Reid: It’s Greenspan’s Fault

By Ed O'Keefe

Jan 23, 2008 3:38pm

ABC’s Z. Byron Wolf Reports: While Democrats and most Republicans and the White House agree there is "slow growth" warranting a one-time economic stimulus package, they’re of differing opinions about who is to blame.

At a press conference with three Democratic U.S. Mayors (Atlanta, Providence and Minneapolis) on Wednesday, Senate Majority Leader Harry Reid and Sen. Chuck Schumer, D-N.Y., blamed the White House, Republicans, and Alan Greenspan for not responding earlier to the housing crisis and a potentially brewing recession.

Reid took a shot at Alan Greenspan, who was Fed Chairman during most of the housing boom until he resigned in January of 2006.

"Alan Greenspan, had he not been attending so many cocktail parties, should have been focusing on the sub prime crisis."

This is not the first time the aging economist has been accused of spending time on the party circuit.

It’s possible Reid read about it when Tony Fratto told ABC News’ John Cochran that Greenspan’s claim in his recent memoir that the "Iraq war is largely about oil" sounded like "Georgetown cocktail party analysis."

Reid has been no fan of Greenspan for some time. Several years ago, he called Greenspan a "political hack" for tax cuts pushed through Congress by President Bush and Republicans.

Schumer added his two cents, insisting Democrats were holding press conferences on Capitol Hill calling for action on the sub prime crisis back in the Fall, but the White House would not act.

"The laissez faire strategy attitude on the economy of this administration has hurt us," Schumer said. "Democrats have been pushing."

Reid’s office pointed out that the Fed started to see deterioration in the credit market back in 2003 and 2004, but didn’t warn lenders off using the "non traditional mortgages" seen as precursors of what is now a credit crisis until December of 2005, shortly before Greenspan resigned.

It is unclear, given the logjam of unpassed spending bills that kept Congress in session well into December, that Congress could have passed any stimulus package last year.

This year, Reid said Congress is working as fast as it can. And legislating for tax rebates just as the IRS gets set for regular tax season is a fact of life at this point.

"Of course we have to start somewhere and that place is the house of Representatives, which is working on legislation. I’ve said I think we can have something passed into law by Presidents day. That’s as fast as we can do it and that’s pretty quick," Reid said.

But there are still no firm details on the short-term stimulus package, though an agreement is said to be in the offing. Reid and Schumer already have their sights set down the road, on a long-term stimulus package.

Schumer said what the economy needs is a "one-two punch" and Reid pointed out that Congress created 40,000 high paying jobs with every billion dollars it spends. He pointed to the Minneapolis bridge collapse (Mayor R.T. Rybak stood to his right) and the water system meltdown in Atlanta (Mayor Shirley Franklin stood to his left) and said Congress needs to address critical infrastructure issues all over the country.

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