[NYTr] Republicans and Bush condemned by Greenspan

[All the News That Doesn't Fit]

The Independent - Sep 17, 2007
http://news.independent.co.uk/world/americas/article2970788.ece


Republicans and Bush condemned by Greenspan

By Andrew Gumbel in Los Angeles

The revered former Federal Reserve chairman, Alan Greenspan, lashed out
against the Bush administration over the weekend, accusing the White
House and the Republicans in a new book of swapping "principle for
power" and allowing fiscal policy to run out of control.

In a series of advance releases and interviews ahead of today's
publication of a new memoir, Mr Greenspan – a lifelong Republican
himself – expressed his deep disappointment with the direction of US
economic policy over the past six-and-a-half years, saying he had
initially looked forward to working with "old friends" he had known
since the Ford administration in the 1970s, only to see them "veer off
in unexpected directions".

He was referring, in particular, to Vice President Dick Cheney and
former Defence Secretary Donald Rumsfeld, who were key aides to
President Ford when Greenspan served on the president's Council of
Economic Advisers. His book, The Age of Turbulence: Adventures in a New
World, further embarrassed them by insisting on what he called a
"politically inconvenient truth": that the Iraq war "is largely about
oil".

The core criticisms, though, were of the Republican-controlled
Congress, which allowed a budget in surplus at the end of the Clinton
administration to give way to runaway deficit spending, and of a White
House that did not veto a single spending bill in six years.

"The Republicans in Congress lost their way," he wrote. "They swapped
principle for power. They ended up with neither." Of last November's
congressional elections, in which the Republicans lost control of both
the House and Senate, Greenspan added: "They deserved to lose."

Greenspan said the Bush administration's hands-off approach to Congress
was a mistake. Issuing the occasional veto, he argued, "would send a
message to Congress that it did not have carte blanche on spending".

He said he had raised the issue with the White House. "But," he said,
"the answer I received from a senior White House official was that the
president didn't want to challenge former House Speaker Dennis Hastert.
"He thinks he can control him better by not antagonising him,' the
official said."

Greenspan added: "To my mind, Bush's collaborate-don't-control approach
was a major mistake – it cost the nation a check-and-balance mechanism
essential to fiscal discipline." He also accused the White House of
controlling economic policy by itself and essentially cutting
successive Treasury Secretaries – Paul O'Neill and John Snow – out of
the equation.

Greenspan, who presided over America's equivalent of a central bank
with a rare authority for more than 18 years before his retirement last
year, is just the latest in a growing chorus of former senior officials
who have lambasted the Bush administration with a vehemence unseen even
in the wake of the Watergate scandal that unseated Richard Nixon.
Greenspan, in fact, praised Nixon as one of the two smartest presidents
he worked with. The other was Bill Clinton.

He and Clinton developed "an easy, impromptu relationship". He wrote:
"I didn't share his baby-boom upbringing or his love of rock'*'roll.
Probably he found me dry – not the kind of buddy he liked to smoke
cigars and watch football with. But we both read books and were curious
and thoughtful about the world, and we got along."

Such cosiness was glaringly missing from the administration that
followed. Of the advent of the Bush administration in 2001, he wrote:
"I looked forward to at least four years of working collegially with
many of the government's best and brightest men, with whom I had shared
many memorable experiences. And on a personal basis, that is how it
worked out.

"But on policy matters, I was soon to see my old friends veer off in
unexpected directions."

Greenspan himself has not been immune from criticism since he left the
Fed. For years, he has fended off accusations that he helped fuel the
dot-com investment bubble at the end of the 1990s, and that he did
something very similar with the housing market that is now experience a
major crunch, particularly in the sub-prime sector.

Like other memorialists of the Bush administration – for instance,
former CIA director George Tenet – Greenspan is also being accused of
speaking out too late against policies that, at the time, he gave every
public appearance of endorsing.

He memorably endorsed George Bush's advocacy of deep tax cuts, focused
on the richest Americans, and said little at the time about their
implications for deficit spending.

On the US presidents ...

* George Bush Snr:

"Great things happened on George Bush's watch: the fall of the Berlin
Wall, the end of the cold war, a clear victory in the Persian Gulf, and
the negotiation of the Nafta agreement to free North American trade.
But the economy was his Achilles' heel, and as a result we ended up
with a terrible relationship."

* On Clinton:

"Clinton was often criticised for inconsistency and for a tendency to
take all sides in a debate, but that was never true about his economic
policy. A consistent, disciplined focus on long-term economic growth
became a hallmark of his presidency."

* On the current Bush administration:

"I was a different person than I had been when first exposed to the
glitter of the White House a quarter-of-a-century before. So were my
old friends: not in personality or character, but in opinions about how
the world works and ...what is important."