Former Federal Reserve Chairman Alan Greenspan said Sunday that he doesn’t think a double-dip recession is on the horizon for the U.S. economy.
“There’s going to be a solution to this,” Greenspan said on NBC’s “Meet the Press,” referring to America’s debt problem. “The great irony and sadness about this whole process is that basically the Bowles-Simpson Commission’s recommendation, which will be the core of the final result. But there’s another issue here. With all this bickering going on, the economy is slowing down. You can see it in all of the data. I don’t see a double-dip, but I do see it slowing down. This deficit problem that sits out there is much larger than we even calculated because the actual numbers employed by those who are calculating the deficits are based on a level of economic activity which we are not achieving.” (RELATED: Ron Paul: Debt limit agreement ‘super committee’ unconstitutional)
And while many warn that cutting government spending now will harm America’s fragile economy, Greenspan said hiking taxes would be worse for the economy than the spending cuts.
“First of all, there’s a general view out there that we are somehow going to solve the problem without pain,” Greenspan said. “There’s no conceivable scenario in which that is true. Cutting back on government spending will cause some contraction in economic activity, but according to the IMF, who has done a considerable number of evaluations of related issues, they’ve concluded that increases in taxes do curtail economic activity. So do expenditure cuts, but significantly less.”