The Wooing Of Alan Greenspan

It wouldn't have been more shocking if a pair of co-workers had decided to use the office Christmas party to go public with a clandestine affair. There in the gallery overlooking the House chamber, waiting to hear the Presi-dent's Feb. 17 address to Congress, were Hillary Rodham Clinton and . . . Alan Greenspan?

Washington's tongues were still wagging two days later when, in testimony before the Senate Banking Committee, the Federal Reserve chairman had kind words for Hillary's husband's "tax and invest" plan. Suddenly, Republican Greenspan appeared to be falling head over heels for Democrat Bill Clinton.

For Clinton's economic team, Greenspan's encomiums were the happy result of a months-long campaign to woo the Fed chairman. As the President assembled his program, Wall Streeters in the White House and Treasury stressed that the strategy could succeed only if long-term interest rates fell--and the key to lower rates was Greenspan's embrace. Clinton's deficit-bashing rhetoric was designed largely to impress Greenspan and bring along financial markets.

ROSY SPIN. Now, though, Fed insiders are beginning to wonder whether salesman Clinton is using them. Greenspan's carefully hedged statements, while praising Clinton's plan as "solid" and "specific," stopped far short of an endorsement. But that's not the interpretation that the White House is placing on Greenspan's remarks. Clintonites are using Greenspan to market their plan, gripes a top Fed policymaker, "and they're doing a good job of it."

Clinton began sending out Fed-friendly pheromones even before the election. During debates, the Arkansan passed up chances to call for limits on Fed independence. A few days before the election, Greenspan was impressed when Clinton criticized President Carter for failing to take the threat of inflation seriously.

The courtship began in earnest on Dec. 3, when Clinton invited Greenspan down to Little Rock. Policy wonk Clinton and number-cruncher Greenspan ordered lunch to keep their two-hour talkathon going. A White House official who knows Greenspan says the Fed chief left the meeting relieved: "Lo and behold, here's this funny-talking guy waddling in from Arkansas, and he wants to talk about the deficit."

The President and the Fed chief have met only once since, but Clinton's aides have kept up the contacts. Treasury Secretary Lloyd Bentsen has resumed weekly breakfasts with the Fed chairman, a tradition dropped last year as tension grew between Greenspan and Nicholas F. Brady. The Fed is working closely with Treasury on measures that Greenspan says will "break the back of this credit crunch" plaguing small business. And Bentsen and White House Staff Chief Thomas F. McLarty III briefed Greenspan on the economic plan before Clinton's speech.

'IMPORTANT SIGNAL.' Greenspan was planning to watch the address on TV--until Hillary Clinton called to invite him to join her in her box. The Fed chief worried that his presence could appear to bless Clinton's plan but decided he could not turn down the First Lady. Photos of the two together sent "an important signal," says White House Communications Director George Stephanopoulos.

But it's a signal that many Fed officials wish he hadn't sent. Members of Greenspan's board privately call the Clinton package "lousy" and worry about the widespread impression that the Fed will back the President with easier money. "Read what Alan said--he's not making any commitments," stresses a top official. Indeed, Greenspan's second round of congressional testimony on Feb. 23 sharply toned down his earlier praise.

Greenspan's defenders say the Fed chief is going into this relationship with both eyes open. After years of strain with Bush, he's back in the policy loop. Bond markets, which tend to tank at a hint of Fed-White House friendship, have soared. And should Clinton's sweet talk fail to work its magic on Congress, Greenspan can always disengage himself and bump up interest rates. Like many Washington relationships, what Greenspan and Clinton enjoy is a marriage of convenience--one that, for now, benefits both sides.

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