Greenspan 'rejected' offer to become US Treasury chief By Andrew Balls in Washington Published: December 16 2004 04:57 Last updated: December 16 2004 14:51
Senior Republicans sounded out Alan Greenspan, chairman of the Federal Reserve, about taking over from John Snow as US Treasury secretary, the Financial Times has learnt.
The informal approach, which would have put the most respected economic leader in the US in charge of President George W. Bush's ambitious second-term domestic agenda, was declined.
The administration's plans to overhaul Social Security and reform the tax system face a stern challenge on Capitol Hill and scepticism in some quarters on Wall Street.
The approach to Mr Greenspan made at arm's length from the White House reflected concern that Mr Snow was not the most effective champion of Mr Bush's agenda.
Meanwhile, British chancellor Gordon Brown said on the eve of his visit to New York and Washington to meet Mr Greenspan and the US administration that he would urge the United States to tackle its current account and budget deficits.
"I will be meeting the American administration over the next few days and will be urging them that the current account and budget deficits, they have got to set a clear path for showing that these can be dealt with over the next period of time," the chancellor told the UK parliament on Thursday.
"Equally, the European economy must contribute to growth in the world economy, in the way it hasn't done for recent years, and that is the same for the Japanese economy which must continue its programme of financial sector reform," he said.
He also warned that "the depreciation of the dollar is affecting the British economy and other economies around the world."
In a separate effort to strengthen the US administration's economic team by bringing in a Fed policymaker, Ben Bernanke, an influential Fed governor, is the leading candidate to replace Greg Mankiw as chairman of the White House Economic Advisers.
The White House on Wednesday refused to comment on what it called "speculation" regarding Mr Greenspan.
Mr Bush last week confirmed that Mr Snow would remain as Treasury secretary, ending days of reports that the administration had been trying to line up a big-name replacement.
"The president thinks Secretary Snow has been an outstanding member of his economic team," Claire Buchan, White House spokeswoman, said.
Michelle Smith, Federal Reserve spokeswoman, said she had no comment.
A group of influential conservatives lobbied the administration and Mr Greenspan directly, arguing for him to replace Mr Snow, people familiar with the talks said.
Greenspan, whose term as Fed chairman comes to an end next year, is a Republican but commands a unique position of public trust and esteem.
He was chairman of the National Commission on Social Security Reform, from 1981-83, which recommended increasing the payroll tax to create the Social Security trust fund and a gradual increase in the retirement age.
Mr Bernanke, whose candidacy is supported by a number of economists in, and close to, the administration, has shown himself to be an effective communicator on complicated economic subjects. He has not been formally asked if he would take the job but has been sounded out by administration officials. Mr Mankiw, current CEA chair, is expected to return to his academic position at Harvard early next year.
Mr Bernanke has demonstrated well-developed political skills, raising new ideas at the Fed without raising the ire ofMr Greenspan, who in the past has clashed with free-thinking governors. He is also seen as a potential replacement when Mr Greenspan steps down as Fed chairman, along with Martin Feldstein and Glenn Hubbard, both academic economists and former CEA chairs.