Tyrone Bigguns
09-17-2007, 02:19 PM
Sept. 15 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan criticized President George W. Bush for following an economic agenda driven by politics instead of sound policy, with little concern for future consequences.
Soon after Bush took office, Greenspan wrote in a new book, it became evident that the Treasury secretary and White House economists would play secondary roles in decisions on taxes and other issues. In addition, officials with whom he had worked in the administration of President Gerald Ford changed after Bush brought them back to Washington, he said he found.
``The Bush administration turned out to be very different from the reincarnation of the Ford administration that I had imagined. Now, the political operation was far more dominant,'' Greenspan, 81, wrote in ``The Age of Turbulence: Adventures in a New World.'' The book, an advance copy of which was obtained by Bloomberg News, is scheduled for publication on Sept. 17. The Wall Street Journal published an account on its Web site yesterday after buying a copy at a New York-area bookstore.
In the 531-page tome, which ranges from Greenspan's childhood in New York to his 18 years at the Fed, he recounts his relationships with the six presidents he served.
Richard Nixon and Bill Clinton were the most intelligent, he wrote, while he found Ford the most normal and likeable. Ronald Reagan was the most devoted to free markets, though his grasp of economics ``wasn't very deep or sophisticated.''
George H.W. Bush, the current president's father, was very cordial, though Greenspan's relationship with him was complicated by differing views on monetary policy, he wrote. Bush blamed high interest rates, in part, for his 1992 election loss to Clinton.
Harshest Criticism
Greenspan saved his harshest analysis for the current president. Soon after Bush took office in 2001, the president set about implementing a campaign promise to cut taxes, a policy Greenspan said he believed at the time wasn't well conceived.
``Little value was placed on rigorous economic policy debate or the weighing of long-term consequences,'' he wrote.
In 2001 testimony before Congress, Greenspan was widely interpreted to have endorsed Bush's proposal to cut taxes by $1.6 trillion over 10 years. In the book, he characterized his testimony as politically careless and said his words were misinterpreted.
Greenspan also expressed disappointment in Bush's reluctance to antagonize then-House Speaker Dennis Hastert and other congressional Republicans by vetoing spending bills.
``There is a remedy for legislative excess,'' wrote Greenspan, ``it's called a presidential veto.''
Defense Spending
White House spokesman Tony Fratto took issue with Greenspan's criticism, saying that budget deficits were caused in large part by an economic downturn at the beginning of Bush's first term and increased spending on defense and security following the Sept. 11, 2001 terrorist attacks.
``It shouldn't have come as a surprise to anyone that the administration was advocating tax cuts,'' Fratto said. ``Clearly those tax cuts proved to be the right medicine for an ailing economy.''
Greenspan's frustration extended to Congress, which let spending get out of control, he said. ```Deficits don't matter,' to my chagrin, became part of the Republicans' rhetoric,'' he said. ``The Republicans in Congress lost their way. They swapped principle for power. They ended up with neither. They deserved to lose.'' The Republicans lost control of both houses of Congress in the November 2006 elections.
Even though he had differences with Bush on economic policy, Greenspan said the president promised him early on he wouldn't interfere with Fed policy. He kept his pledge, Greenspan said.
Cheney's Role
Greenspan also rejected the belief held by some critics that Vice President Dick Cheney tells Bush what to do.
``From my brief acquaintance'' with Bush, wrote Greenspan, ``it was my impression that he was his own man.''
When Bush brought one-time Ford aides Cheney -- whom Greenspan describes as having a ``sphinx-like calm'' -- and Donald Rumsfeld, back to Washington, the Fed chairman saw a ``golden opportunity to advance the ideals of effective, fiscally conservative government and free markets.''
It wasn't to be. ``I was soon to see my old friends veer off in unexpected directions,'' wrote Greenspan, who had been encouraged by the budget surpluses of the Clinton administration. ``Then with George Bush came the tax cuts, unmatched by decreased spending, and, in the wake of September 11, still more open-handed spending.''
Inner Circle
Greenspan said he never became part of Bush's inner circle, in which dissent from staff like former Treasury Secretary Paul O'Neill wasn't encouraged. ``Paul's outspokenness put him at odds with the administration, which emphasized loyalty and staying on message.'' The White House just wanted a spokesman for its economic policies, he said.
Greenspan's career in Washington began in 1967 when he worked on Nixon's presidential campaign. Though he said he found Nixon thoughtful and articulate, he soon saw a dark side. Just before the 1968 Republican convention, Greenspan attended a staff meeting where Nixon fulminated angrily and at length about Democrats.
``His speech was so intense and so laced with profanity that it would have made Tony Soprano blush,'' wrote Greenspan. He was so disturbed by the outburst that he turned down a job at the White House after Nixon defeated Hubert Humphrey in the election.
Nixon Resignation
During Nixon's second term, amid a recession, Greenspan agreed to become chairman of the White House Council of Economic Advisers. Nixon announced his resignation the night of Greenspan's Senate confirmation hearing.
Greenspan later worked on Reagan's 1980 presidential campaign and admired the candidate for ``the clarity of his conservatism.'' Reagan, wrote Greenspan, had fixed ideas about what government should and shouldn't do. In 1987 Reagan nominated Greenspan to succeed Paul Volcker as Fed chairman.
Soon after Bush took office, Greenspan wrote in a new book, it became evident that the Treasury secretary and White House economists would play secondary roles in decisions on taxes and other issues. In addition, officials with whom he had worked in the administration of President Gerald Ford changed after Bush brought them back to Washington, he said he found.
``The Bush administration turned out to be very different from the reincarnation of the Ford administration that I had imagined. Now, the political operation was far more dominant,'' Greenspan, 81, wrote in ``The Age of Turbulence: Adventures in a New World.'' The book, an advance copy of which was obtained by Bloomberg News, is scheduled for publication on Sept. 17. The Wall Street Journal published an account on its Web site yesterday after buying a copy at a New York-area bookstore.
In the 531-page tome, which ranges from Greenspan's childhood in New York to his 18 years at the Fed, he recounts his relationships with the six presidents he served.
Richard Nixon and Bill Clinton were the most intelligent, he wrote, while he found Ford the most normal and likeable. Ronald Reagan was the most devoted to free markets, though his grasp of economics ``wasn't very deep or sophisticated.''
George H.W. Bush, the current president's father, was very cordial, though Greenspan's relationship with him was complicated by differing views on monetary policy, he wrote. Bush blamed high interest rates, in part, for his 1992 election loss to Clinton.
Harshest Criticism
Greenspan saved his harshest analysis for the current president. Soon after Bush took office in 2001, the president set about implementing a campaign promise to cut taxes, a policy Greenspan said he believed at the time wasn't well conceived.
``Little value was placed on rigorous economic policy debate or the weighing of long-term consequences,'' he wrote.
In 2001 testimony before Congress, Greenspan was widely interpreted to have endorsed Bush's proposal to cut taxes by $1.6 trillion over 10 years. In the book, he characterized his testimony as politically careless and said his words were misinterpreted.
Greenspan also expressed disappointment in Bush's reluctance to antagonize then-House Speaker Dennis Hastert and other congressional Republicans by vetoing spending bills.
``There is a remedy for legislative excess,'' wrote Greenspan, ``it's called a presidential veto.''
Defense Spending
White House spokesman Tony Fratto took issue with Greenspan's criticism, saying that budget deficits were caused in large part by an economic downturn at the beginning of Bush's first term and increased spending on defense and security following the Sept. 11, 2001 terrorist attacks.
``It shouldn't have come as a surprise to anyone that the administration was advocating tax cuts,'' Fratto said. ``Clearly those tax cuts proved to be the right medicine for an ailing economy.''
Greenspan's frustration extended to Congress, which let spending get out of control, he said. ```Deficits don't matter,' to my chagrin, became part of the Republicans' rhetoric,'' he said. ``The Republicans in Congress lost their way. They swapped principle for power. They ended up with neither. They deserved to lose.'' The Republicans lost control of both houses of Congress in the November 2006 elections.
Even though he had differences with Bush on economic policy, Greenspan said the president promised him early on he wouldn't interfere with Fed policy. He kept his pledge, Greenspan said.
Cheney's Role
Greenspan also rejected the belief held by some critics that Vice President Dick Cheney tells Bush what to do.
``From my brief acquaintance'' with Bush, wrote Greenspan, ``it was my impression that he was his own man.''
When Bush brought one-time Ford aides Cheney -- whom Greenspan describes as having a ``sphinx-like calm'' -- and Donald Rumsfeld, back to Washington, the Fed chairman saw a ``golden opportunity to advance the ideals of effective, fiscally conservative government and free markets.''
It wasn't to be. ``I was soon to see my old friends veer off in unexpected directions,'' wrote Greenspan, who had been encouraged by the budget surpluses of the Clinton administration. ``Then with George Bush came the tax cuts, unmatched by decreased spending, and, in the wake of September 11, still more open-handed spending.''
Inner Circle
Greenspan said he never became part of Bush's inner circle, in which dissent from staff like former Treasury Secretary Paul O'Neill wasn't encouraged. ``Paul's outspokenness put him at odds with the administration, which emphasized loyalty and staying on message.'' The White House just wanted a spokesman for its economic policies, he said.
Greenspan's career in Washington began in 1967 when he worked on Nixon's presidential campaign. Though he said he found Nixon thoughtful and articulate, he soon saw a dark side. Just before the 1968 Republican convention, Greenspan attended a staff meeting where Nixon fulminated angrily and at length about Democrats.
``His speech was so intense and so laced with profanity that it would have made Tony Soprano blush,'' wrote Greenspan. He was so disturbed by the outburst that he turned down a job at the White House after Nixon defeated Hubert Humphrey in the election.
Nixon Resignation
During Nixon's second term, amid a recession, Greenspan agreed to become chairman of the White House Council of Economic Advisers. Nixon announced his resignation the night of Greenspan's Senate confirmation hearing.
Greenspan later worked on Reagan's 1980 presidential campaign and admired the candidate for ``the clarity of his conservatism.'' Reagan, wrote Greenspan, had fixed ideas about what government should and shouldn't do. In 1987 Reagan nominated Greenspan to succeed Paul Volcker as Fed chairman.