Tuesday, July 20, 2004

Greenspan speaks

Will Congress and the financial markets like what he says?

...Politics will likely loom large at Tuesday's hearing and again Wednesday morning before the U.S. House of Representatives Financial Services panel.

With the November presidential election campaign in full swing, Democrats and Republicans will try and draw Greenspan into the debate over whether the recovery is too slow to rebuild the labor market or is responding nicely to Bush administration tax cuts.

The economy clearly lost momentum in June -- retail sales fell, industrial production slipped and job creation came in below forecasts -- but there were early signs of improvement in July and policy-makers are confident the elements of lasting expansion are intact.


Greenspan may counter lawmakers' efforts to quiz him on big budget deficits -- a hot issue in the election campaign -- by repeating his long-held conviction that Congress needs to impose discipline on government spending.

The Fed chief has emphasized that while he sees deficits as dangerous, spending curbs, not tax increases, are the wisest way to fix them.

Spending curbs? Someone better tell the preznit.