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Greenspan to Testify Before Senate Panel Next week on Fed Policy

By Reuters
Published | Updated

WASHINGTON – Federal Reserve Chairman Alan Greenspan is scheduled to appear before a Senate panel next week to deliver the central bank's semiannual report on the health of the economy, a Senate Banking Committee aide said Tuesday.

The monetary policy hearing, scheduled for Tuesday Feb. 11 at 10 a.m. EST, will be held by the Senate Banking Committee and is the Fed chief's first appearance on Capitol Hill since December.

Greenspan's closely watched testimony and release of the Fed monetary policy report come at a crucial time as lawmakers are weighing President. Bush's $695 billion economic stimulus and tax-cut package, which would help drive the U.S. budget deeper into deficit.

On Monday, Bush outlined a $2.23 trillion budget for fiscal 2004, which begins Oct. 1. Bush's plan forecasts a $304 billion deficit in fiscal 2003, which would surpass 1992's record of $290 billion. That shortfall is expected to grow to $307 billion and to total $1.084 trillion over the next five years.

Although Greenspan typically has not commented on specific government spending and tax cut proposals, the Fed chief has warned lawmakers repeatedly about the need for fiscal discipline and the risks of a growing budget deficit.

Treasury Secretary John Snow Tuesday, while promoting Bush's tax plan that would, among other things, end taxes on corporate dividends to individuals, warned the U.S. must be vigilant against growing deficits.

"These deficits are not out of control," Snow told the House Ways and Means Committee. "On the other hand we must always be vigilant on deficits."

Calling himself a deficit hawk, Snow gave his support for Bush's stimulus package, saying it would promote economic growth.

"I remain committed to fiscal discipline, but I also think, and I mean this sincerely, that things like the dividend exclusion and the small business tax reduction and accelerating these tax cuts will give us growth," Snow said.