The next Greenspan?

[papau]

http://www.pbs.org/wsw/news/fortunearticle_20040601_01.html

The next Greenspan?
As one of George W. Bush's key advisors on economic policy, Harvard professor Martin Feldstein helped design the President's tax cuts. He's working on a plan to overhaul Social Security. Could he be the next Greenspan?
By Anna Bernasek FORTUNE
June 1, 2004
<snip>Feldstein's thinking underpins the Bush administration's economic agenda, and his trademark ideas have already been incorporated into current policy. Consider the dividend tax cut that the President pushed through last year. Cutting the tax on dividends is an idea that's been around for so long no one can seem to remember who first came up with it. Well, Feldstein did -- back in 1973 when he showed the negative effects of dividend taxation on investment. Feldstein also had a key role in shaping both the 2001 and the 2003 income tax cuts. And his biggest impact may lie ahead. If Bush wins reelection in November, Feldstein could help reshape the Social Security system. He has long championed the idea of privatizing Social Security accounts.

The current reverence bestowed on Feldstein is all the more remarkable when you consider his past. As the chairman of the Council of Economic Advisors during Ronald Reagan's first term as President, Marty had a very public falling out with the Republican Party after daring to argue that growing budget deficits were bad for the economy. (No, he's not worried about the current record budget deficits -- but more on that later.) His position was so at odds with the Reaganites, in fact, that the President considered firing Feldstein and doing away with the CEA altogether. Any chance for a career spent shaping economic policy from inside the government seemed shot. Now, after two decades of quietly building a network that spans politics, academia, the media, corporate America, and the public sector, Feldstein is back -- and back in a big way.

It's a bitterly cold February morning in Cambridge, Mass., and Feldstein is getting ready to walk over to his first class of the day. At 65, he still teaches a full course load at Harvard, where he's been a professor of economics since 1967. Feldstein tucks a printout of the day's economic data into his brown leather briefcase -- a well-worn satchel that looks as if he's owned it since he first began teaching -- and reaches for his coat. As he leaves his office at the National Bureau of Economic Research, which he runs, he buttons up his brown sheepskin-lined coat and puts on his matching hat. With his corporate blue pinstriped suit under wraps, he looks as though he's out for a walk in the woods.

During a brisk two-minute march over to campus -- Feldstein likes to walk fast -- he explains his reaction to comments by Greenspan days earlier that the government needs to explore cutting Social Security benefits to preserve the program without taking on crippling debt. "I was very surprised, very surprised," he says. Feldstein and Greenspan have known each other for years and share many of the same views. "I don't understand why he came out and said those things in an election year," he says, sounding almost exasperated. "I mean, if you're a Democrat, you can say, 'Bush wants to cut your Social Security benefits, and we won't do that. We'll preserve your benefits,' " he says, nearly out of breath.<snip>