| FOR IMMEDIATE RELEASE: | CONTACT: |
| Wednesday, February 12, 2003 | Jesse Jacobs - 202-224-4524 |
SARBANES FURTHER REACTS TO FEDERAL RESERVE
CHAIRMAN ALAN GREENSPAN'S TESTIMONY
BEFORE SENATE BANKING, HOUSING,
AND URBAN AFFAIRS COMMITTEE
"TESTIMONY PUTS HIM DIRECTLY AT ODDS WITH
THE BUSH ADMINISTRATION ON KEY ECONOMIC ISSUES"
Senator Paul S. Sarbanes (D-MD), the Ranking Member on the Senate Banking, Housing, and Urban Affairs Committee, issued the following statement today following up on Federal Reserve Chairman Alan Greenspan's recent testimony before the Senate Banking, Housing, and Urban Affairs Committee:
"Federal Reserve Board Chairman Greenspan's testimony before the Senate Banking Committee yesterday puts him directly at odds with the Bush Administration on several key economic issues:
"During his testimony on February 11, 2003, Chairman Greenspan said, 'There's no question that as deficits go up, contrary to what some have said, it does affect long-term interest rates. It does have a negative impact on the economy, unless attended;'
"He indicated that he supports the elimination of the so-called double taxation of dividends, 'But it should be done in the context of pay-go rules, which means that the deficit must be maintained at minimal levels;'
"He reaffirmed his position stated before the Banking Committee almost two years ago, 'The desirability of eliminating the federal debt ... is still, frankly, my first priority because I think it's had an extraordinarily important impact on the economy, on the financial markets, on long-term interest rates, and on economic growth;' and
"He stated, 'Faster economic growth alone is not likely to be the full solution to the currently projected long term deficits.'
"When President Bush came into office in January 2001, the federal government had a projected ten-year surplus of $5.6 trillion. If the President's program were enacted into law, the budget projection for the same ten-year period would be a $2.1 trillion deficit. That is a $7.7 trillion reversal. By any measure, the Administration is in the process of transforming the fiscal position of the United States from one of fiscal surplus to one of large fiscal deficits. Particularly in the face of the uncertain demands on public resources imposed by the war on terrorism, homeland defense, difficulties with North Korea, and a possible war with Iraq, I believe the President's proposals are reckless and irresponsible.
"Giving our economic strength away with the kind of irresponsible tax cuts proposed by the President would not only deny us the public resources we will need to meet future challenges. It would put upward pressure on long-term interest rates which would reduce economic growth and job creation, and impose greater hardship on middle and working class Americans."
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