Projections Quotes
The forecasts that were made by many after the Meltdown of 2008. 5 years later they were almost all wrong—very wrong.
In 2001, the nation had a huge budget surplus from the Clinton administration and there was much political debate over economic policy. President Bush wanted to have a very large tax cut. Greenspan had testified that given the very large surplus, the nation could afford a tax cut and not resume a deficit. However, the tax cut did not have the stimulus effect that the President had hoped, and the surplus was used up and exceeded. To make matters worse, September 11 began the War on Terror which required extensive additional government spending. The nation went from the largest surplus in American history to the largest deficit in American History in the next 4 years. Greenspan did something that is very rare in Washington. He publicly admitted error.
He is absolutely right, but unfortunately made this statement several years after he served as the Fed Chairman. He never made a statement like this when he and his colleagues made their policies based on their economic forecasting. Central bankers have generally felt that one of their jobs was to give the people confidence in the nation’s banking system and economy and the admission that much policy making was based on “coin toss” forecasting.
