Greenspan's Tax Views Prompt GOP Raves

W A S H I N G T O N, Jan. 26 -- President Bush, in office less than a week,has scored an early triumph in his campaign for a $1.6 trillion taxcut, winning Federal Reserve Chairman Alan Greenspan’s support fortax relief.

Greenspan, who until recently was insisting that the best use ofthe projected surpluses was to pay off the national debt, saidThursday that the surplus estimates have gotten so large that henow believes there will be enough money to pay off the debt and cuttaxes too.

In testimony before the Senate Budget Committee, Greenspan saidthat if the surplus projections come true — $5 trillion over thenext 10 years — the government will be able to eliminate the $3.4trillion in debt held by the public and have enough left over toreduce taxes.

New Administration Welcomes Comments

The president and other Republicans were quick to praiseGreenspan's comments. Bush told reporters at the White House thathe believed Greenspan had gotten it "just right. He recognizesthat we need good monetary policy and sound fiscal policy to makesure that the economy grows."

House Speaker Dennis Hastert, R-Ill., said Greenspan's testimony"confirmed that the path advocated by President Bush and theRepublican Congress is the right one. Fiscal discipline combinedwith tax relief will keep our economy growing."

In addition to dropping his previous reservations about usingthe surplus for tax cuts, Greenspan also voiced support for anotherelement of a tax cut program that Bush is considering — speeding upthe relief so that it can provide support for an economy that hassuddenly lost altitude.

In fact, Greenspan used some of the starkest language he hasever employed to describe current economic conditions, saying thedramatic slowdown that began in the fourth quarter has probablypushed economic growth "very close to zero" in the currentquarter.

He said he still believed the country could avoid a full-blownrecession as long as consumer confidence did not tank.