Saturday, March 5, 2005

A Guru By Any Other Name…

The right wing was shocked, shocked to hear Sen. Harry Reid call Fed Chairman Alan Greenspan a “political hack” the other day, but now that it’s been said, folks are beginning to at least look at the record and venture to say that while Mr. Reid – heretofore described as “mild-mannered” (some say meek) – may have been intemperate in his remarks, he hit the nail on the head.

Questioning the wisdom of Alan Greenspan in political Washington is akin to challenging the integrity of the pope in Rome, so figures in both parties agreed yesterday that the top Senate Democrat’s description of the Federal Reserve Board chairman as a “political hack” was a blunder.

But Democrats said the accusation by Sen. Harry M. Reid (D-Nev.) reflected a real frustration in the minority party with Greenspan. Even before Reid’s attack, Democrats say, they have been changing their view of Greenspan from one of an above-politics wise man to the Republican partisan he had been in the 1960s and ’70s.


Democratic strategists say Greenspan, who turns 79 on Sunday and plans to retire in January, is newly vulnerable. “It is about time Democrats stopped treating him like he was an untouchable,” said Chris Lehane, a campaign adviser to Democratic presidential nominees Al Gore and John F. Kerry. And Marshall Wittmann of the Democratic Leadership Council said Greenspan has “returned to his Ayn Rand roots” in recent times, referring to his work for a publication affiliated with the libertarian philosopher in the 1960s. “The Fed chairman is the closest thing in Washington to a deity. At least with Democrats, he no longer has that deity status. He’s now viewed as a partisan figure.”

It was not always this way. Democrats were grateful to Greenspan in 1992, when Republicans blamed the defeat of President George H.W. Bush on the Fed’s refusal to drop interest rates more quickly. Greenspan’s support was critical to winning passage of President Bill Clinton’s 1993 deficit-reduction budget proposal, which included tax increases, with no GOP votes.


Even some of Greenspan’s colleagues at the central bank have long complained that he should stay out of debates over federal tax and spending decisions, or fiscal policy. They say the Fed’s independence from political pressure is key to its credibility in financial markets. “I believe the chairman shouldn’t insert himself and the Fed into political debates over the direction of fiscal policy,” former Fed board member Laurence H. Meyer, who served under Greenspan, wrote in a recent book about his time at the central bank.

Greenspan still enjoys broad respect. Last April, a Gallup poll found that the public had more confidence in Greenspan’s economic advice than in that of Bush or congressional Democrats.

It may be a sign of waning influence that Greenspan’s remarks about Social Security accounts have not transformed the debate the way his endorsement of tax cuts did in 2001. A GOP leadership aide said that “it was helpful to our side” but added that “it was not dynamic-changing.” [Washington Post]

Tom Toles gets it:

Take away the mystery and a guru is just an old guy in a loincloth talking to himself.