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While Federal Reserve Chairman Alan Greenspan is a loyal Republican, he has taken pains to avoid any appearance of partisanship. And for its part, the Bush Administration has refrained from publicly admonishing Greenspan over monetary policy. But that restraint evaporated last week when Budget Director Richard Darman, appearing on NBC's Meet the Press, accused the Federal Reserve Board of keeping interest rates too high because of an exaggerated concern about inflation. "If we do have a recession, I think it will be because they erred on the side of caution," said Darman.

Rather than disavow the Budget Director's comments, Bush told a news conference on Tuesday that "I can feel very comfortable with his sallying forth and saying that." While Darman's critique was not directed at Greenspan personally, former Federal Reserve Governor Lyle Gramley thinks the ploy may backfire. Said he: "The Fed cannot be seen as knuckling under to pressure from the Administration."