Looking for a Dialogue

WASHINGTON, D.C.: Ending weeks of speculation, the White House announced that President Clinton will nominate Alan Greenspan to a third term as Federal Reserve Chairman. The President also chose White House budget director Alice Rivlin for the number two position at the Fed, and economist Laurence Meyer to fill the third vacant spot on the seven-member board. The choice to renominate the highly popular Greenspan was a difficult one for a President frustrated by Greenspan's refusal to lower interest rates for fear of causing runaway inflation. Clinton has pushed hard for a lowering of rates to try to jump start a sluggish economy in this election year. Seeking to encourage an interest rate cut, Clinton has called for a national dialogue on how fast the economy can safely grow. "Nobody, but nobody, knows for sure that this economy can't grow any faster in the information age that it did between 1970 and 1995," he said at a New York fundraiser last week. "It ought to be debated within a commitment not to let inflation get out of hand." By appointing Rivlin, he hopes to create encourage that dialogue on the Fed. Unlike investment banker Felix Rohatyn, who withdrew his name from Fed consideration under heavy criticism of his economic philosophies from Senate Republicans, "Rivlin should not have a hard time getting confirmed by the Senate," says TIME's J.F.O. McAllister. "She is known as a deficit hawk, more so than almost anyone in the administration. Although she would probably be more inclined to lower interest rates than Greenspan, she's not a real liberal 'soft money' person, and so she should be acceptable to Republicans." There are signs that Greenspan may be bending a bit to Clinton's pressure. The Fed chairman, who sent markets plunging on Tuesday when he told Senate Banking Committee that he might not lower interest rates, sent them soaring back up Wednesday when he reversed himself and said maybe a cut was possible after all.