Clinton denies he was Greenspan's creature

PRESIDENT Bill Clinton has denied that he was a virtual cats-paw of the Federal Reserve chairman, Alan Greenspan, in determining his economic policy, as claimed by a new book chronicling his first year in the White House and the formulation and passage of his 1993 deficit-cutting package.

Questioned by American television networks during his current visit to Europe, Mr Clinton insisted he had a very 'candid' relationship with Mr Greenspan, but rebuffed suggestions that it was the federal chairman who converted tax-cutting candidate Clinton into the presidential champion of a five-year dollars 500bn (pounds 330bn) deficit-reduction scheme.

Such, though, is precisely the message of The Agenda: Inside the Clinton White House, by the celebrated Washington Post journalist Bob Woodward, which is to be published this week.

In a second excerpt published yesterday, for which the federal chairman is plainly the main - albeit unidentified - source, he writes that Mr Greenspan was 'in some ways a ghost-writer of the Clinton plan'.

In Mr Woodward's version of events, Mr Clinton was finally persuaded by the political attractions of Fed-inspired rigour. Once convinced that the new Democratic president was serious about cutting the deficit, the financial markets would drive down interest rates and thus do more for economic expansion than any tax-cuts or government intervention from Washington. And thus it proved.

Sadly, however, the book does not deal with events of early 1994, when fears of inflation panicked those same markets into pushing rates back to where they had been when Mr Clinton took office.

The conservative shift in Clintonomics apparently produced an open feud between Mr Clinton's economic advisers and the political consultants who shaped his triumph in 1992.

In one memorable remark, strategist James Carville declared that, granted a second life, he once wanted to return as president or king, but now 'I'd want to be the bond market. It runs everything.'