WASHINGTON -- Bashing the Federal Reserve for keeping interest rates too high has been a populist Democratic staple for decades, a political mantra as well worn as raising the minimum wage or saving Social Security.
But the most liberal wing of the Democratic Party now has some unlikely company in its rhetorical wars against federal monetary policy: conservative Republicans on the presidential campaign trail.
The rhetoric of three presidential hopefuls -- Steve Forbes, Gary Bauer and Dan Quayle -- has amused some Democrats and raised concerned eyebrows in the pro-Republican business community that has been wildly supportive of Alan Greenspan, the Federal Reserve chairman.
Their criticism has also highlighted sharp contrasts between Republican establishment candidates, such as George W. Bush and Elizabeth Dole, who support Greenspan, and more conservative candidates who are now searching for a populist appeal.
Forbes, Bauer and Quayle all greeted the Federal Reserve Board's decision yesterday to raise interest rates by a quarter-point with a new round of rhetorical raspberries, decrying the decision as a dangerous mistake that could lead the nation into an economic abyss.
They argue that by raising interest rates, the Fed will choke off new business investment, increase the cost of mortgages and stifle economic growth just as the economic boom begins reaching poor and middle-income Americans.
"The high priests of finance at the Fed must come out of their cloisters and make their decision based on real economic conditions rather than relying on out-of-date assumptions and seat-of-the-pants speculation," Forbes said in a statement that followed the rate increase.
Jonathan Baron, a Quayle spokesman, said, "Vice President Quayle has always had a very populist orientation."
Such rhetoric has left some Republican strategists and traditional allies scratching their heads. After all, said Martin Regalia, the chief economist for the U.S. Chamber of Commerce, under Greenspan's tenure, unemployment fell to a 29-year low of 4.3 percent; 20 million jobs were created; and interest rates, even with yesterday's increase, remain tame compared with a decade ago.
Whenever President Clinton has tried to take credit for the nation's economic boom, Republicans have invariably countered that Greenspan -- whose stewardship of interest-rate policy has helped fuel the longest-ever peacetime economic expansion without igniting inflation -- deserves most of the credit.
Although the Chamber of Commerce has disagreed with some of Greenspan's rate increases, Regalia made clear that the lobbying powerhouse would look unkindly on any Republican candidate who would pressure Greenspan to be less concerned about warding off inflation.
Certainly, the business community would be wary of any candidate who opposes Greenspan's reappointment after his term as chairman ends next year.
"Making a statement highly critical of the chairman would seem to me to be the kind of move that would make it less likely that you would ever be in the position to have to make a decision on his re-appointment," Regalia warned.
Even so, attacking Greenspan and the Federal Reserve certainly provided some short-term advantages for some of the candidates seeking votes in the Republican straw poll in Iowa on Aug. 14. While much of the country's economy is humming along, the agriculture sector has been reeling from falling crop prices, shrinking overseas markets and overproduction. Farmers are especially sensitive to interest rates because they survive on short-term loans that tide them over from harvest to harvest.
When the Federal Reserve raises interest rates to combat the specter of inflation, its justification often rings false to farmers suffering from the deflation of farm prices.
No wonder, then, that just before the Iowa straw poll, Quayle fired off a letter to Greenspan, charging, "In chasing the phantom of inflation, you and other members of the Federal Reserve Board are ignoring the real-world evidence right before your eyes."
To their political rivals, the stands of Quayle, Forbes and Bauer smack of political opportunism.
Michael Boskin, a Stanford University economist and top Bush policy adviser, acknowledged that the Farm Belt is hurting. But, he said, Greenspan surely should not determine the proper course for interest rates -- a decision affecting the entire world -- based on the likely consequences for one sector of the U.S. economy, like agriculture.
Dole and Bush have both called for Greenspan's reappointment, and their campaigns are standing by Greenspan and his record of success to try to make their candidates appear more presidential.
"Politicians can't resist an easy target, and attacking the Fed the day they raise interest rates is an easy target," said Ari Fleischer, a spokesman for Dole. "Other politicians rise above it and see the bigger picture."
Even Regalia said he recognized the political temptation in Iowa to attack the Fed.
"But," he added, "when you make political statements for particular constituents, you'd better understand there are other constituents that are listening and may be wondering about what you're saying."
Fleischer, of course, said he did not believe that attacks on the Federal Reserve Board would yield any significant benefits in the farm states, and certainly would have little effect on the electorate as a whole.
Whit Ayres, a Republican campaign consultant in Atlanta, said he would agree. "Making the chairman of the Fed a presidential campaign issue in the best economy of the lifetime of most Americans is the ultimate tough sell," Ayres said.