DJ US Lawmakers Defend Greenspan, Fed Independence
02/26/2003
Dow Jones News Services
(Copyright © 2003 Dow Jones & Company, Inc.)
By Deborah Lagomarsino and Dawn Kopecki
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--Several lawmakers Wednesday rushed to Federal Reserve Chairman Alan Greenspan's defense after speculation that the Bush Administration may not renominate Greenspan next year following his recent harsh criticism of the White House tax plan.
Greenspan told lawmakers earlier this month that he supports some aspects of President George W. Bush's $695 billion tax proposal, such as eliminating the double taxation of corporate dividends. However, he said that any such tax cut should be offset by an increase in taxes elsewhere or a reduction in spending - in stiff opposition to the White House.
He also said the U.S. economy does not need a fiscal stimulus right now. Concerns about war with Iraq are making it tough for policymakers to assess the true state of the U.S. economy, he said.
Greenspan urged lawmakers to wait until consumers are less concerned about war before pursuing a large tax package. It will be easier to assess the need for a fiscal stimulus at that point, he said.
Several lawmakers defended Greenspan's stance, using a routine Senate Banking Committee hearing on deposit insurance reform to reaffirm their confidence in Greenspan and in the Fed's role as an independent federal regulator.
Sen. Charles Schumer, D-N.Y., unveiled at the hearing a resolution supporting the Fed's independence and objectivity and "of keeping Chairman Greenspan in as long as he wants to." Schumer later tried to get the resolution to the Senate floor to a vote, but was unsuccessful.
"So all of this whispering and all of this desire to sort of muffle the Fed, not to say they disagree with the views, but to say that the chairman ought to go, the chairman's outlived his usefulness, I think is very bad for the Fed, for investors and for our country," Schumer said.
Senate Banking Chairman Richard Shelby, R-Ala., also threw his support behind Greenspan.
"I hope you're there as long as you want to be," Shelby said. "And we all would stipulate that the Fed is independent, both Democrats and Republicans. And gosh, it's going to remain independent, especially under your tenure. I know that."
Greenspan's only reply: "Thank you, Mr. Chairman. And speaking for my colleagues as well as myself, we thank you."
-By Deborah Lagomarsino and Dawn Kopecki, Dow Jones Newswires; 202-862-9200; deborah.lagomarsino@dowjones.com
(END) Dow Jones Newswires
02-26-03 1427ET |
