CLINTON PLAN GETS DRUBBING.

Byline: Alice Ann Love Associated Press 

Saying the government should not invest hundreds of billions of dollars in the stock market, Federal Reserve Chairman Alan Greenspan swiftly joined congressional Republicans on Wednesday in battering the most controversial part of President Clinton's Social Security plan.

``I do not believe it is politically feasible to insulate such huge funds'' from political interference, Greenspan told the House Ways and Means Committee.

The central bank chairman said, however, that he enthusiastically supports most of Clinton's plan, which would use 62 percent of government surpluses over the next 15 years to bolster Social Security's cash reserves.

``In my judgment, that's all to the good,'' Greenspan said.

He said across-the-board income tax cuts, which the Republicans want, would not be the wisest use of the surplus. The Fed chairman said he believes it would help the economy most if the surplus were used to pay down the national debt - something Clinton's Social Security plan would indirectly do.

On the other hand, if the choice is between Republican tax cuts or the new military and domestic programs for which Clinton wants to use 11 percent of the surplus, Greenspan said tax cuts would help the economy more.

The influential Fed chairman's disdain for government investment in the stock market, combined with opposition from Republicans who control Congress, could scuttle an important part of Clinton's plan.

Without assumed earnings from the stock market, Clinton's plan would fall about five years short of a key goal: keeping Social Security from running short of cash for 55 years. That might mean an increase in pressure for other changes in Social Security.

Clinton administration officials said that they weren't caught off guard - that Greenspan has expressed his concerns before - and that they will forge ahead.