Former President Gerald Ford blames the economic advice of Alan Greenspan for his 1976 election loss – but still thinks the current Federal Reserve chairman’s ideas were sound, it was reported today.
Ford, who became president in mid-1974 after Richard Nixon’s resignation, followed the guidance of Greenspan – then head of his Council of Economic Advisors – who called for a tight-fisted federal budget without the big tax cuts that some White House staffers were seeking.
The result was a spike in unemployment figures in October 1976 – followed by a narrow defeat to Carter in November.
“I happen to think that was the major reason we lost the election,” Ford said in a New Yorker magazine profile of Greenspan.
But the ex-president, who lost by two percentage points, remains close friends with the Fed honcho.
“I have no regrets,” he told The New Yorker.
“My conscience has always been clear. It was one of those gambles. It didn’t turn out politically, but it was good for the country.”
At the time, the U.S. was deep in a recession, with high inflation and rising unemployment – and some of the new president’s advisors wanted him to cut taxes to juice the economy.
But Greenspan told Ford the policy would increase the deficit and lead to economic troubles down the road. Ford sided with Greenspan and chose to take a conservative budget tack, despite the risks.
The magazine points out that Greenspan, a Republican, has also been blamed for the electoral defeat of another GOP president – George Bush.
Greenspan took over the Fed during the Reagan administration, but by the time Bush was in office in the early 1990s, White House advisers had become angry at Greenspan for not cutting interest rates as quickly as they wanted.
With the economy easing out of another recession as the 1992 election approached, Bush’s Treasury Secretary Nicholas Brady began warring with Greenspan – an old friend – over rate cuts, the magazine reported.
After Bush lost to Bill Clinton, some Republicans blamed Greenspan.
The four-time Fed boss loves his high-pressure job, The New Yorker reported.
“Other people would be daunted by the ups and downs, by the fact that you are only as good or as bad as your last decision, that you can’t ever rest on your track record,” said Greenspan’s wife, Andrea Mitchell, an NBC correspondent.
“I would find that more than a little frightening. He finds it exhilarating.”