Bush Frets About Economy, to Meet Greenspan
dailynews.yahoo.com
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.
``He's got good judgement. I can't wait to hear what he has to say,'' Bush
told reporters in Austin, Texas, on Sunday after naming Condoleezza Rice as
his national security adviser.
Hitting the talk-show circuit earlier in the day, 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
Bush himself said he admired Greenspan, describing the Fed chairman as a
``distinguished, thoughtful economist''.
But Bush declined to speculate whether Greenspan shared his fear of an
excessive economic slowdown. ``One of the things I'm certain that I should
not do as president-elect is to try and put words in the mouth of Alan
Greenspan,'' he quipped.
Despite Bush's cordial tone, analysts have worried whether he will continue
the Clinton administration's hands-off policy toward the Fed. Bush's father,
ex-President George Bush, has claimed Greenspan's reluctance to cut interest
rates faster during the last 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 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. |
