Greenspan, Bush sizing each other up

AUSTIN, Texas – The Federal Reserve’s slashing of a key interest rate sent a mixed message to the incoming Bush administration.

Fed Chairman Alan Greenspan essentially agreed with the president-elect’s assessment of a slumping economy, but he also seized the initiative from Bush on how to deal with it.

As Bush prepares to begin his term and Greenspan prepares to work with his fourth president, the two Republicans continue to warily size each other up.

The Fed’s decision on Wednesday caught Bush and his advisers by surprise, coming as the incoming president was hosting a conference on the economy in an Austin hotel with some of the nation’s top corporate executives.

And while no one close to the process will suggest the Fed’s timing was politically motivated, those who know both Bush and Greenspan suggest that the veteran central banker is clearly mindful of the value of being able to act on the economy pre-emptively.

Some Bush advisers continued to characterize the half-point rate decrease as a gift, reinforcing Bush’s contention that the economy was slumping.

But others suggested it could also make the entire $1.3 trillion, 10-year tax-cut package harder for Congress to swallow and could undercut the argument that it was up to the president and Congress alone to take steps to rescue the economy.

The surprise move came after Bush appeared to be going out of his way to accommodate Greenspan.