Chairman Moved a Nation
Friday, January 27, 2006
Government leaders, Wall Street analysts and academics have heaped accolades on Alan Greenspan as he prepares to step down as Federal Reserve chairman Tuesday, leaving behind a strong economic expansion, tame inflation and low unemployment after more than 18 years of adjusting the nation's interest rates.
But Greenspan, 79, also leaves a remarkable political legacy, say Republican and Democratic policymakers who have worked with him in Washington over nearly four decades.
From his days working on Richard Nixon's 1968 presidential campaign to his congressional testimonies last year, Greenspan has helped candidates, presidents and lawmakers devise and sell policies on countless social and economic issues. An avowed "free-enterpriser," Greenspan consistently pushed for less government regulation, smaller federal budget deficits and freer trade, these observers said. Early on, he helped move the federal government to play a smaller role in the U.S. economy than was commonly accepted in the 1960s and 1970s.
However, as Greenspan has indicated in public and private comments, his years in political life also taught him that compromise is necessary to preserve both capitalism and democracy. Over time, Greenspan helped forge several deals that strengthened the government's hand or extended its reach.
"Alan has had, mostly behind the scenes, a tremendous impact on government policy" over the last 40 years, said former president Gerald R. Ford in a December interview. Ford appointed Greenspan chairman of the Council of Economic Advisers in 1974.
Long before becoming Fed chairman in 1987, Greenspan played key roles in ending the nation's military draft, rescuing New York City from near-bankruptcy and temporarily saving Social Security from insolvency. Since taking the helm of the central bank, he helped persuade Congress to approve President Bill Clinton's 1993 budget and President George W. Bush's 2001 tax cut. He urged Congress last year to create private Social Security accounts, reduce the deficit and resist calls to erect new trade barriers.
"Alan Greenspan has probably been a key player in more Republican presidential campaigns and Republican party platforms and Republican administrations than any other economist in the country," said Martin Anderson, a senior fellow at the Hoover Institution who worked in the Nixon and Reagan administrations. "He's a wonderful politician."
Greenspan thrived in the Republican Party because it housed so many like-minded individuals. But Democrats, including President Jimmy Carter, also embraced deregulation in the 1970s; Clinton, in the 1990s, supported free trade and deficit reduction, declaring the era of big government over.
In the process, "the political impact of [Greenspan's influence] has probably been to push the Democrats more to the center on fiscal policy," said investment banker Felix G. Rohatyn, a Democrat who served as Clinton's ambassador to France.
The Fed chairman declined to comment for this article.
Greenspan took his first steps into politics in 1968 when Anderson asked him to join Nixon's presidential campaign. Greenspan helped coordinate domestic policy research and analyze poll data, writing computer programs to project the electoral vote count.
Greenspan had met Anderson years earlier when both formed part of the intellectual circle of novelist Ayn Rand, a Russian emigre whose writings celebrated laissez-faire capitalism. Three of the essays in Rand's 1967 book "Capitalism: The Unknown Ideal" were authored by Greenspan, then the 41-year-old president of an economic consulting firm in New York City.