Greenspan's future in doubt

Fed Chief Alan Greenspan, a lifelong Republican, is under fire for pointing out that Bush's "stimulus plan" is nothing short of ridiculous. As a result, GOPers are grumbling about replacing Greenspan when his term expires mid-next year.

Given Greenspan's reputation for cryptic Oracle-like pronouncements, his pointed criticism of Bush's budget came through loud and clear:

What was surprising about Greenspan's congressional testimony last week was not so much the warnings against further tax cuts, now that budget deficits have returned, but rather the extent of his criticism of the Bush program.

Greenspan said future tax cuts should be paid for, either by spending cuts or tax increases. Bush does not propose that. The Fed chairman also raised doubts about one of Bush's biggest selling points — that the economy needs another round of government stimulus.

Greenspan contended that once the uncertainty over war in Iraq passes, economic growth should accelerate without the need for additional tax cuts.

For good measure, he directly challenged the administration's "deficits don't matter" school of thought and the contention that economic growth alone can take care of the revenue lost from the tax cuts.

Some speculate that Greenspan was trying to regain some of the credibility he lost when he endorsed Bush's first round of tax cuts. Others suggest he has tired of the job and doesn't care about being reappointed (hence the uncharaceristic bluntness and lack of diplomacy).

In any case, Greenspan's testimony all but doomed Bush's push for new tax cuts. It doesn't make up for his irresponsible endorsement of Bush's first round of tax cuts (which led in large part to the current dismal fiscal outlook), but it does help repair some of his tattered image, and should give him hope to retire with some sort of legacy still intact.

Posted February 16, 2003 01:40 PM | Comments (27)