By MARY DEIBEL
Scripps Howard News Service
October 25, 2005
Bernanke, a 51-year-old Ivy League economist, is an inflation hawk who was also Wall Street's top choice to succeed Greenspan even though Republican supply-siders were pushing for a more ideological pick devoted to even steeper tax cuts to spur growth.
Bernanke once likened his chosen profession to "trying to learn how to repair a car while the engine is running" and now he'll get a chance to be monetary mechanic-in-chief, having spent three years as a Fed governor before becoming chairman of Bush's Council of Economic Advisers last June.
The nomination was instantly hailed on Capitol Hill, where Bush is facing battles over the budget and Supreme Court appointee Harriet Miers. Senate Banking Chairman Richard Shelby, R-Ala., welcomed Bernanke as "eminently qualified and a superb choice."
Born in Augusta, Ga., and raised in Dillon, S.C., where his father was the town druggist, Bernanke was an academic star from childhood, becoming South Carolina state spelling bee champion. He was knocked out of the Scripps national spelling bee when he misspelled "edelweiss" by adding an extra "i" to the flower made famous by "The Sound of Music." (Dillon was too small to have a movie theater back in 1965, he explains.)
He went on to graduate from Harvard College with top honors and earn a doctorate from Massachusetts Institute of Technology, although he confesses to being distracted from his Ph.D. studies by his passion for the Boston Red Sox and their losing bid to beat the Cincinnati Reds in the 1975 World Series.
From 1985 to 2002, he taught at Princeton, where he chaired the economics department.
As a leading scholar of monetary policy and inflation targeting, he arrived at the Fed in 2002 as a governor schooled in the fine points of fine-tuning the economy and quickly rose to be considered a leading contender to fill "Maestro" Greenspan's shoes when his non-renewable term is up in January 2006.
First, however, there's been the role of Bush's economic council chairman, a job Greenspan held during Gerald Ford's presidency. During Senate confirmation hearings for the council post, Bernanke embraced administration priorities, including energy security, a streamlined tax code and solutions for dealing with an aging population.
"The economic challenges facing the United States today - including the need to address the implications of an aging population, to achieve long-term energy security, while protecting the environment, and to reform our tax system so that it is simpler, fairer and more supportive of economic growth - are as great as at any time since the council was created," Bernanke told senators.
Since he was sworn in as council chairman, he's also grappled with the most costly natural disaster in U.S. history and whether the White House should propose other spending cuts or raise taxes to cover the cost of repair. As Bernanke told recent gathering of Washington economists: "The costs of rebuilding after Katrina are, of course, substantial and will add to the budget deficit in the near term ... (but) this necessary spending should not jeopardize the president's long-term deficit reduction goals."
Bernanke has been a prolific writer of books and articles, even while serving on the Fed. Many of his pieces have dealt with his ideas on targeting inflation, or coming up with a specific inflation rate of 2 percent plus or minus and pursuing policies over two or more years to stabilize price hikes at that level.
He cited his theories in a piece he wrote for the Wall Street Journal with Frederic Miskin and Adam Posen in 2000, entitled: "What Happens When Greenspan Is Gone?"
Their answer? "The Fed needs an approach that consolidates the gains of the Greenspan years and ensures that those successful policies will continue - even if future Fed chairmen are less skillful or less committed to price stability than Mr. Greenspan has been."
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