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Greenspan Supports Tax Cuts

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LEON HARRIS: Just moments ago we heard the man whose voice moves markets -- Alan Greenspan speaking before the Senate Budget Committee; talking about whether or not -- we were listening for whether or not there would be any clue as to where he stands on a tax cut.

Let's go now to our Myron Kandel, who's standing by in New York.

Mike, your thoughts right now?

MYRON KANDEL, CNN CORRESPONDENT: Well, you know, there was no real surprise in what Greenspan said. He said if the economy slows down even more than it has -- than appears likely, his words, then a tax cut certainly will be necessary.

Now, the Fed is supposed to be an independent body, free of politics, but does not live in a vacuum. It's clear that it's a growing consensus on Capitol Hill, as well as in the White House, for some kind of tax cut and Greenspan indicated he's not going to fight it, although in the past, he's been primarily in favor of using the budget surplus to pay down the debt. Right now he's saying the economy indeed is slowing down -- as if we needed to hear it once again. And he said if it continues to slow, then a tax cut, obviously, would be necessary and would be desirable.

The market on Wall Street, however -- there's no -- there's been no great reaction. Right now the Dow is up 53 points; the Nasdaq is down 37 points. What the -- what Wall Street really wants to hear from the chairman of the Fed, and it isn't getting, is some clue to what the Fed will do next week on interest rates. It's generally expected the Fed will cut the interest rates; the big question on Wall Street: Will it cut by a quarter of a point or a half a point?

No word today; and nobody really expected any major word from Greenspan. He's very close to the vest on that subject. But so far, Wall Street is taking Greenspan's comments in stride.

HARRIS: And I'm watching the numbers now. Last time I checked there I saw the Dow going up by 54 and the Nasdaq down some 36 or 37 points. So we'll keep our eye on that throughout the day.

Thanks much; Myron Kandel reporting from New York this morning.

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