WASHINGTON, April 22 - U.S. President George W. Bush on Tuesday backed another term for Alan Greenspan at the Federal Reserve helm, ending speculation about the White House's plans after a rift over the need for new tax cuts. "Yes, I think Alan Greenspan should get another term," Bush said when asked by magazine reporters if the central bank chief had done a "good enough job." Greenspan's current four-year term as Fed chairman ends in June 2004, when he will be 78. The endorsement came as Greenspan on Tuesday underwent surgery to treat an enlarged prostate. The Fed said he tested negative for cancer and planned to return to work later this week, calling his surgery "routine and successful."
Speculation about Greenspan's future arose in February after the Fed chief questioned the need for Bush's $726 billion tax-cut plan, the centerpiece of his reelection campaign. Greenspan, 77, has not said publicly whether he wants another term and White House spokesman Ari Fleischer said he did not know whether the chairman had stated his preference to the president. The Fed declined to comment. SHORE UP CONFIDENCE Greenspan's reappointment could help shore up confidence in Bush's economic stewardship in the run-up to next year's election. Bush cleaned economic house late last year, with all of the major jobs on his team, including treasury secretary, now in new hands. "It makes sense. I think Bush's economic team is still not ready for prime time, so you've got to keep somebody like Greenspan on board because of his stature," said Greg Valliere of Schwab Washington Research. After 15 years at the helm of the world's most powerful central bank, Greenspan enjoys legendary status for his role in guiding U.S. monetary policy. By staying on into 2006, when he would be 80, Greenspan could become the longest-serving U.S. Fed chief, surpassing the record of William McChesney Martin, who led the central bank for nearly 19 years from April 1951 to January 1970.
Despite criticism for failing to pop the doomed stock market bubble of the 1990s, Greenspan has earned praise for his handling of the 2001 recession and the shocks that followed. "The president thinks he has done a very able job as a steward of the economy, making certain that we had the proper monetary policies in place," Fleischer said. Still, questions about his reappointment have lingered. Greenspan irked Republicans inside and outside the White House in February by telling Congress the U.S. economy needed no new economic stimulus and warning of the dangers of rising budget deficits. Congressional Democrats seized on the comments, blaming Bush's 2001 tax cuts for turning budget surpluses into record deficits and for costing the private sector more than 2.6 million jobs. Some of the president's supporters lashed out at the Fed chairman for interfering in fiscal affairs. "He is wrong. He was wrong back when we were having the bubble and he is wrong now," said House of Representatives Majority Leader Tom DeLay, a Texas Republican. "I think he's getting old," said Grover Norquist, head of Americans for Tax Reform. The Republican-led Congress eventually scaled back Bush's plan, setting a $550 billion cap in the House and a $350 billion limit in the Senate.
Bush has accepted the $550 billion figure as the minimum needed to revive the beleaguered economy, and administration officials are considering phasing in some components of the tax-cut package to keep costs within limits set by Congress. But Fleischer said on Tuesday Bush does not support a delay in cutting the top income tax rate. The stakes are enormous for Bush as he seeks to avoid the fate of his father, former President George Bush, who saw his popularity soar after a victory in the 1991 Gulf War only to lose his 1992 re-election bid to Bill Clinton over doubts about his economic management. Bush's father blamed Greenspan in part for his defeat in 1992, saying the Fed was too slow to cut rates to boost the sluggish economy coming out of the 1990-1991 recession. "Clearly this President Bush has learned some lessons from his father, and that lesson is that you don't get into a dispute with Greenspan," Valliere said. The White House said Bush plans to make several day trips, including one this week to Ohio, to sell his tax cuts. Ohio is the home state of Sen. George Voinovich, one of the moderate Republicans who cut the deal that limited Senate tax cuts to $350 billion. The visit could step up pressure on Voinovich and other lawmakers to reconsider.//