Alan Greenspan, just another partisan hack?

Paul Krugman takes on Alan Greenspan today calling Greenspan a Bush shill and another partisan hack. His double speak to congress on Social Security was a case of him trying to have his cake and eat it too. He said that Bush's privitazation plan was a good idea but not really. Alan Greenspan did a fairly good job when all he really had to do was tweak the interest rates to keep inflation under control. He preached that deficits were bad until Clinton managed a surplus which was bad. He warned of an economic bubble but did nothing to stop it's inflation and he had a number of tools he could have used to do so. He apparently didn't want to anger the booming investment community. As a disciple on Ayn Rand he has always despised everything about the New Deal, especially Social Security. George W. Bush put Mr Greenspan in a very bad position, he came up with a plan that would eventually destroy Social Security but is so ill conceived that the economist had to say take it slow while the Bush shill wanted to say full speed ahead. Ok, enough of my rantings, here is what Krugman had to say.

Four years ago, the Fed chairman lent crucial political support to the Bush tax cuts. He didn't specifically endorse the administration's plan, and if you read his testimony carefully, it contained caveats and cautions. But that didn't matter; the headlines trumpeted Mr. Greenspan's support, and legislation whose prospects had previously seemed dubious sailed through Congress.

On Wednesday Mr. Greenspan endorsed Social Security privatization. But there's a difference between 2001 and 2005. In 2001, Mr. Greenspan offered a convoluted, implausible justification for supporting everything the Bush administration wanted. This time, he offered no justification at all.

In 2001, some readers may recall, Mr. Greenspan argued that we needed to cut taxes to prevent the federal government from running excessively large surpluses. Even at the time it seemed obvious from his tortured logic that he was looking for some excuse, any excuse, to help out a Republican administration. His lack of sincerity was confirmed when projected surpluses turned into large deficits, and he nonetheless supported even more tax cuts.

This week, Mr. Greenspan offered no excuse for supporting privatization. In fact, he agreed with two of the main critiques of the administration's plan: that it would do nothing to improve the Social Security system's finances, and that it would lead to a dangerous increase in debt. Yet he still came out in favor of the idea.

So as we can see Greenspan is a man torn between being an economist and being an Ayn Rand Uber Libertarian and Bush shill. Yet while not fully endorsing the Bush plan on Social Security he was still able to play the shill.

Yet the chairman managed to avoid admitting the obvious - that borrowing on the scale the Bush plan requires would substantially increase the risk of a financial crisis. And the headlines didn't emphasize his concession that crucial critiques of the Bush plan are right. As he surely intended, the headlines emphasized his support for privatization.

And Krugman makes one final disturbing observation.

One last point: a disturbing thing about Wednesday's hearing was the deference with which Democratic senators treated Mr. Greenspan. They acted as if he were still playing his proper role, acting as a nonpartisan source of economic advice. After the hearing, rather than challenging Mr. Greenspan's testimony, they tried to spin it in their favor.

But Mr. Greenspan is no longer entitled to such deference. By repeatedly shilling for whatever the Bush administration wants, he has betrayed the trust placed in Fed chairmen, and deserves to be treated as just another partisan hack.

I think Krugman is not quite on target here. Greenspan is not just another partisan hack, he is a modern day true believer in feudalism, a true Social Darwinist.