Monday, September 24, 2007

Washington Post's Novak points out Greenspan's lies

The Maestro's False Notes

By Robert D. Novak
Monday, September 24, 2007; A19

After four decades of
Alan Greenspan's nimble maneuvers, it seemed no accident that publication of his long-awaited memoir, "The Age of Turbulence," coincided with global financial turmoil. Instead of examining his frequently suspect management of monetary affairs during 18 years as chairman of the Federal Reserve Board, the political and financial worlds focused last week on Greenspan's self-portrait as a "conservative libertarian" who deplores Republican leaders and their policies.
Greenspan knows that the surest route to praise in Washington is for a purported man of the right to be seen as embracing the left. Although appointed by Republican presidents to four of his five terms heading the nation's central bank, Greenspan in his memoir is markedly more negative about those political benefactors than reviewers have suggested. Only
Gerald Ford, the hapless, short-term president, gets passing grades.
But the "Maestro" sounds false notes in a book that probably reveals more than intended. Instead of a detached policymaker, Greenspan comes across as engaged in political games. I have had enough contact with Greenspan to know that in private the central banker is a political junkie, but I had no idea how deeply he was involved with the one Democratic president who appointed him:
Bill Clinton.
One veteran Greenspan-watcher, going first to the book's photo section, was surprised that Greenspan had selected an image of himself between
Hillary Clinton and Tipper Gore, a place of honor, at President Clinton's first State of the Union address, in 1992. Federal Reserve colleagues had viewed his taking that seat as undermining the central bank's cherished independence. Greenspan's memoir does not mention Clinton's quest to get him to cut interest rates as compensation for tax increases, but the Fed chairman was quite concerned at the time about being seen as the president's pawn. When my column suggested then that his presence in the presidential box played into Clinton's designs, he called me (for the last time) to complain.
In "The Age of Turbulence," Greenspan buys into the discredited depiction of
Ronald Reagan (who first named Greenspan to the Fed) as an amiable dunce and does not conceal his contempt for both Bushes (each of whom nominated him). Even more surprising is his adoration of Clinton. While scathing in attacking increased spending by George W. Bush, he ignores massive non-defense spending hikes under Clinton and embraces the Democrat's tax increase "as our best chance in 40 years to get stable long-term growth."
Greenspan's book treats Reagan's tax-cutting, supply-side movement as if it never happened. Seeing no inherent benefits from a lower tax burden, he accepts the Democratic deficit-reduction formula that a dollar of higher taxes is equivalent to a dollar of reduced spending.
With the memoir retreating from his passive endorsement of Bush's 2001 tax cuts, it is hard to tell the Greenspan of this book from a conventional Democrat. He indicates that his favorite colleague in the younger Bush's administration was the dysfunctional Treasury Secretary Paul O'Neill, who opposed the tax-cut strategy while ruining morale in his department.
The tip-off to Greenspan's mind-set is his reference to Democratic Sen.
Kent Conrad as a "fiscal conservative." Conrad is an avowed deficit hawk whose advocacy of high taxes and high spending earned him a 16 percent fiscally conservative rating last year from the National Taxpayers Union.
Though Greenspan's memoir makes him a virtual member of the Clinton administration, he describes himself as a reluctant public servant -- which runs counter to my firsthand observations. He writes that he turned down a job in the
Nixon administration, but in fact he was rejected by the new president's staff because of his performance as part of the 1968 campaign. (Temporarily exiled to political Siberia, a distraught Greenspan was reduced to scheduling breakfast with me on his trips from New York to Washington.) His book has him reluctantly accepting Reagan's appointment as Fed chairman in 1987, but in fact he aggressively promoted himself for the job. (He approached me at a Washington reception that year to say he had heard I opposed his appointment and asked me why.)
"The Age of Turbulence" lacks the confessional candor of the best memoirs, but it tells enough to leave intriguing questions for a future biographer. Why did three Republican presidents name a Federal Reserve chairman fundamentally opposed to the
GOP's economic doctrine? Did Greenspan deceive them?

Comments:
Great work.
 
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