President Bush's reappointment of Federal Reserve Board chairman Alan Greenspan and his quick confirmation by the Senate are both political no-brainers. To do otherwise would needlessly roil the financial markets, something no one wants to do, particularly in an election year.
While Bush had said last April that he planned to keep Greenspan on, he waited until Tuesday, a month before the chairman's term expired, to formally do so. There was speculation that the delay was the White House's way of reminding the central banker to go easy on raising interest rates.
If Bush is carrying a grudge, he didn't let it show, saying Greenspan is doing "a superb job." Aides to his father flatly said the chairman was one reason for the elder Bush's loss of the White House in 1992, that the Fed failed to cut interest rates fast enough and far enough to pump up the economy. And the elder Bush said, "I reappointed him and he disappointed me."
This will be Greenspan's fifth term. He was first appointed by President Ronald Reagan in 1987, reappointed by Bush senior and then twice named by President Bill Clinton. While 17 years is a long run, Greenspan is not yet the longest-serving Fed chairman. That distinction belongs to William McChesney Martin, who served from 1951 to 1970. Many believe — and Greenspan himself has indicated — that he will step down in 2006 when he turns 80, passes Martin's milestone and his separate 14-year term as a Reserve Board governor expires.
That would give the president, whoever it is, a chance to name a new chairman free of election-year politics.
Greenspan is a Washington veteran. He and Vice President Cheney both served in the White House under President Gerald Ford, Cheney as chief of staff and Greenspan as economic adviser. For lack of a better term, Greenspan he is a nonpartisan Republican. His testimony in regular appearances before Congress is legendarily circumspect, the word "opaque" often being invoked to describe it. HeThe chairman is a hawk on inflation, and it is a small irony that interest rates have been slashed to 40-year lows on his watch.
Greenspan is in favor of tax cuts in principle — he largely backed President Bush's — but he is also strongly opposed to deficits. And if there is any tension between the chairman and the White House and the Republican Congress, it will likely come over red-ink spending.
Greenspan's appointment was a good and necessary one, and now the Senate should fulfill its half of the bargain by speedily confirming him.