Greenspan Calls For Tax Cuts 'Sooner Rather Than Later'

By BridgeNews Federal Reserve Chairman Alan Greenspan says that tax cuts "appear required" in the next several years to prevent the government from getting into a situation where it starts accumulating private financial assets due to swelling budget surpluses. Greenspan, in prepared testimony to the Senate Budget Committee, said tax cuts should be started "sooner rather than later" to help "smooth the transition to longer-term fiscal balance." Moreover, Greenspan said, should current economic weakness spread beyond what now appears likely, having a tax cut in place may, in fact, do noticeable good. His comments dealt mostly with budget issues. In his prepared remarks, he made no comments on monetary policy, nor did say how big the tax cuts should be. While Greenspan had little to say about the current state of the economy, he did say that the "apparent sustained strength" in productivity growth, despite a "pronounced slowing" in the growth of demand the 2000 second half, was an important test of the extent of improvement in structural productivity. "These most recent indications have added to the accumulating evidence that the apparent increases in the growth of output per hour are more than transitory," he said. Forward-looking indicators of technical innovation and structural productivity growth have shown few signs of weakening despite the markedly slower growth in capital spending, he said.

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