WASHINGTON - Top policymakers, testifying separately Tuesday, urged lawmakers on Capitol Hill to cut taxes.
Federal Reserve Chairman Alan Greenspan told the Senate Banking Committee that risk of a U.S. recession this year is low, but he said tax cuts would speed the country's recovery should it slip into a recession.
"In the event - and it is a low-probability event -- that we not only go into a recession but stay there for an extended period of time, it is better to have had lower taxes than otherwise," Mr. Greenspan said. "In short, it would be an insurance against a low-probability event."
Treasury Secretary Paul O'Neill was more direct, telling lawmakers they should move quickly to enact the tax cuts proposed by President Bush.
"With the economy slowing, now is the time to boost consumer confidence with quick congressional action," Mr. O'Neill told the House Ways and Means Committee. "I can't accept the idea that it takes nine months to get tax relief on its way to the American people."
Mr. Greenspan said the economy slowed "perhaps to the point of stalling out" in the last three months of 2000. That prompted the Fed to cut the funds rate a full percentage point in January.
But Mr. Greenspan said economic conditions have not deteriorated further since then, and he suggested that further deterioration may not occur.
"The exceptional weakness so evident in a number of economic indicators toward the end of last year (perhaps in part the consequence of adverse weather) apparently did not continue in January," the Fed chairman said. Moreover, he said, other indicators bode well for economic growth.