Editorial: A lesson to learn

Wednesday, Sept. 19, 2007 | 7:12 a.m.

Former Federal Reserve Chairman Alan Greenspan was famous for, as he puts it, "mumbling with great incoherence" to avoid moving the financial markets. But he is now making his views clearly known - much to the chagrin of President Bush.

In his memoir, "The Age of Turbulence: Adventures in a New World," Greenspan shows little sign of tempering his views as he did for 18 years as head of country's central bank. Notably, he pointedly criticizes Bush and the Republicans, and singles out former President Bill Clinton for praise.

Greenspan praises Clinton, saying he had a "consistent, disciplined focus on long-term economic growth." He notes that under Clinton, federal deficits turned into surpluses. Those surpluses were turned into deficits under Bush and a Republican-controlled Congress.

A self-described "libertarian Republican," Greenspan wrote that Republicans in Congress "lost their way" and "deserved to lose" in the 2006 elections.

" 'Deficits don't matter,' to my chagrin, became part of Republicans' rhetoric," he writes, criticizing Bush's failure to control spending. "Most troubling to me was the readiness of both Congress and the administration to abandon fiscal discipline."

Greenspan rightly describes the White House's inept handling of the economy but fails to fully acknowledge his role in it.

Bush and the Republicans pushed a $1.35 trillion, 10-year tax cut plan through Congress in 2001, which has been a principal reason for the deficits. One of the reasons that plan passed, however, was because Greenspan endorsed the plan over the protests of former Treasury Secretary Robert Rubin, who worked for Clinton, and Sen. Kent Conrad, D-N.D., who asked him not to do so.

"It turned out that Conrad and Rubin were right," he wrote.

Greenspan is correct in his assessment, though it is way too late now. He should have stood up to the White House when he had a chance to prevent the nation's economic slide. We hope his replacement, Ben Bernanke, learns from Greenspan's failure.