Economic Odd Couple Clinton, Greenspan Seem to Get Along

Article excerpt

They're the odd couple of U.S. economic policy: a Republican Federal Reserve chairman and a Democratic president who actually seem to get along. That could help President Bill Clinton put his stamp on the powerful central bank board.

Clinton now has an opportunity to fill two vacancies and pick a vice chairman. All current members of the seven-member board are GOP appointments.

The cordial relationship between Clinton and Fed Chairman Alan Greenspan breaks a recent pattern of White House sniping at the Fed - and financial markets seem to like the truce.

Greenspan, who was President Gerald R. Ford's chief economic adviser and a 1980 campaign adviser to Ronald Reagan, appeared to go out of his way to be supportive of the administration's deficit-cutting efforts.

And Clinton has worked at courting Greenspan - inviting him to sit next to Hillary Rodham Clinton at the president's economic speech to Congress last year, extending social invitations and speaking respectfully of the independence of the Fed.

Greenspan talks informally with Clinton every few months and sees Treasury Secretary Lloyd Bentsen even more often.

***** Absence of Bashing

The absence of Fed bashing was underscored this week when Greenspan told Congress the Fed might have to nudge up short-term interest rates to guard against new inflation.

The statement was carefully worded to keep markets from going haywire. And Clinton avoided direct criticism of Greenspan in response, although presidents never want higher interest rates.

He noted the Fed chairman's focus on short-term rates like car loans rather than longer-term rates like most home mortgages. "There is still a kind of gap between short- and long-term rates," Clinton said, a nod toward Greenspan's point that short-term rates were disproportionately low.

Their words seemed coordinated, as if Greenspan and Clinton were playing their respective parts but reading from the same script.

"It looks like this (Greenspan's) testimony was cleared with the White House," said David Jones, an economist at Aubrey G. Lanston & Co., a New York government securities house.

But White House aides say they only knew what Greenspan would say 15 minutes before his testimony - when they got an advance text from the Joint Economic Committee. …