It's the nagging question that comes up every four years: Does the Federal Reserve try to influence presidential elections?
When Alan Greenspan, Fed chairman and longtime friend of Vice President Dick Cheney, convenes the Federal Open Market Committee tuesday, will he keep interest rates low because of the data or with an eye to the polls or both?
According to tradition, the central bank strives for strict neutrality in an election year by avoiding policy changes as much as possible. But political pressures in Washington are enormous. And the Fed's record is not quite so straightforward as tradition suggests.
The most suspicious activity occurred in 1971 and '72. At the time, a prominent journalist accused Chairman Arthur Burns of trying to reelect President Nixon by keeping interest rates lower than was justified by a robust economic expansion and growing inflation.
"Burns was very, very political," says Mickey Levy, who worked for him at the American Enterprise Institute after Dr. Burns left government. When he asked Burns about Nixon's influence, he got a lame answer, says Mr. Levy, who is now chief economist of the Banc of America Securities in New York.
But Alan Meltzer, an economist at Carnegie Mellon University in Pittsburgh who has studied Nixon's taped conversations with Burns, concludes there was "no conspiracy ... no cabal" between the two on Fed monetary policy.
Immediately after Nixon sent his economic policy aide to the Fed building to pressure Burns for easy money, Burns is heard on the phone to Nixon warning him that if he does this again, he will have the aide "thrown out bodily." (When I questioned Burns about the charge of political accommodation in an interview in the mid-1970s, he vehemently denied it.)