“Alan Greenspan, the Federal Reserve chairman, yesterday rebutted many of President Bush’s arguments in favor of big new tax cuts, saying that the economy probably does not need any short-term stimulus and warning that budget deficits could spiral out of control,” writes Edmund Andrews in today’s New York Times.

“Mr. Greenspan did not attack the specifics of Mr. Bush’s $674 billion tax-cutting package, but he cast doubt on the need for a stimulus proposal in the first place.”

“He also disagreed with the Bush argument that rising budget deficits have little link to higher interest rates. And he pointedly took issue with the administration’s argument that the best way to balance the budget is by promoting faster growth.”

” ‘I am not one of those who is convinced that stimulus is desirable policy at this point,’ he told lawmakers at a hearing of the Senate Committee on Banking, Housing and Urban Affairs. ‘My own judgment is that fiscal stimulus is premature.’ “

“Because of Mr. Greenspan’s enormous stature as a spokesman on economic issues, his comments today were a serious blow to the Bush administration. At the same time, the president met with some lawmakers at the White House to press his proposal.”

“In a cautious assessment of the economy, Mr. Greenspan said the biggest obstacle to faster growth was uncertainty about a likely war with Iraq. Though expressing optimism that the economy would strengthen once those uncertainties disappeared, he suggested that the Fed would not raise interest rates any time soon.”

“Two years ago, Mr. Greenspan provided crucial support for Mr. Bush’s first round of tax cuts. That support helped Republicans win over wavering Democrats and push through the tax cuts even though Democrats had a slim majority in the Senate at that time.”

“Administration officials and most Republican lawmakers tried to put the best face possible on Mr. Greenspan’s testimony, emphasizing that he had reiterated his support for eliminating the so-called double taxation of dividends.”

“But one Republican senator angrily accused Mr. Greenspan of surreptitiously trying to sink the Bush plan and suggested that he resign.”

” ‘You have been in this position for a long time, some would say too long,’ said Senator Jim Bunning, Republican of Kentucky and a longtime critic of Mr. Greenspan. ‘No president should try to set monetary policy. But the Fed chairman should not try to make fiscal policy. That’s not your job.’ “

“Democrats immediately pounced on Mr. Greenspan’s remarks to step up their attack on Mr. Bush’s tax plan.”