Greenspan: Nostalgia for the Ford administration, plus a lack of self-awareness, made me do it

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Upon opening my copy of The Age of Turbulence, the first thing I checked was the acknowledgments, to make sure my friend Peter Petre got some credit for, uh, ghostwriting the book. Sure enough:

Peter Petre has been my collaborator in the writing. He taught me the age-old art of narrating in the first person. I had always viewed myself as an observer of events, never as part of them. The transition was a struggle and Peter was patient.

So it wasn’t really all written long-hand in the bathtub, I guess.

Because Peter is my friend, I can’t review the book. I do think it’s okay to comment on the substance, though. And so after the acknowledgments, I turned to Chapter 10, “Downturn,” to read Greenspan’s take on the infamous 2001 Senate testimony in which he appeared to wholeheartedly endorse the Bush tax cuts. This passage struck me:

During those last days of December and first days of January, I indulged in a bit of fantasy, envisioning this as the government that might have existed had Gerald Ford garnered the extra 1 percent of the vote he’d needed to edge past Jimmy Carter into a second term. … I thought we had a golden opportunity to advance the ideals of effective, fiscally conservative government and free markets.

Greenspan’s story line, then, is that he wanted to believe that the Bushies would do the right thing, and thus was willing to cut them lots of slack. It was only later that he realized that, unlike every other presidential administration he had experienced, the Bush gang had absolutely no interest in adjusting its political plans to changing economic reality.

That brings us back to the question, raised by Karen Tumulty this morning, of why the heck he didn’t say something sooner once he realized Bush was going to be an inveterate budget buster?

I think it’s because Greenspan is an astute politician who didn’t want to ruin his relationship with an increasingly popular president. Greenspan’s explanation in the book is that he naively misunderstood how the press and Congress would selectively construe his carefully balanced statements about taxes and the budget. This seems a bit rich. Although I guess if you believe that line from the acknowledgments, where Greenspan says “I had always viewed myself as an observer of events, never as part of them,” then maybe he really didn’t understand the impact he could have.