The Fed's cut in the discount rate to 6 1/2% Tuesday in and of itself was not an especially significant event, insofar as it has no impact on bank liquidity. But with the economy sinking and everyone looking at the Fed for answers, it seemed a good public-relations move by Fed Chairman Alan Greenspan to get a unanimous vote from his board for the action. Greenspan is running out of freebies, though, and there is not much more he can do as long as there is no movement by the Bush Administration on reviving the capital gains tax. The flip-flopping on capgains this week on whether or not the President will revive it in January looks pretty awful, with a high probability that Treasury Secretary Nick Brady will prevail in killing it for the duration of his tenure at Treasury. The only thing that might revive it is if Greenspan goes public and persuades the President that the Fed alone will not be able to handle the economic weakness that is emerging. Greenspan is a more avid supporter of capital gains tax cuts -- even a zero rate -- than anyone would guess from his public posture. He thoroughly understands that a lower rate would lift real estate values and take pressure off the banking system. It would make a big difference if he told the country about his views on this element of fiscal policy, but he obviously is wary of the political crossfire he might be stepping into. The fight over capgains is not a simple dispute over economic policy, but a fundamental power issue, one the President seems ready again to concede without a fight. Merry Christmas.