Two top officials on U.S. President George W. Bush's economic team submitted their resignations last week amid concerns about the sluggish American economy. The moves came as the country's unemployment rate rose to 6 percent, the highest in more than eight years. Analysts say the departures provide an opportunity for Bush to bring in new advisers and try to develop an economic growth package. Bush's new economic team is expected to be announced later today.
Washington, 9 December 2002 (RFE/RL) -- Economists say U.S. President George W. Bush dismissed the two leaders of his economic-policy team in an effort to demonstrate that he is not distracted by foreign-policy concerns and is determined to restore vitality to the sluggish American economy.
Treasury Secretary Paul O'Neill and Lawrence Lindsey, the White House economic adviser, announced their resignations on 6 December, although it was widely reported that Bush had demanded their departures.
The president's spokesman, Ari Fleischer, praised both men's work. Speaking with reporters, Fleischer said that continued economic bad news -- including a government report showing that the unemployment rate for November was the highest in eight years -- was not a factor in the resignations of O'Neill and Lindsey. "The president looks at the economy as a matter that is bigger than any one person or any one expert, and the president looks forward to working with the Congress to advance policies and plans that would help the economy grow even stronger."
News reports say Bush is likely today to nominate John Snow, head of the freight and transportation conglomerate CSX Corporation, as the new treasury secretary. His appointment will need to be confirmed by the U.S. Senate. Stephen Friedman, a former chairman of the major investment firm Goldman Sachs, is expected to be named as the new White House economic adviser.
One economist interviewed by RFE/RL, David John, said that from the day he was inaugurated nearly two years ago, Bush has been mindful of the failure of his father -- President George Bush -- to win a second four-year term in the White House in the 1992 election.
John is an economist with the Heritage Foundation, an independent Washington policy research center. He recalls that the elder Bush enjoyed a high approval rating among Americans in public-opinion polls conducted during the months that followed the 1991 Persian Gulf War.
But John notes that the first President Bush appeared to be more focused on foreign policy than on domestic issues, and seemed unconcerned about the onset of an economic recession later in 1991. It was that recession, John said, that gave Bill Clinton the opportunity to unseat the elder Bush in the 1992 presidential election.
According to John, the current President Bush wants to show Americans that he is not going to make the same mistake. "Given the continued weakness in the [U.S.] economy, rather than find himself charged with ignoring domestic activities and concentrating totally on foreign affairs, as his father was, this president is sending a message once and for all that the economy is important to him and that he is leading the effort to restart it."
Other economists agree, but say there were further reasons why Bush wanted to be rid of O'Neill and Lindsey. As treasury secretary, O'Neill was regarded as the administration's chief spokesman on the economy, and most observers say he did not perform that job well. O'Neill has a reputation for candor that is considered inappropriate for someone who is supposed to be focused on maintaining public confidence in the economy.
Robert Dunn, an economics professor at George Washington University in Washington, D.C., said O'Neill also has been known to have sharp disagreements with other members of Bush's economic team -- something that can further erode public confidence. "The guy [O'Neill] made some unfortunate comments. He's very blunt and direct. And that's not a quality of the secretary of the treasury, which is supposed to be somebody who's very discreet. If he has these disagreements, they shouldn't have become public anyway."
O'Neill reportedly has been on the losing side of two crucial differences of opinion in the Bush administration. One was Bush's decision eight months ago to impose high tariffs on most imported steel, which infuriated U.S. trading partners.
A second and perhaps more important dispute within the White House inner circle is whether to cut taxes again. Shortly after he was inaugurated president in January 2001, Bush persuaded Congress to enact a cut in taxes that will cost the U.S. Treasury $1.33 billion before it expires in 2010.
Bush wants to make the tax cut permanent, or reduce tax rates in other ways, even though the federal budget has moved from surpluses to deficits in the past two years because of the weak economy and the high cost of the war on terrorism. Barry Bosworth, an economist at the Brookings Institution, another Washington think tank, said O'Neill's opposition to further tax cuts is probably the reason for his departure. "I suspect that O'Neill has resigned or been asked to resign because of the dispute over policy, that in good conscience he could not continue to advocate large tax reductions in the face of growing budget deficits."
Bush himself has a reputation for not abiding dissent within his administration. John -- of the Heritage Foundation -- said this, too, was probably a factor in O'Neill's departure. "There were a number of disagreements within the White House economic team. There were bitter disagreements, and that's something that this president isn't going to tolerate."
As for Lindsey, Dunn said he was probably dismissed because, in the end, he lacked the academic prestige needed to be the president's economic adviser. "I just think Larry Lindsey never had a high standing in the economics profession. I'm sure he's a nice guy, and he's written some stuff, but if you're going to be the chief economist for the administration, then you ought to be somebody who has a real academic track record, and he doesn't."
According to John, Lindsey shared one failing with O'Neill: an inadequate public image. John said this means Lindsey has been unable to demonstrate leadership during an economic slump, when such a quality is essential. "There was a question as to whether or not, as far as P.R. goes, he [Lindsey] was the strongest possible figure out there, that his speeches and his interviews were sometimes regarded as less strong than others.'"
Whether O'Neill and Lindsey quit or were fired, their resignations were barely noticed by the U.S. stock market, the daily indicator of Americans' confidence -- or lack of it -- in their economy. Stocks ended slightly higher on 6 December as investors bet a Bush administration shake-up would usher in new solutions for the slow-growing U.S. economy.
Washington, 9 December 2002 (RFE/RL) -- Economists say U.S. President George W. Bush dismissed the two leaders of his economic-policy team in an effort to demonstrate that he is not distracted by foreign-policy concerns and is determined to restore vitality to the sluggish American economy.
Treasury Secretary Paul O'Neill and Lawrence Lindsey, the White House economic adviser, announced their resignations on 6 December, although it was widely reported that Bush had demanded their departures.
The president's spokesman, Ari Fleischer, praised both men's work. Speaking with reporters, Fleischer said that continued economic bad news -- including a government report showing that the unemployment rate for November was the highest in eight years -- was not a factor in the resignations of O'Neill and Lindsey. "The president looks at the economy as a matter that is bigger than any one person or any one expert, and the president looks forward to working with the Congress to advance policies and plans that would help the economy grow even stronger."
News reports say Bush is likely today to nominate John Snow, head of the freight and transportation conglomerate CSX Corporation, as the new treasury secretary. His appointment will need to be confirmed by the U.S. Senate. Stephen Friedman, a former chairman of the major investment firm Goldman Sachs, is expected to be named as the new White House economic adviser.
One economist interviewed by RFE/RL, David John, said that from the day he was inaugurated nearly two years ago, Bush has been mindful of the failure of his father -- President George Bush -- to win a second four-year term in the White House in the 1992 election.
John is an economist with the Heritage Foundation, an independent Washington policy research center. He recalls that the elder Bush enjoyed a high approval rating among Americans in public-opinion polls conducted during the months that followed the 1991 Persian Gulf War.
But John notes that the first President Bush appeared to be more focused on foreign policy than on domestic issues, and seemed unconcerned about the onset of an economic recession later in 1991. It was that recession, John said, that gave Bill Clinton the opportunity to unseat the elder Bush in the 1992 presidential election.
According to John, the current President Bush wants to show Americans that he is not going to make the same mistake. "Given the continued weakness in the [U.S.] economy, rather than find himself charged with ignoring domestic activities and concentrating totally on foreign affairs, as his father was, this president is sending a message once and for all that the economy is important to him and that he is leading the effort to restart it."
Other economists agree, but say there were further reasons why Bush wanted to be rid of O'Neill and Lindsey. As treasury secretary, O'Neill was regarded as the administration's chief spokesman on the economy, and most observers say he did not perform that job well. O'Neill has a reputation for candor that is considered inappropriate for someone who is supposed to be focused on maintaining public confidence in the economy.
Robert Dunn, an economics professor at George Washington University in Washington, D.C., said O'Neill also has been known to have sharp disagreements with other members of Bush's economic team -- something that can further erode public confidence. "The guy [O'Neill] made some unfortunate comments. He's very blunt and direct. And that's not a quality of the secretary of the treasury, which is supposed to be somebody who's very discreet. If he has these disagreements, they shouldn't have become public anyway."
O'Neill reportedly has been on the losing side of two crucial differences of opinion in the Bush administration. One was Bush's decision eight months ago to impose high tariffs on most imported steel, which infuriated U.S. trading partners.
A second and perhaps more important dispute within the White House inner circle is whether to cut taxes again. Shortly after he was inaugurated president in January 2001, Bush persuaded Congress to enact a cut in taxes that will cost the U.S. Treasury $1.33 billion before it expires in 2010.
Bush wants to make the tax cut permanent, or reduce tax rates in other ways, even though the federal budget has moved from surpluses to deficits in the past two years because of the weak economy and the high cost of the war on terrorism. Barry Bosworth, an economist at the Brookings Institution, another Washington think tank, said O'Neill's opposition to further tax cuts is probably the reason for his departure. "I suspect that O'Neill has resigned or been asked to resign because of the dispute over policy, that in good conscience he could not continue to advocate large tax reductions in the face of growing budget deficits."
Bush himself has a reputation for not abiding dissent within his administration. John -- of the Heritage Foundation -- said this, too, was probably a factor in O'Neill's departure. "There were a number of disagreements within the White House economic team. There were bitter disagreements, and that's something that this president isn't going to tolerate."
As for Lindsey, Dunn said he was probably dismissed because, in the end, he lacked the academic prestige needed to be the president's economic adviser. "I just think Larry Lindsey never had a high standing in the economics profession. I'm sure he's a nice guy, and he's written some stuff, but if you're going to be the chief economist for the administration, then you ought to be somebody who has a real academic track record, and he doesn't."
According to John, Lindsey shared one failing with O'Neill: an inadequate public image. John said this means Lindsey has been unable to demonstrate leadership during an economic slump, when such a quality is essential. "There was a question as to whether or not, as far as P.R. goes, he [Lindsey] was the strongest possible figure out there, that his speeches and his interviews were sometimes regarded as less strong than others.'"
Whether O'Neill and Lindsey quit or were fired, their resignations were barely noticed by the U.S. stock market, the daily indicator of Americans' confidence -- or lack of it -- in their economy. Stocks ended slightly higher on 6 December as investors bet a Bush administration shake-up would usher in new solutions for the slow-growing U.S. economy.