Alan Greenspan Melissa Golden for The Wall Street Journal, Grooming by Melissa Schwartz Jones
Alan Greenspan, the former chairman of the Federal Reserve, goes to a lot of parties. He and his wife, the TV journalist Andrea Mitchell, "sort of get invited everywhere," he says, sitting in front of the long bay window in his office on Connecticut Avenue in Washington, D.C. Lately, though, cocktails and dinners seem to have guest lists drawn almost exclusively from one political party or the other. "It used to be a ritualistic 50-50 at parties—the doyennes of culture and partying were very strict about bipartisanship," he adds. "That doesn't exist anymore."
In his new book "The Map and the Territory," to be released on Tuesday, Mr. Greenspan, 87, goes on a hunt for what has gone wrong in American politics and in the U.S. economy. He doesn't blame the current administration for today's partisan divide. The culprit? "It's the benefits," he says, pointing to the disagreements between Republicans and Democrats over how to deal with the growth of entitlements.
In the book, he also ponders why the Fed failed to predict the financial crisis, where he himself went wrong and how that discovery has completely changed his worldview.
Mr. Greenspan's biggest revelation came one day about a year ago when he was playing with gross domestic savings numbers. What he found, to his surprise and initial skepticism, was that an increase in entitlements has closely corresponded to a decline in the country's savings. "We had this extraordinary increase in benefits, with each party trying to outbid the other," he says. "That practice has been eroding the country's flow of savings that's so critical in financing our capital investment." The decline in savings has been partly offset by borrowing from abroad, which brings us to our current foreign debt: "$5 trillion and counting," he says.
