President Bush on Tuesday defended himself from criticism by former Federal Reserve chairman Alan Greenspan, who said Bush has not been a good shepherd of the economy.

Greenspan, whose book, "The Age of Turbulence: Adventures in a New World," was released Monday and reached No. 1 on Amazon.com on Tuesday, wrote that the president has been irresponsible in handling the nation's spending, and Bush and the former GOP-led Congress abandoned the party's conservative principles favoring small government.

Bush said he had to "respectfully disagree" with Greenspan.

"Our fiscal record is admirable and good. After all, the deficit as a percentage of GDP is low relative to the 30-year average. It's about 1.5 percent of GDP which is good, and we submitted a budget that shows we can get to balance," the president said in an exclusive interview with FOX News.

"I would also argue that cutting taxes made a significant difference not only in dealing with the recession and attack on our country, but it also made a significant difference in dealing with the deficit because the growing economy yielded more tax revenues, which allowed us to shrink the deficit. So I would respectfully disagree with the characterizations of Chairman Greenspan," Bush continued.

The president spoke shortly after the Fed slashed a key interest rate by a half point — the first cut in over four years — and left open the possibility of further cuts to prevent a painful housing slump and jarring credit crunch from turning the economy toward a recession.

It also followed House passage of legislation that would allow the Federal Housing Administration, which insures mortgages for low- and middle-income borrowers, to back refinanced loans for tens of thousands of borrowers who are delinquent on payments because their mortgages are resetting to sharply higher rates from low initial "teaser" levels.

But Greenspan, who was appearing on FOX News just as the president's remarks were being released, said Bush should have tried to rein in a run-away Congress years ago.

"My basic problem is with the Republican Congress," Greenspan said. "My problem with the president is that he did not use the veto sufficiently. It was not he who essentially created agriculture policy, or I should say the agricultural program, or the highway bill. He was coming in much lower. ... He better start vetoing certain stuff because we are going to go into the demographic issues wholly unprepared."

Greenspan added that he's very concerned for the economy in the years after Bush's administration, when the Medicare system, which is expected to go broke in 2019, is forced to pay out millions more to upcoming retirees.

"The issue is really not the short-term. The president's numbers are correct. The deficit this year is coming well under expectations. The concern I have is what the potential for the budget deficit is when the baby boomers retire. Any evaluation of the period that starts about 2010, '11 forward, especially when you look at Medicare, creates a huge fiscal problem. We've never had a major increase in retirees like we're about to run into."

"I've put out an answer, I've put out a way forward and the Congress frankly hasn't shown much of an appetite," Bush responded, referring to his proposals on entitlement funding.

But with Democrats in control of Congress and the new fiscal year just two weeks away, the president is in agreement with Greenspan on the latest budget — threatening to veto at least 10 of their 12 appropriations bills and refusing to allow spending to increase beyond $23 billion more than the president's $2.9 trillion 2008 fiscal year request.

Meanwhile, as Greenspan's warnings reached a wide audience, two of the Senate's budget hawks launched a bipartisan bid to rein in the budget deficit ahead of the skyrocketing retirements.

Budget Committee chairman Kent Conrad of North Dakota and the panel's top Republican Judd Gregg of New Hampshire proposed the formation of a study group to develop recommendations on how to tame the deficit. According to their proposal, if two-thirds of the 16-member group can agree on legislation, Congress could put it out for a vote in early 2009.

That approach came under almost immediate fire from partisans as both an abdication of responsibility and an opportunity to create massive tax hikes.

"The Conrad-Gregg proposal raises some serious questions," said Jim Manley, spokesman for Majority Leader Harry Reid, D-Nev. "Most fundamentally, is it appropriate to entrust the future of health care, Social Security, our tax system, and perhaps even Iraq to a small group of individuals whose recommendations could be moved through Congress without meaningful public input or amendment?"

"There are better reforms out there that don't lead to tax increases," said Rep. Paul Ryan, R-Wis.

Greenspan suggested one way for Congress to become more fiscally responsible is to revise the entire budget from a cash-based system of accounting to accrual accounting that counts future commitments.

"You shouldn't do planning on a cash budget. Corporations stopped doing that 150 years ago," Greenspan said.

FOX News' Bret Baier and Wendell Goler and The Associated Press contributed to this report.