Sunday December 17 1:37 PM ET
Bush Frets About Economy, to Meet Greenspan
By Knut Engelmann
WASHINGTON (Reuters) - President-elect George W. Bush (news - web sites)'s team expressed mounting concern over the slowing U.S. economy as Bush prepared to take his case for a massive tax cut directly to Federal Reserve Chairman Alan Greenspan (news - web sites) on Monday.
Hitting the talk-show circuit on Sunday, a slew of top Bush advisers said broad tax relief -- a centerpiece of the Texas Republican's presidential campaign -- was the best way of ensuring a slowdown in the world's top economy does not turn into an outright recession.
``We've got an economy that's slowing down, where we could conceivably get into a recession somewhere down the road, where tax cuts would be important,'' Vice President-elect Dick Cheney (news - web sites) said on CBS's ``Face the Nation'' program.
A keynote in the president-elect's campaign was a huge $1.3 trillion tax cut that included lower taxes on wages, cuts in the estate tax and reducing the so-called marriage penalty, or taxes on two-wage-earning couples.
Democrats have slammed the proposal as favoring the wealthy, and some Republicans, such as House of Representatives Speaker Dennis Hastert of Illinois, have said it may be better to present the evenly-split legislature with piecemeal cuts.
Greenspan, widely seen as the architect of the record U.S. expansion, has also been critical of massive tax cuts. He has insisted repeatedly that his first priority would be to use the government's bulging surpluses to pay down the nation's debt.
Cheney said Bush, in Washington on Monday for meetings with the outgoing administration of President Clinton (news - web sites) and congressional leaders in an effort to mend fences after the divisive election, would meet Greenspan over breakfast.
``We want to work very closely (with Greenspan),'' Cheney said on ABC. ``He is the independent chairman of the Federal Reserve. They are responsible for monetary policy, but there is a degree of cooperation required between any administration in terms of tax policy and fiscal policy ... It would be foolish not to work closely together.''
History Lessons
Cheney added that Greenspan, a Republican first appointed to the powerful job at the central bank by President Ronald Reagan in 1987, was ``maybe the best Fed Chairman we ever had''.
His comments echoed those of Bush himself in a television interview earlier this month, in which he praised Greenspan and said it was up to the Fed chief whether he might wish to serve for a fifth term when his current term comes up in 2004.
But analysts have worried over whether Bush would continue the Clinton administration's hands-off policy to relations with the Fed. Bush's father, former President George Bush, has claimed that Greenspan's reluctance to cut interest rates more speedily during the last economic downturn in the early 1990s contributed to his defeat at the hands of Bill Clinton in 1992.
The Bush-Greenspan meeting will come just a day before Greenspan and his colleagues on the Fed's policy-making Federal Open Market Committee are due to meet for the last time this year to talk about the future of U.S. interest rates.
They are widely expected to leave borrowing costs unchanged but signal that they now attach equal weights to the risks of an economic slowdown and those of an inflationary overheating. Such a move to discard their long-standing warning that inflation is the prime risk to the economy would open the door to rate cuts early in 2001.
Bush and his top advisers have said repeatedly the slowdown in the U.S. economy underscored the need for tax relief that would boost demand and help avert a recession, officially defined as two successive quarters of negative growth.
``The economy is fragile and we think that we need to do something to make sure that there is a relatively soft landing if the economy turns real sour,'' Bush adviser and prospective chief of staff Andrew Card said on Fox News Sunday.
Bush himself signaled that his proposed $1.3 trillion tax cut was nonnegotiable, calling it ``an insurance policy'' against an economic downturn. ``Well, I'm not prepared to compromise,'' Bush told this week's Time Magazine, which named him Person of the Year. ``I think it's the right size.''
But he also acknowledged there ``may be moments'' of compromise in order to find common ground with Congress |
