COLUMN ONE : Greenspan: Supreme Survivor : The Fed chairman, one-time jazz saxophonist and disciple of Ayn Rand, has become the nation’s premier economic force. Though under fire, he is likely to be reappointed.

Party-givers in this socially conscious city might think twice about inviting Federal Reserve Board Chairman Alan Greenspan and Treasury Secretary Nicholas F. Brady to the same dinner.

Brady, after all, has been publicly berating Greenspan for months for failing to push interest rates down rapidly enough to foster an economic recovery from a deadening recession. Only recently, Brady let loose with another broadside against Greenspan’s economic leadership.

So who were those two couples having a quiet dinner together just a few nights later at the Brighton Grill Restaurant in the Watergate complex in Washington? Wasn’t that Greenspan and his frequent companion, NBC correspondent Andrea Mitchell, and Brady and his wife?

It was, indeed. Despite the fiery rhetoric from the Treasury boss, his friendship with Greenspan--forged over the last two years during private crab feasts at the Bradys’ vacation home on Maryland’s Eastern Shore--was still intact.

That would not surprise those who know Greenspan best. Through two decades and four presidencies, he has survived and flourished in the cut-throat world of Washington politics. And he appears to have done it largely by avoiding the political game as it is generally played.

That also may help explain why, in the face of such public bashing from the Administration, the stoop-shouldered and often morose-looking Greenspan, who has held the Fed post for nearly four years, is virtually certain to be asked by President Bush to stay on as America’s chief central banker, arguably the most powerful figure in global finance. Greenspan’s term expires in August.

“He is a survivor,” says Washington power broker Robert S. Strauss, the former chairman of the Democratic National Committee and a close friend of Greenspan. “He is one of the best political operators in this town, and yet you never hear people talk about him in political terms. Most people don’t even think that he knows anything about politics, which shows you how good he is at it.”

The 65-year-old Greenspan will have his work cut out for him in another term at the Fed.

Budget gridlock and massive federal deficits have prevented either the Bush Administration or Congress from forging any kind of plan to pull the economy out of the recession. That paralysis has meant that the Federal Reserve is the only institution in Washington that has a chance to bolster the economy.

As a result, Greenspan has become the premier force in American economic policy today, with influence that in many ways extends beyond that of George Bush. When Greenspan’s Fed determines that the economy is not growing fast enough, it can open the throttle by slashing interest rates; when the Fed believes the economy is moving too fast, it can clamp down, constricting the flow of money into the economy, forcing interest rates higher. The Fed’s control over interest rates is a blunt instrument and often does not have an impact on economic activity until months later.

But right now, it’s the only weapon available at a time when policy-makers face not only the first recession in nearly a decade but a credit crunch brought on by the worst banking crisis since the Great Depression.

So Greenspan’s actions will come under microscopic analysis, and he will continue to be buffeted with criticism from all sides that he is either not doing enough--or else is doing too much--to pull the American economy out of the mire.

A lifelong conservative who has played key roles in Republican politics since the Richard M. Nixon campaign of 1968, Greenspan was chief economic adviser to President Gerald R. Ford in the mid-1970s--an experience that has helped keep him in good stead in the Bush camp, which includes many of the old Ford alumni. Greenspan and Defense Secretary Dick Cheney, who was Ford’s chief of staff, remain especially close friends, and Greenspan has good relationships with Secretary of State James A. Baker III and National Security Adviser Brent Scowcroft.

“I think these longstanding friendships enhance their working relationships today,” Ford says. In the early days of Bush’s unsuccessful 1980 presidential race, Greenspan acted as a behind-the-scenes adviser to the campaign on economic issues.

But despite his ties to the Administration, those close to him insist that Greenspan has been moving to cut rates in recent weeks in spite of, not because of, the overt pressure from the White House. Senior Fed officials say that the recent interest rate cuts have come because Greenspan believes that inflation is under control and that the central bank now has room to push the economy toward recovery at a faster pace without risking higher prices. A handful of anti-inflation hawks inside the Fed disagree with the easing strategy and caution that the stage has been set for a new burst of inflation next year, when the presidential election will make it difficult for the Fed to turn the screws on the economy.

Until recently, Greenspan might have agreed with them; throughout his professional career, Greenspan has had a conservative’s fear of inflation. And, in his first few years at the Fed, he sought to dispel any public impression that he might not be as tough on monetary policy as his predecessor, Paul A. Volcker. Almost immediately after he took over at the Fed in the summer of 1987, in fact, Greenspan raised interest rates--at least partly to convince Wall Street that he was not in the Ronald Reagan Administration’s pocket. Now, many private economists believe that Greenspan has taken a more stable and consistent approach to monetary policy than did Volcker, who some analysts say often tried a little too hard to fine-tune interest rates.

Greenspan showed his steadiness under fire during the stock market crash in October, 1987. From a hotel room in Dallas on the day of the 500-point crash on Wall Street, Greenspan worked the phones throughout the night and by the next morning was able to calm the markets by announcing a massive infusion of funds into the economy.

On tax and budgetary policy, Greenspan remains an old-fashioned conservative, who consistently rails against the federal government’s massive deficits. And he is not above using his role as Fed chairman to put pressure on Congress and the White House to cut spending. Last fall, for instance, he warned that if the budget agreement collapsed, interest rates would likely rise and the stock market would tumble. He also rewarded the two sides by lowering rates when the agreement was finally approved.

It is that new budget discipline, along with years of tight monetary policy, that have finally convinced Greenspan that inflation is licked--at least for now. The Fed, he thinks, can now concentrate on battling the economic slump. So in private sessions at the Fed, he has campaigned forcefully for lower rates for months, countering the arguments of the anti-inflation camp that easier policies will set the economy up for a big fall next year.

Greenspan’s low-key personal style is a polar opposite to that of Volcker, who frequently was accused of ruling the central bank by personal fiat. Unlike the Spartan Volcker, who shunned the Washington scene, Greenspan likes to take part in the social networks both inside and outside the Fed and quietly tries to build a political consensus before taking action.

A very private man who rarely shows much of himself to the public, Greenspan has an uncanny ability to ignore emotion and personal bickering in political and policy debates inside government--a trait that allows him to work with almost anyone. Friends describe him as something akin to a “19th-Century, Middle-European philosopher”--a brilliant analyst who enjoys the process of intellectual debate and the hashing out of ideas, a trait he distilled in his years sparring with the dry intellect of conservative guru Ayn Rand, the author of “Atlas Shrugged” and other books.

From his years in the Ford White House, meanwhile, he learned that a collegial working style makes for a longer political life span. “There were no sharp elbows in the Ford Administration, and that is Alan’s style now also,” observes Robert Hormats, an economist who played a key policy-making role on Ford’s National Security Council.

“I think you can deal with people in one of two ways, either by force, or by persuasion,” Greenspan says, carefully choosing his words in a rare--and largely off-the-record--interview. “If you can’t deal with them by persuasion, you are not as effective.

“And I don’t enjoy confrontation, to tell you the truth,” he adds. “I can do it if necessary, I can be as hard as anybody I know, but I don’t like it.”

On television or in the confines of a congressional hearing, such quiet traits often make Greenspan seem morose.

Yet throughout his life, his unflappable nature and his ability to ignore outside distractions in order to focus on the task at hand have served him remarkably well. And while he has made his share of missteps, his eye for consensus building and his talent for social networking among America’s elites have always helped him avoid long-term damage to his career or his political standing.

A bachelor with no children, Greenspan loves classical music and tennis, which he plays regularly with Fed governor Wayne D. Angell at a YMCA in suburban Arlington, Va. Friends say he relaxes by working on complex economics-related mathematics problems.

An only child, whose parents divorced when he was young, Greenspan grew up in New York City with his mother, who is now 88. He still flies from Washington to New York on the shuttle every Saturday to visit her for at least a few hours.

After studying music at the prestigious Julliard School, Greenspan won a job as a full-time clarinet and tenor saxophone player, earning $55 a week during New York’s jazz heyday.

Those were wild times on the wartime band scene in Manhattan in 1944 and 1945, and the Henry Jerome Band, with quiet Alan Greenspan on tenor sax, was right on the cutting edge. But along with avant-garde jazz, the kind of early bop that Charlie (Bird) Parker was blowing uptown and Jerome was trying to mimic with his band downtown, came drugs.

Between sets at Child’s Paramount, a massive restaurant in the basement of the old New York Paramount Theater in Times Square, some of Jerome’s musicians, still in their band uniforms, chocolate brown pants and canary yellow jackets, would rush over to the Walgreen’s drugstore next door, crowd into phone booths and light up their marijuana--risky business in the 1940s.

But none of this affected Greenspan, who always stayed clean and sober. “He never even took a drink,” recalls bandleader Jerome, who later became a record producer.

Instead, the new saxophonist proved to be a bookish teen-ager who took care of the band payroll when he was not playing his instrument. Greenspan spent his free time in the midst of New York’s jazz Golden Age reading college economic texts and the new philosophical novels of Ayn Rand. He ignored the distractions around him to focus on his goal of going back to college full time to study economics.

“Nothing bothered him,” remembers band member Leonard Garment, now a Washington lawyer. “Some guys were wild, big headaches. But he was never any trouble. He did his job, took care of the band’s books and went off to the side and studied. He would come on time and leave on time. He was imperturbable.”

Eventually, Greenspan gave up music in favor of economics; he did graduate studies at Columbia University under the legendary Fed chairman Arthur F. Burns, who eventually became one of Greenspan’s mentors.

In the fall of 1952, Greenspan, by then a steel analyst, married an aspiring painter, Joan Mitchell, who introduced him to Ayn Rand. Soon, both Greenspan and Mitchell were in Rand’s “collective,” an informal group of disciples of the right-wing novelist who met regularly in Manhattan to hash over Rand’s ideas in a hothouse intellectual atmosphere. While Greenspan’s attachment to the “collective” grew, within nine months his only marriage was over. “They just fell out of love,” recalls Nathaniel Branden, a leading Rand disciple and member of the collective, who knew both Greenspan and Joan Mitchell well.

Greenspan’s introduction to the Rand “collective” began a close, lifelong friendship with Rand, and also led to his introduction to Republican politics and extensive contacts throughout conservative circles.

Rand, an ideological extremist who wrote novels depicting businessmen as super-heroes, won over a whole generation of young conservatives, many of whom are now members of the conservative Establishment. “Alan is my disciple philosophically,” Rand said in a 1974 interview. “He is an advocate of full laissez-faire capitalism, but neither he nor I expect it overnight.”

His ties to Rand, who died in 1982, eventually led Greenspan into government. In 1967, while Greenspan was running his lucrative New York economic consulting firm, Townsend-Greenspan, fellow Rand-disciple Martin Anderson brought Greenspan onto the fledgling Nixon presidential campaign.

After Nixon’s 1968 victory, Greenspan turned down several offers to come to Washington, at least partly out of disgust with Nixon’s decision to impose wage and price controls. Eventually, he accepted, in the dying days of the scandal-racked Nixon Administration in the summer of 1974--but not before receiving quiet assurances from Vice President Ford’s staff that he would be kept on as chief economist if Nixon resigned.

But as Ford’s chief economic adviser, Greenspan quickly and firmly put his foot in his mouth. In 1974, he told a Washington audience made up mostly of groups of consumers and minorities that stock brokers on Wall Street, not poor people, were suffering the most in the recession that was then straining the economy. His remarks were met with catcalls and boos and made front-page headlines across the country the next day. Still, he had already won President Ford’s ear and easily survived the flap.

After Ford was defeated in 1976, Greenspan returned to New York, intent on resuming his consulting business and finishing his graduate work in economics. It was one of the ironies of Greenspan’s life that he had been too busy as a practicing economist to complete his work on a Ph.D.

Greenspan had completed his course work and was just beginning his doctoral thesis, the final requirement for his doctorate at New York University when he was called to the White House in 1974. But Greenspan found when he returned to New York in 1977 that he was once again too busy with his business to write his thesis.

Bob Kavesh, an economics professor at NYU and an old friend and college classmate of Greenspan’s, came to the rescue. He agreed to chair a faculty committee that awarded Greenspan a Ph.D. in the fall of 1977 based on a dissertation composed of some of Greenspan’s previously published articles. Kavesh now concedes that the incident marked the only time at NYU that he can recall in which a doctorate was awarded without an original dissertation. But leading academics in economics say that while the incident was unusual, the awarding of a Ph.D. to an accomplished economist based on previous work written for academic journals does not violate any professional standards.

In 1984, Greenspan, back at Townsend-Greenspan, accepted Charles H. Keating Jr. and Lincoln Savings & Loan indirectly as clients through Keating’s New York lawyers, and Greenspan made what in hindsight now seems to be a major blunder. For large fees, Greenspan provided Keating with what amounted to a clean bill of health and a seal of approval for his real estate lending activities, which later helped bring on Lincoln’s spectacular collapse and led to the current charges facing Keating. In early 1985, Greenspan wrote a letter to the Federal Home Loan Bank of San Francisco arguing that Lincoln Savings deserved an exemption from regulations that limited to 10% an S&L;’s direct investment in real estate projects.

Greenspan reported that Lincoln was “financially strong” and that Lincoln posed no “foreseeable risk to the Federal Savings and Loan Insurance Corp.” Keating’s full-court pressure on the regional regulators in San Francisco helped delay any federal move against Lincoln for years; the firm’s eventual collapse was the largest of any in the S&L; crisis. Weeks later, Greenspan testified before a House subcommittee on behalf of Keating, telling Congress that S&Ls; should be allowed to make such direct investments in real estate in order to allow them to diversify.

But unlike others who have been tied to Keating, including Sen. Alan Cranston (D-Calif.) and a group of four other senators who endured a lengthy ethics probe as a result, Greenspan never suffered from the connection--largely because his work for Keating came long before the thrift industry’s problems became apparent or became front-page news. “At the time, he (Keating) had the kind of balance sheet that we all should have,” Greenspan has insisted.

Greenspan consolidated his position in the mid-1980s as one of the Republican Party’s senior statesmen on economic matters, and once again began to display his skills as a behind-the-scenes consensus builder. As chairman of a bipartisan commission formed in 1982 to solve the seemingly intractable financial crisis then confronting the Social Security system, he put together a compromise acceptable to both the Democratic Congress and the Reagan White House.

Now that he is Fed chairman, Greenspan has continued to prove his ability to get involved in the political process without leaving heavy footprints. Although he was one of the main proponents quietly urging President Bush to push for a capital gains tax cut early this year, Greenspan has still been extremely cautious as chairman-designate of a proposed bipartisan committee to study the budgetary impact of such a controversial tax reduction.

Greenspan--whose support for lower business taxes dates back to his years with Ayn Rand--agreed to a request from Bush to chair the panel just before Bush announced the idea in his State of the Union Address.

Yet he has refused for months to organize the committee, delaying action until the Democratic leadership in Congress, which fiercely opposes a capital gains cut, signs on to the proposal.

That’s vintage Greenspan.