Editore"s Note
Tilting at Windmills

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February 24, 2003
By: Kevin Drum

ALAN GREENSPAN'S SLOW DEATH....According to a story in the Chicago Tribune, George Bush is peeved that Alan Greenspan actually testified truthfully to Congress a couple of weeks ago:

When he publicly undercut President Bush's proposals to stimulate the economy, Alan Greenspan opened the door to widespread speculation that his career as chairman of the Federal Reserve may be drawing to a close.

The Fed chief angered the White House and many Republicans on Capitol Hill when he testified recently that Bush's proposed tax cuts were premature and that they should be offset by tax increases or spending reductions to keep the deficit under control.

Greenspan's term is up in June 2004, and the Tribune quotes several analysts who suggest that Bush won't reappoint him. Given W's penchant for demanding absolute loyalty, I'd say that's a good bet.

But then the Tribune goes on to say:

There are no obvious replacements to Greenspan....Harvard University economist Martin Feldstein and Treasury officials John Taylor and Peter Fisher are among frequently mentioned candidates, but none has the stature of a Greenspan.

I just love that. Every single Fed chairman for, oh, at least the last 50 years has taken over from someone who was regarded in Washington as a god. And every single time, the new guy becomes a god within a few years and everyone starts worrying that the economy will collapse when he retires because there's no one in the entire country who can take his place. This goes back all the way to the legendary William McChesney Martin, and the only exception was G. William Miller, who was Fed chairman for about a year and didn't quite have time to fully assume the financial divinity these guys usually get.

So I have no fears that the country will be left rudderless if Greenspan steps down. In fact, the Tribune quotes one guy who thinks that Bush will ask Greenspan to stay on through the election and then name a replacement. I hope he does, because after all, Bush might lose and then a Democrat could replace him. Anyone up for Paul Krugman as Fed chairman?

UPDATE: Brad DeLong has more.

Kevin Drum 10:36 AM Permalink | Trackbacks

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