Greenspan said the government will pay off its debt sooner than previously imagined and will then need to cut taxes to avoid growing surpluses.
Large surpluses are bad.
Greenspan is concerned a massive buildup of surpluses would force the Fed to buy large amounts of private securities, such as corporate bonds, to influence interest rates. That's now accomplished by buying or selling Treasury debt. He also does not think the federal government should be in the practice of funding private business by buying corporate bonds. In discussing the economy, Greenspan said growth probably had slowed to zero but consumer confidence did not appear to have declined to a point that would result in a recession. President Bush said he was pleased with Greenspan's comments.