Greenspan retains cautionary view on tax cuts

By Martin Crutsinger
Associated Press

WASHINGTON — Federal Reserve Chairman Alan Greenspan said today that he remained hopeful the end of war in Iraq will result in stronger economic growth and repeated his opposition to substantial tax cuts that would run up a larger deficit.

"I haven't changed my view from where I was in February," Greenspan said in response to questions about President Bush's tax package.

He said he continued to believe that the centerpiece of Bush's plan, eliminating the double-taxation of stock dividends, would have long-term advantages for the economy.

But Greenspan also said that in light of rising federal budget deficits, he continued to believe that any further tax cuts need to be offset either with cuts in government spending or tax increases in other areas.

Since the end of the war, the president has increased his campaign to win approval of a new round of tax cuts. His proposed economic stimulus bill of $726 billion in tax cuts over the next decade has run into strong opposition, with the House voting to limit the measure to $550 billion over 10 years and the Senate capping the proposal at $350 billion.

Bush recently indicated he'd accept the $550 billion figure.

Greenspan's February comments gave a boost to tax-cut opponents and prompted some conservative Republicans to call on Bush not to re-nominate Green-span when his current term as chairman ends in 2004. Last week, however, Bush announced that he did plan to nominate Greenspan for a fifth term as Fed chairman.