Duh department

Greenspan admits he got it wrong over Bush's tax cuts

"The chairman of the US Federal Reserve, Alan Greenspan, has admitted he made a mistake in 2001 when he defended President George Bush's tax cuts, which led to the turnaround of a large budget surplus at the end of the Clinton presidency to a budget deficit this year of more than $US400 billion ($506 billion).

Instead of a projected surplus of $US5.6 trillion by 2011, the budget deficit is now expected to be $US4 trillion by that date if the tax cuts become permanent.

Dr Greenspan's defence of the tax cuts was always viewed as highly unusual for a Reserve chairman who is mandated to be non-political and whose main responsibility is to determine US interest rates and help keep inflation in check.

But Dr Greenspan has long been seen as a partisan figure by Democrats and was described last week by the Senate minority leader, Harry Reid, as the "biggest political hack in Washington".