Well, the CBO, incidentally, Congressional Budget Office, which is really a first-rate operation, says that it does. The problem is not their estimates, but the range of potential error in those estimates.

And when you’re dealing with an economy in which debt is becoming — federal debt is becoming ever increasingly a problem, it strikes me that when you’re dealing with public policy and you’re in a position where you have to ask yourself, “What happens if we are wrong?”

In other words, in the case now, where our buffer between our capacity to borrow and our actual debt is narrowing, for the first time, I think, in the American history, there’s a question, supposing we are wrong on the cost estimates, and, indeed, they are actually much higher than the best estimates can generate, the consequences are very severe, whereas if they are too high, it’s very easy to adjust.

So I think it’s — it’s — there’s an issue over and above the question of what’s the best cost estimate. There’s a policy strategy here which I think requires us to lean in an ever more conservative area with respect to judging…

TAPPER: So it might have been too rosy, the projections, you’re saying?

GREENSPAN: Possibly. I don’t know that. But I do know that the probability that it might be is much higher than we would like.

The fact that people still pay attention to the advice of Alan Greenspan is one of great curiosity to me.  His long history of flip-flopping and failures is well documented, and lends little credibility to any financial predictions he might have at this point.  During his ABC interview, Greenspan admitted he “got it wrong,” but said he doesn’t know “six, seven, or eight” who got it right.

“…I know four or five people who are really good. I don’t know six, seven, eight or nine.”

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