Alan Greenspan Pending Quotations

We should not be cutting taxes by borrowing, ... We should be cutting taxes by reducing the level of spending and that's an issue that I think is critically on the table.

To date, interest-sensitive spending has remained robust and the FOMC (Federal Open Market Committee) will have to stay alert for signs that real interest rates have not yet risen enough to bring the growth of demand into line with that of potential supply, even should the acceleration in productivity continue,

Through most of last year's slowdown, in contrast to the usual pattern, the household sector was a major stabilizing force, ... As a consequence, although household spending should continue to trend up, the potential for significant acceleration in activity in this sector is more limited.

Fixed mortgage rates remain at historically low levels and thus should continue to fuel reasonably strong housing demand and, through equity extraction, to support consumer spending as well,

there are mechanisms in place that should help to slow the growth of spending to a pace more consistent with that of potential output growth.

Although household spending should continue to trend up, the potential for significant acceleration in activity in this sector is likely to be more limited than in past cycles,

Lower equity prices and higher financing costs should damp household and business spending, and greater uncertainty and risk aversion may also lead to more cautious spending behavior,

Lower budget deficits are the surest and most direct way to increase national saving. Higher national saving would help to lower real interest rates, spurring spending on capital goods so as to put cutting-edge technology in the hands of more American workers,

On balance, the recovery in spending on business fixed investment is likely to be only gradual; in particular, its growth will doubtless be less frenetic than in 1999 and early 2000,

With production running well below sales, the lift to income and spending from the inevitable cessation of inventory liquidation could be significant,

But it is clear that, for the time being at least, the increase in spending on consumer goods and houses has come down several notches, albeit from very high levels.

Much fiscal policy is implemented, not through spending increases, but through tax credits and other so-called tax expenditures. The markets should respond to them as they do spending cuts, with little contraction in economic activity.