Fed’s Bies Decries Lawmakers’ Spending

The American government budget has become a “cookie jar” for lawmakers over the past four years, with taxpayer funds spent in some cases for “political reasons,” Federal Reserve Governor Susan Bies said.“The part of it that has gotten me so upset is that in this whole election debate, nobody’s been talking about the spending side,” Ms. Bies said, responding to a question after a speech yesterday to about 100 individual investors in Rosslyn, Va.With the exception of additional funds spent on domestic security and the military, “it has been a cookie jar over the last four years,” she said. “Everything has gotten loaded in. Money has gone into these appropriation bills that are funding everything under the sun.”The central banker’s rebuke comes before the November 2 presidential and congressional elections. Republican President Bush says Democratic challenger John Kerry, the four-term Massachusetts senator, plans to raise taxes and expand government programs. Mr. Kerry says Mr. Bush turned a budget surplus into a record deficit in part by cutting taxes for the rich. The economy ranks as the top issue in most voter polls, including those by ABC News and Time magazine.Ms. Bies prefaced her remarks by saying the views were her opinions and not necessarily those of the Fed, which tries to remain independent from politics. She gave no specific examples of wasteful spending and mentioned neither party. The Republican Party has held the majority in the House and Senate since 2002.Ms. Bies, 57, began her term as a Fed governor in December 2001. Before joining the Fed, she was executive vice president for risk management and auditor at First Tennessee National Corp.“She’s reflecting frustrations that people have on both sides of the aisle,” said Robert Hormats, vice chairman of Goldman Sachs International and who worked for both Republican President Ronald Reagan and Democrat Bill Clinton. “If something isn’t done about fiscal policy, the Fed is the one who has to deal with the problems of higher interest rates.”Bush campaign spokesman Reed Dickens said the president has kept the growth in non-defense spending “under 1%. This was much needed after the big spending of the previous administration”Kerry spokesman David Wade said Mr. Bush “may be the only president in modern history not to veto a spending bill. They have become the borrow and spend Republicans.”The American budget deficit swelled to a record $412.6 billion in the year ended September 30, as the war in Iraq and security costs contributed to the third straight annual shortfall under Bush. The latest deficit followed budget gaps of $377.1 billion in 2003 and $157.8 billion in 2002.“In the long run we’ve got to get the spending discipline under control,” Ms. Bies said. “That is not even being discussed, maybe it’s because it’s an election year. People don’t want to acknowledge that we’ve spent money on things for political reasons.”

Fed’s Bies Decries Lawmakers’ Spending

Fed’s Bies Decries Lawmakers’ Spending

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