Former Federal Reserve Chairman Alan Greenspan said a plan to tax the richest Americans at 70 percent would be a "terrible idea."
Rep. Alexandria Ocasio-Cortez, D-N.Y., is suggesting a tax rate as high as 70 percent on the very rich to help pay for a major plan to fight climate change. She floated the idea during an interview on the CBS show “60 Minutes,” which will be shown on Sunday.
The new lawmaker calls the plan the “Green New Deal.” It aims to eliminate carbon emissions within 12 years. Ocasio-Cortez and other progressives have pushed for the climate change plan that includes thousands of jobs in renewable energy such as wind and solar party.
"If you're willing to take a significant drop in economic activity, I would suggest that," Greenspan told CNBC. "Maybe I better make myself clear," he then added. "I think it would be a terrible mistake."
Greenspan said the measure passed in 2017 "was an excellent tax cut" though Congress failed to come up with a way to pay for it. He noted that the U.S. budget deficit for fiscal 2018 is likely to hit $1 trillion due in large part to entitlement burdens that lawmakers have not addressed, CNBC explained.
"Nobody cares about deficits until it grips the economy in an inflationary way," he said.
As for the general economic outlook, Greenspan remains pessimistic. He recently warned that investors should "run for cover."
"This is an economy which is reminiscent of the 1970s, which was a period of inflation and economic slowdown," he said. "That's the type of system we're dealing with unless we can confront the issue of entitlements."