Former Federal Reserve Chairman Alan Greenspan, whose backing of George W. Bush’s 2001 tax cuts was instrumental in persuading Congress to pass them, said lawmakers should allow the reductions to expire at the end of this year in an interview with Judy Woodruff to be aired this weekend.

The story from Bloomberg News:

“They should follow the law and let them lapse,” Greenspan said in an interview on Bloomberg Television’s “Conversations with Judy Woodruff,” citing a need for the tax revenue to reduce the federal budget deficit.

The former U.S. central bank chairman also said the economy is in “a temporary slump” and would emerge with a “sluggish” 3 percent growth rate in the second half of the year. He said banks’ lending will remain constrained because financial markets are pressing them to maintain higher capital levels and predicted the Wall Street regulatory measure the Senate passed yesterday will reduce credit available for low- income consumers.

Greenspan’s comments on taxes, to be broadcast today and over the weekend, place him in the middle of an election-year struggle over extending Bush’s trillions of dollars of tax cuts.

President Barack Obama campaigned for election in 2008 on a promise of extending the Bush tax reductions for families earning up to $250,000 while eliminating the cuts for higher- income Americans, a position also embraced by most congressional Democrats. Republicans have pressed for continuing the cuts for higher-income families, arguing that a weak economy is no time for a tax increase.

House Majority Leader Steny Hoyer, a Maryland Democrat, stoked the debate with comments on June 22 that permanent extension of the middle-class tax cuts may no longer be affordable because of the growing U.S. debt burden.

If by "temporary slump" Greenspan means a decade plus, then I suspect he may be right. The other big economic news of the day comes from Ezra Klein who published a Brookings Institute chart that shows that "adding new jobs at a rate of 200,000 a month would take us 150 months -- or 12.5 years -- to get back to normalcy." Normalcy being a pre-recession level of employment. The bad news is that so far this year only in April did the economy generate 200,000 new jobs.

You can read the full Job Gap report written by Michael Greenstone and Adam Looney here. As of June, employment numbers, the job gap stands at almost 11.3 million jobs.