WASHINGTON -- If Lawrence Lindsey resigns as President Bush's
National Economic director, would the administration's economic leadership
problems be solved while Paul O'Neill remains as secretary of the Treasury?
The confidential answer from the White House is an unequivocal "no."
Lindsey will not stay much longer, but published reports that he
will go while O'Neill stays at Treasury as the administration's chief
economic spokesman are not in touch with reality. President Bush's business
supporters have told him for months that he must fill the Treasury portfolio
with someone who believes in his tax-cutting strategy, or else follow his
father as a one-term president. There are signs the president finally has
accepted this advice.
Neither Lindsey nor O'Neill will be handed a pink slip
immediately but will slowly fade away, saying they have resigned to tend
private concerns. Delay is necessary because there is no clear successor at
Treasury. After O'Neill, the White House flinches at the thought of picking
another CEO. Nobody in Wall Street looks good. Something very different at
the Treasury may result.
The White House recognizes but cannot publicly admit that its
problem is Treasury secretary, not National Economic director. The latter
position was created in 1993 specially for financial maven and Democratic
donor Robert Rubin, but he exerted little impact until he moved into the
Treasury in 1995.
While confined to a coordinating job, Lindsey for months has
been mercilessly battered and blamed in newspaper accounts for lack of a
dynamic Bush economic policy. Anonymous administration sources attack
Lindsey, a highly unusual practice within the Bush team. The largely mute
O'Neill is not the culprit. R. Glenn Hubbard, chairman of the president's
Council of Economic Advisers, raises suspicions by invariably coming out
well in these stories.
Friends of Lindsey are more than suspicious. They claim hard
information that Hubbard, on leave as a Columbia University economics
professor, has waged a disinformation campaign against his colleague.
Lindsey has said as much to White House aides, who have questioned Hubbard.
He denies committing an offense that carries a death sentence under George
Larry Lindsey is a devoted Bushie. He left Harvard's economic
faculty to join the White House staff of the elder George Bush, who later
made him the youngest Federal Reserve governor ever (while Hubbard was a
mid-level Treasury official). In 1999, Lindsey, then a seven-figure economic
consultant, was called upon by the younger Bush as his 2000 campaign
economics expert. In that role, he became one of Gov. Bush's favorites.
National Economic director turned out to be a much tougher job,
particularly when Lindsey is compared with the silky-smooth performance of
his national security counterpart, Condoleezza Rice. Lindsey suffered after
he was quoted as estimating a $100 billion cost for attacking Iraq and he
failed to get a late-blooming tax stimulus off the ground this fall.
O'Neill is widely perceived as turning up his nose at Bush's tax
cuts. Indeed, he insists he believes that any secretary of the Treasury
cannot hope to seriously influence the massive U.S economy. Neither
political nor ideological, O'Neill was a career civil servant who flourished
in the corporate world. He came to the Treasury because Dick Cheney
remembered him from bygone Nixon administration days as one of the smartest
bureaucrats he had ever met.
It is hard to find a prominent Republican who does not consider
the O'Neill appointment a serious mistake. However, the president, always
loath to punish loyal lieutenants, was immobilized by demands from Sen. Tom
Daschle and other Democrats for a new economic team. Now, with his term half
gone, the president can consider a change at Treasury.
But who, if not a CEO or a Wall Streeter? Financier Gerald
Parsky, Bush's lieutenant in California, was an assistant Treasury secretary
in the Ford administration and would vigorously promote Bush's tax policies;
but he is a controversial figure, under attack from the California
Republican right. Retiring Sen. Phil Gramm knows economics and politics, but
is eager to start a new career in investment banking. The name of Democratic
Sen. Zell Miller of Georgia is being mentioned in Bush's inner circle. The
point is that the president seeks a real advocate at the Treasury for the