Alan Greenspan's criticism of the administration's fiscal record couldn't have come at a better time. The former Federal Reserve chairman's autobiography, "The Age of Turbulence," lays into President Bush and congressional Republicans for their free-spending ways. The criticism seems to have emboldened Bush just as Democrats challenge him on taxes and spending.

Speaking at a press conference last week, Bush repeatedly hit congressional Democrats for proposing tax hikes and spending increases. The new hard-line attitude, something missing when Republicans controlled Congress, is refreshing for conservatives seeking a return to fiscal restraint.

"The worst decision the Congress could make would be to raise taxes," Bush said. "We don't need to raise taxes in order to fund budget priorities."

When asked about the economy, Bush was even more adamant. "I'm optimistic about our economy," he said. "I would be pessimistic, however, if the Congress has its way and raises taxes. I believe the worst thing that can happen now is to allow the Congress to do that which they have said they want to do, which is to raise the taxes on people."

Taxes may be one thing, but Bush also came out strongly against additional government spending -- specifically the proposed $35- to $50-billion expansion of the State Children's Health Insurance Program, SCHIP for short. Add in 12 appropriations bills awaiting resolution -- all threatening to exceed the president's spending recommendations -- and the stage is set for the biggest budget showdown since then-Speaker Newt Gingrich challenged President Bill Clinton to shut down the government in 1995.

All of this activity has led the mild-mannered Greenspan to offer Bush some blunt advice: Dust off the veto pen.

"My problem with the president is that he did not use the veto sufficiently," Greenspan said last week on Fox News. "He'd better start vetoing certain stuff."

Bush appears ready to flourish that veto soon if Congress doesn't change course on the SCHIP bill. Originally intended to cover poor children whose folks can't afford private health insurance, SCHIP would be transformed into a new middle-class entitlement program under a proposal expected to be approved by Congress next week. Under this massive expansion, families earning up to $83,000 per year would be eligible for "free" government coverage for their kids, turning it into HillaryCare lite.

The budget outlook could be even grimmer. Congress has made little progress on the 12 appropriations bills it is supposed to pass before Sept. 30, the end of the fiscal year.  And what they have done isn't much to the president's liking. He has already promised to veto up to 10 of them. It appears that once again -- for the 22nd time in 25 years -- Congress will fail to finish its basic budget work on time.

The result will likely be a bloated omnibus spending bill that encompasses everything. This approach invites special-interest pork-barrel projects to be slipped into the legislation, boosting government spending to levels much higher than the president proposed. (The Democratic majority's spending proposals already come in at $945 billion, about $81 billion -- 9 percent -- higher than last year.)

Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi may well take a page from Gingrich's playbook and tempt the president to temporarily shut down government offices. That would certainly make for political drama, but it wouldn't bring fiscal responsibility to Washington.

To deter that kind of drama, Sen. Jim DeMint (R-S.C.) and Rep. Jeb Hensarling (R-Tex.) last week introduced a bill to prevent a government shutdown. Their legislation, supported by the White House, would automatically maintain spending at the current year's level if Congress fails to enact appropriations bills on time. The bill authors hope this approach will appeal to Democrats who want to get something done and Republicans who are content to maintain current spending levels.

Bush and Congress will have to navigate a rocky road this fall to reach a settlement of their differences over tax and spending issues. But what's even more troubling is that the disagreements over SCHIP and appropriations bill pale in comparison to the problems facing entitlement programs such as Social Security and Medicare. Congress seems content to avoid those problems, leaving them for a future generation to solve. By then it might be too late.

Robert B. Bluey is director of the Center for Media & Public Policy at The Heritage Foundation and maintains a blog at RobertBluey.com