Bush, Fed chief differ on economy
By William Branigin
By William Branigin
WASHINGTON — President Bush yesterday touted improved employment numbers and other economic indicators as signs that his policies are working and that America has a bright economic future.
But Federal Reserve Chairman Alan Greenspan warned that despite a "solid performance" so far this year, the nation faces tough economic times ahead if it does not deal with ballooning federal budget deficits and a current fiscal policy that appears "unsustainable."
In an unscheduled appearance in the White House Rose Garden, Bush pointed to yesterday's Labor Department report showing that jobs grew by 215,000 in November, a number that exceeded expectations and ended two months of relative doldrums caused in part by devastating hurricanes this fall.
Bush pointed to nearly 4.5 million new jobs that have been added in the past 2 1/2 years, third-quarter economic growth of 4.3 percent and a relatively low unemployment rate of 5 percent.
"We have every reason to be optimistic about our economic future," Bush said. "When you think about the news that's come in — the job report, the recent report on strong economic growth, low inflation, strong productivity, lower gasoline prices, a strong housing market, increases in consumer confidence and business investment — our economic horizon is as bright as it's been in a long time.
"We're not going to rest until every American who wants a job can find one," Bush vowed. "I'll continue to push for pro-growth economic policies, all aimed at making sure every American can realize the American dream."
With that, he turned and walked back into the White House, declining to answer any questions from reporters.
Bush's brief comments contrasted with the warning from Greenspan, who underscored a need for the administration and Congress to make tough choices now to avoid bigger problems in the future.
In comments taped for a conference in Philadelphia, Greenspan, who is retiring at the end of January, again stressed that the government needs to come to grips with the looming retirement of the baby-boom generation, whose oldest members will start drawing Social Security retirement benefits in 2008. He said the government likely will not be able to make good on promised Social Security and Medicare payments and will probably have to reduce benefits to future retirees.
"The soaring cost of medical care for an aging population is certain to place enormous demands on our nation's resources and to exert pressure on the budget that economic growth alone is unlikely to eliminate," Greenspan said.
"So long as healthcare costs continue to grow faster than the economy as a whole, they will exert budget pressures that seem increasingly likely to make current fiscal policy unsustainable," he added.
Greenspan said "economic activity appears to be expanding at a reasonably good pace as we head into 2006. However, the positive short-term economic outlook is playing out against a backdrop of concern about the prospects for the federal budget over the longer run."
He said projections from the administration and Congressional Budget Office suggest "our budget position will substantially worsen in the coming years unless major deficit-reducing actions are taken."