WASHINGTON – Federal Reserve Chairman Alan Greenspan Wednesday repeated there was an urgent need to restore budget discipline, and cautioned it was hard to gauge the U.S. economy's health amid war worries.
The Fed chief's testimony to the House Financial Services Committee was identical to that he gave Tuesday to the Senate Banking Committee, including a warning not to allow "growing budget deficits to again become entrenched."
Greenspan's Tuesday testimony and his responses to questions afterward were regarded as a blow to President Bush's proposed $695-billion economic stimulus program, which envisages record deficits for the next two years.
Bush administration officials were at pains afterward to note that Greenspan endorsed ending so-called double taxation of dividends -- once as corporate profits and again in the hands of shareholders. That was a centerpiece of Bush's plan, though Greenspan said any such change should be balanced, or made "neutral", by either restraints on spending or by finding revenue from other sources.
The Bush proposals have been heavily criticized by opposition Democrats, who claim they unfairly favor richer Americans, an impression the administration is seeking to counter by sending top officials including Treasury Secretary John Snow around the country to rally support for the plan.