BLOWING BUBBLES
Issue of 2004-07-12 and 19
Next March, Alan Greenspan will turn seventy-nine. Sound health persisting—he plays tennis and golf regularly—he will be well into his eighteenth year as chairman of the Federal Reserve Board and, depending on what happens in November, will be serving his fourth or his fifth President. Greenspan’s lugubrious face and nasal monotone are as familiar and as comforting to ordinary Americans as Prozac and “The Simpsons,” both of which débuted in 1987, the same year President Reagan appointed him to office. Greenspan’s absence, like that of Lord Palmerston in Victorian Britain, has come to seem unthinkable.
But, in our system of checks and balances, Greenspan’s position is an anomaly. The Fed is at once an independent institution and part of the government. Its chairman is Presidentially nominated and senatorially confirmed, but he takes orders from no one. The Fed’s decision last week to raise short-term interest rates by a quarter of a point cannot be appealed—not to the White House, not to Capitol Hill, not to the Supreme Court. Although Congress obliges the Fed chairman to report to it twice a year on the conduct of monetary policy, politicians rarely challenge his authority. Last month, when the Senate Banking Committee endorsed Greenspan’s nomination for a fifth four-year term, Senator Jim Bunning, Republican of Kentucky, cast the only vote against him. (Bunning objected to Greenspan’s voicing opinions on subjects such as tax cuts and the budget deficit, which he believes are outside the Fed’s jurisdiction.)
Issue of 2004-07-12 and 19
Next March, Alan Greenspan will turn seventy-nine. Sound health persisting—he plays tennis and golf regularly—he will be well into his eighteenth year as chairman of the Federal Reserve Board and, depending on what happens in November, will be serving his fourth or his fifth President. Greenspan’s lugubrious face and nasal monotone are as familiar and as comforting to ordinary Americans as Prozac and “The Simpsons,” both of which débuted in 1987, the same year President Reagan appointed him to office. Greenspan’s absence, like that of Lord Palmerston in Victorian Britain, has come to seem unthinkable.
But, in our system of checks and balances, Greenspan’s position is an anomaly. The Fed is at once an independent institution and part of the government. Its chairman is Presidentially nominated and senatorially confirmed, but he takes orders from no one. The Fed’s decision last week to raise short-term interest rates by a quarter of a point cannot be appealed—not to the White House, not to Capitol Hill, not to the Supreme Court. Although Congress obliges the Fed chairman to report to it twice a year on the conduct of monetary policy, politicians rarely challenge his authority. Last month, when the Senate Banking Committee endorsed Greenspan’s nomination for a fifth four-year term, Senator Jim Bunning, Republican of Kentucky, cast the only vote against him. (Bunning objected to Greenspan’s voicing opinions on subjects such as tax cuts and the budget deficit, which he believes are outside the Fed’s jurisdiction.)
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