Like my colleague The Moose, I was stunned by press accounts of Federal Reserve Board Chairman Alan Greenspan's testimony to the administration's tax reform study commission yesterday. Back in 2001, you may recall, Greenspan endorsed Bush's tax cuts on the bizarre theory that otherwise the national debt might disappear and the federal government would have to start buying equity in private businesses to dispose of excess cash. More recently he has returned to his pre-Clinton administration doomsaying about federal budget deficits. So what does he propose now? Draining more revenues from Washington by creating big, fat tax-free savings vehicles to enable high earners to shelter investment income from taxation.
To be sure, what Greenspan actually wants is a national consumption tax, and endorses tax-free savings vehicles as a back-door means to that goal. This approach, of course, is a big part of the Grover Norquist "starve the beast" strategy of deliberately engineering large budget deficits in order to force big cutbacks in federal spending, or a shift in the tax base towards wage income or consumption, or all of the above.
And the convergence of the Norquist and Greenspan approaches represents a stunning demonstration of how politics has completely debased a large part of the U.S. libertarian tradition.
In Grover's case, the big deal with the devil was his acceptance of the idea that repealing any sleazy corporate tax break represented a verbotin "tax increase." Thus, instead of championing a level playing field for business competition and for tax policy, Norquist is now the tribune for corporate favoritism and reverse-Robin-Hood fiscal strategies, which help finance and politically drive an agenda that is "libertarian" only to the extent that it screws up government in a way that might eventually cause its general demise.
Greenspan's own Faustian Bargain stems from his famous "pragmatism"--barred by the limited role of the Fed, and by political realities, from actively promoting the free-market paradise he has long espoused, he consistently reaches out to endorse "politically feasible" policies that indirectly achieve his ends--typically, the free candy of tax cuts and tax breaks.
Thus, both men embrace a stealth libertarianism that isn't libertarian at all in its means. We all know Grover's many ideological and rhetorical vices, but for all his legendary power and influence, he's essentially just another Washington jive-ass thriving at the intersection of money and politics. But it's beginning to become more apparent every day that the oracular Chairman has an equally twisted agenda.
The Moose's post today linked to an AEI article by Bill Bradford about
Greenspan's much-reported but oft-forgotten association with the Objectivist cult of novelist and proto-libertarian Ayn Rand. I thought I knew the story pretty well, but two things really startled me in Bradford's piece: (1) Greenspan went straight from Rand's inner circle (ironically but accurately known as "The Collective") into the 1968 presidential campaign of Richard Nixon. In fact, Greenspan was already knee-deep in conventional Republican politics when he signed onto Rand's bizarre excommunication of her protege and former lover Nathaniel Brandon. (2) When asked during various Senate confirmation hearings over the years if he still adhered to Randian dogmas like abolition of all regulations and a return to the gold standard, Greenspan gave no sign of a change of heart or mind.
Given Greenspan's current status as a close ally of George W. Bush, you kinda wish someone had recently asked him if he still regards belief in God as a deadly "mysticism of the mind" (corresponding to socialism, the "mysticism of the muscle"), a key tenet of the Objectivist canon. But whatever his political prudence and well-rehearsed routine as a mere economic technocrat, it is becoming clear that his formative extremism has not gone away--just the candor with which his mentor always expressed her oppressively dogmatic views about ends and about means. --