Broadcast January 4, 2001
The person missing from Bill Clinton s economic summit almost exactly eight years ago is the same person who's missing from George W. Bush s economic summit this week. I m referring of course to the president of the United States economy, Alan Greenspan.
Greenspan doesn't do economic summits. But he does make deals. Eight years ago his deal with Bill Clinton was this: Mr President, you get the deficit down and I ll cut interest rates. As a result, the economy will boom and you'll be re-elected. Clinton took the deal and the rest is history.
Now that the economy has boomed for eight years, what's the new deal Greenspan is offering the new President-Elect? Mr. President, play down your giant tax cut and I'll engineer a soft landing. I'll keep the economy moving forward far more slowly than it's been moving, but I won't put it in reverse. No recession, no inflation.
But this time, the new president may not take the deal. Why? Because he knows presidents don't get re-elected on soft landings. The most important thing in the minds of voters come Election Day is the direction the economy is heading. If truth be told, George W. wouldn't mind a hard landing in 2001, because a hard landing means that by 2004 the economy is likely to be taking off again. A hard landing gets the worst out of the way early on in his administration. And a hard landing also would give Bush political cover for his signature tax cut, in 2001. We need to stimulate the economy, he'll say. What better way than slashing taxes?
So the big news at the economic summit of January of 2001, in contrast to the economic summit of January of 1993 is this: No deal with Greenspan. No deal means Greenspan won't reduce interest rates as much as he would if there were a deal -- which in turn increases the likelihood of a hard landing. Or even -- dare I men
