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Friday, Jan. 26, 2001

Greenspan said that expected continued levels of U.S. budget surpluses over the next 10 years would allow for a trillion-dollar tax cut phased in over the next decade, provided that policymakers keep as a first priority the paying down of the U.S. debt.

Bush, departing from Clinton's policy of not commenting on Greenspan's pronouncements, issued praise from the White House after the remarks from the Fed chairman.

"I was pleased to hear Mr. Greenspan's words. I thought they were measured and just right," Bush said. "He recognizes we need both monetary policy and sound fiscal policy to make sure that the economy grows."

Greenspan spoke on Thursday before the Senate Budget Committee on the topic of "Evolving Fiscal Challenges" in a session that mostly revolved around the potential effects of a tax cut on U.S. debt.

Will such a trillion-dollar, phased-in tax cut help a U.S. economy that Greenspan said was near to zero growth? Not substantially, according to his testimony on the Hill.

"Lately there has been much discussion of cutting taxes to confront the evident pronounced weakening in recent economic performance," said Greenspan before the Senate Budget Committee. "Such tax initiatives, however, historically have proved difficult to implement in the time frame in which recessions have developed and ended."

Greenspan added, however, in subsequent remarks that "should current economic weakness spread beyond where now appears likely, having a tax cut in place may, in fact, do noticeable good."

Bush accepted the qualified comments of Greenspan. "I don't think Alan Greenspan was supporting any particular plan. I know he wasn't going to the Hill to say, 'Well, President Bush has the right plan.' "

"I felt like he was speaking about policy in general. His job is to report to the Congress in an objective way, and that's exactly how I read it," Bush said. "I've got my view of how to enact tax relief. I suspect others in the Congress will have their view."

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