Fed chief, Spratt disagree on taxes

WASHINGTON — John Spratt hoped the most influential economic mind in the nation would lend him at least a little support for his dismal views of President Bush’s tax cuts.

But Federal Reserve chair-man Alan Greenspan — who shares many of the York congressman’s opinions on budget discipline — parted ways with Spratt on taxes Wednesday.

Keep the cuts, he told the House Budget Committee, on which Spratt is the ranking Democrat.

“It’s an easy solution to a problem where you have a deficit, to increase taxes,” he said. “It’s not evident to me that, over the long run, that actually works.”

Spratt, following up, asked Greenspan whether the president’s tax package — which has totaled $1.7 trillion to date — makes sense, given the $521 billion federal deficit the White House predicts this year.

“You’ve been around this town longer than most of the people in this room,” Spratt said. “Do you think that cuts of that magnitude are politically realistic?”

“I don’t think they are,” Greenspan began, but went on to say that before taxes are raised, substantial spending cuts should be made. By increasing taxes, “we are risking lowering the rate of economic growth... .”

Predictably, Republican sup-porters of the president were overjoyed by Greenspan’s repeated support of the tax cuts, and his testimony in general, which counseled tighter fiscal controls.

Usually, said U.S. Rep. Christopher Shays, R-Conn., Republicans and Democrats alike come away from Greenspan’s testimony claiming that whatever he said supported their respective points of view — but that didn’t happen Wednesday.

“Your message was stronger to my side of the aisle than it was down the middle,” said Shays, the vice chairman of the Budget Committee.

Spratt, however, discounted Greenspan’s tax comments after the hearing.

“His real charge is monetary policy rather than fiscal policy,” Spratt said, referring to the Federal Reserve’s influence over interest rates, as opposed to tax policy.

What should be gleaned from the hearing, Spratt said, was Greenspan’s insistence that Congress be required to have enough revenue to cover tax cuts.

That, Spratt said, was “the most significant thing he said today.”

LEGISLATION WATCH

• Title: To Amend the Robert T. Stafford Disaster Relief and Emergency Assistance Act to Make Beach Nourishment Projects Eligible For Inclusion in Mitigation Plans and for Hazard Mitigation Assistance

• More fitting title: The Feed the Beach Act of 2004

• Introduced by: U.S. Rep. Henry Brown, R-Hanahan

• Intent: Make beach renourishment projects eligible for “pre-disaster mitigation grants” administered by the Federal Emergency Management Agency. Money to replace sand on shrinking beaches would get slashed in President Bush’s proposed budget.

“The dedication of a United States courthouse in his honor — in the shadow of his birthplace that was once cloaked in the scourge of segregation — signals a new era in South Carolina, brought about in large measure by the dogged determination of Matthew Perry and his unbending faith that justice will prevail.”

— U.S. Rep. Jim Clyburn, D-S.C., on the floor of the U.S. House of Representatives, honoring U.S. District Court Judge Matthew Perry, for whom a new federal courthouse will be dedicated in Columbia next month

Reach Markoe at (202) 383-6023 or lmarkoe@krwashington.com