WSJ online - December 6, 2002
Bush Ousts Treasury's O'Neill, Economic Adviser Lindsey
By JOHN D. MCKINNON Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- President Bush began overhauling his economic team on Friday, as the White House ousted Treasury Secretary Paul O'Neill and top adviser Lawrence Lindsey amid concerns about lagging growth and lack of jobs.
Bush advisers have been worried that a weak economy could hamper the president's re-election prospects. Just today, the unemployment rate rose to 6%, the highest in nearly nine years.
Meanwhile, as the economy limped along, Messrs. O'Neill and Lindsey were increasingly becoming liabilities for the administration in its efforts to revive economic growth. Mr. O'Neill, a former Alcoa Inc. chairman, brought a free-spiritedness that ran counter to the administration's disciplined style. His invariably upbeat view of the economy also put him at odds with a White House that is clearly worried about the issue. Mr. Lindsey, by contrast, was often too pessimistic about the economy and also was prone to clashes with other advisers and lawmakers.
Overall, the changes appear to clear the way for a significant new Bush initiative to stimulate the economy early next year, primarily through new tax cuts. Mr. O'Neill, for one, had let it be known he worried that a big new tax-cut proposal not only wasn't needed, but also could send deficits soaring.
O'Neill's Candor Often Ruffled Feathers
For the time being, though, the moves leave the administration with an economic policy team that is in disarray. Today's resignation's came four weeks after Securities and Exchange Commission Chairman Harvey Pitt resigned under fire. His successor also hasn't been determined.
Democrats had a field day. "Firing its economic team is an overdue admission by the Bush administration that its economic policies have failed," said Senate Democratic Leader Tom Daschle of South Dakota. "However, the fundamental problem is that this administration has no comprehensive plan to get the economy back on track."
Administration officials promised to move quickly to fill the vacancies. "The president is going to look for people who are expert in the economy, who have faith and confidence of the markets and people who are leaders of experience and judgment dealing with private markets, private sector, a good understanding of government service," said White House spokesman Ari Fleischer. He said the president will "cast a wide net" in the search. But he noted that Mr. Bush also has a history of promoting from within.
Contenders for the Treasury job include Commerce Secretary Donald Evans and former U.S. Trade Representative Carla Hills. Also viewed as possible candidates were several business executives, including financial-services mogul Charles Schwab, as well as a slew of former lawmakers.
For Mr. Lindsey's job as director of the National Economic Council, likely contenders include Steve Friedman, a former chairman of Goldman Sachs, and R. Glenn Hubbard, the current chairman of the White House Council of Economic Advisers.
There had been persistent rumors since at least last summer that both Messrs. O'Neill and Lindsey would leave by the end of the year. But the suddenness of the forced resignations suggested internal clashes within the administration over the immediate direction of its economic policy.
Mr. Bush has promised new ideas for spurring growth and job creation early next year. But his advisers have given mixed signals about the direction of the package.
With his optimism about the economy and his concern about the impact of further tax cuts on federal deficits, Mr. O'Neill in particular appeared to be out of step with the rest of the administration. Mr. O'Neill also upset some other administration officials with his efforts to take the lead on fundamental tax reform.
Mr. O'Neill announced his resignation with a terse four-sentence letter to the president Friday morning. "It has been a privilege to serve the Nation during these challenging times," he wrote. "I thank you for that opportunity. I wish you every success as you provide leadership and inspiration for America and the world."
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PAUL HENRY O'NEILL
Age 67, born Dec. 4, 1935, in St. Louis, Mo.
EDUCATION -- B.A., Fresno State College, 1960; M.P.A., Indiana University, 1966.
EXPERIENCE -- Nominated by George W. Bush as Treasury secretary in December 2000; Alcoa Inc. chairman, 1987-2000, chairman and CEO 1987-1998; International Paper Co., vice president, senior vice president, president, 1977-1987; Office of Management and Budget, budget examiner, assistant director, associate director and deputy director, 1967-1977; Veterans Administration, systems analyst, 1961-1966; Morrison-Knudsen Inc., site engineer, 1955-1957.
FAMILY -- Married to Nancy Jo Wolfe; three daughters, one son, and 12 grandchildren.
LAWRENCE B. LINDSEY
Age 48, born July 18, 1954.
EDUCATION -- B.A., Bowdoin College, 1976. M.A. and Ph.D. in economics, Harvard University, 1985.
EXPERIENCE -- Senior White House economic adviser, January 2001 to present; Federal Reserve, governor, 1991-1997; Board of the Neighborhood Reinvestment Corp., chairman, 1993-1997; special assistant to President Bush for policy development, 1989-91; professor of economics at Harvard, 1984-89; senior tax-policy economist on President Reagan's Council of Economic Advisers, 1981-84.
FAMILY -- Married to Susan; two children.