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Fed Chairman, Political Hack...Tsunami Aid Meets GOP Cutback

SENATE MINORITY LEADER HARRY Reid said something terribly impolite last week when he described Federal Reserve Chairman Alan Greenspan as a “political hack.” And yet, to the extent that it’s fair to describe Greenspan in two words or less, those two are as fair as any. 

Greenspan has been an effective manager of monetary policy. He has also made a career of using his prestige to shill for Republican policies. In 1980, he assured the public that Ronald Reagan’s plans to slash taxes and boost defense spending were “an exercise in reasonable budget-making.” The result was massive deficits. In 2001, he endorsed Bush’s tax cut on the bizarre, convoluted theory that failure to do so would quickly lead to the national debt being paid off completely, which would be followed by the government buying up private equities, tilting the U.S. economy toward socialism. Again, massive deficits were the result of the policy to which Greenspan left his imprimatur. At heart, Greenspan is a libertarian with a preference for smaller government, but he misleadingly couches those preferences in technocratic language. 

Until last week, nobody in official Washington had been impolitic enough to point this out. Reid’s observation was so shocking that his colleagues were pressed to renounce it. On “Meet the Press“ last Sunday, Tim Russert asked Democratic Senator Dick Durbin, “Do you share [Reid’s] view?” and pressed him again, “But should the chairman of the Federal Reserve be described as a political hack?” This is precisely the problem. Greenspan feels free to use the prestige derived from his apolitical role to advance his political preferences. But then, if anybody wants to criticize him, he’s The Chairman Of The Federal Reserve, a figure above reproach. So, to answer Russert: No, the chairman of the Federal Reserve should not be described as a political hack. But that’s because the chairman of the Federal Reserve should not be a political hack. 

DEMOCRATIC NATIONAL HEADQUARTERS in Washington, where Howard Dean now resides, isn’t the only place where the spirit of Dean’s presidential campaign lives on. In recent weeks, at least three state Democratic parties—in Colorado, North Carolina, and Arkansas—have dumped longtime party “insiders” for liberal activists who promise to reconnect with the party’s allegedly neglected “grassroots.” This, of course, has long been Dr. Dean’s prescription; unfortunately, it amounts to political malpractice. While Democrats have recently struggled in North Carolina, for instance, the party did retain the governorship last fall; yet it was the governor’s handpicked operative who was ousted by liberal activists. In Arkansas, the party can boast two Democratic senators—but the two-term state party chairman there was nevertheless dumped for a 34-year-old insurgent. And, in Colorado this week, a faction of liberals— “many of whom are new to party activism,” as The Denver Post put it—ousted an establishment insider, even though Democrats won a House and Senate seat and reclaimed the legislature there last fall, making the state one of 2004’s few bright spots. 

In each case, activists argued that the party had fared poorly during the 2004 presidential campaign (John Kerry lost all three states). But their belief that the Democrats’ problem in southern and western states was a failure to connect with grassroots, as opposed to a candidate with a disastrous cultural profile, reveals a dangerous navet—one that threatens to dash what little hope these Democrats now have in their backyards.

President Bush has been trumpeting the U.S. response to the deadly Indian Ocean tsunami as having not only alleviated the suffering of millions throughout the devastated region, but also for helping to improve the U.S. image abroad and buying us some much-needed goodwill in the greater Muslim world. But now, House Republicans—perhaps with tacit approval from the White House—are doing their best to undercut those benefits.

According to The New York Times, “[T]he [House] appropriations committee recommended spending $656 million on tsunami disaster relief, $45 million less than what Mr. Bush had requested. It also recommended cutting $570 million requested by the White House for reconstruction projects in Afghanistan.” The House’s miserliness, if successful, will vindicate those in the Middle East and Europe who argue that the United States does not really care to help poor, struggling democracies like Afghanistan and that we will not commit the resources needed to make nation-building successful. This flies in the face not only of our humanitarian impulse, but also of our own self-interest. Stabilizing Afghanistan and Indonesia, and enhancing our image in those countries, could save us more tomorrow than it will cost us today. 

But the House GOP is myopic. Overall, they seek to cut Bush’s $5.6 billion foreign aid proposal nearly in half. They are doing so not to balance the budget (nor would these cuts make a real dent in the deficit anyway), but rather because they wish to add $1.8 billion in spending to military operations.

Will Bush use his clout on the Hill to get his foreign aid spending restored? We are doubtful. This smells like another one of Bush’s disingenuous ploys, where he makes a reasonable proposal (say, cutting farm subsidies) knowing full well that Republicans in Congress will block it. Bush then quietly lets the issue die, while taking credit for “trying” to find a middle ground with the other half of the country and the rest of the world, while congressional Republicans can return to their districts and brag that they “saved farm subsidies” or, in this case, “held down spending.” 

TNR APPLAUDS EDITOR PETER Beinart on being named The Week magazine’s columnist of the year. Beinart is currently on leave writing a book.

DUE TO A TECHNICAL ERROR, SOME information was obscured on page four of the March 14 issue, including the cover date (March 14, 2005), the print date (March 3, 2005), the volume (232, number 9), and the issue number (4,704). We regret the error.

This article appeared in the March 21, 2005 issue of the magazine.