Summary
Federal Reserve Chairman Alan Greenspan traveled to Capitol Hill last week and delivered the Fed's semi-annual Monetary Policy Report to Congress. He brought with him a particularly strong economic forecast for the presidential election year. The Fed projects that economic growth will accelerate during 2004 to 4.5-5.0 percent from last year's 4.3 percent rate. If the actual growth rate approaches the midpoint (4.75 percent) of that forecast, the economy will have grown by its fastest rate in 20 years. Having already effectively achieved its statutory goal of price stability, the Fed expects inflation to decline slightly to one of its lowest levels in postwar history. The unemployment rate, meanwhile, is projected to be between 5.25 and 5.5 percent during the fourth quarter.
As expected, the real partisan sniping erupted over the budget deficit, which the White House recently estimated will exceed $500 billion during the 2004 fiscal year. At the Senate hearing, Democrats sought - but failed - to gain Mr. Greenspan's support for their position against making the 2001 and 2003 tax cuts permanent. Asked point blank by Sen. Paul Sarbanes, Maryland Democrat, about making tax cuts permanent, Mr. Greenspan left no doubt where he stood, declaring: "I am in favor, as I have indicated in the past, for continuing the tax cuts that are in dispute at this particular stage."See the full content of this document
Extract
Greenspan's Testimony
Mr. Greenspan, however, did not limit his fiscal advice to endorsing the ...
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