Reorganizing White House economics team

Posted: Jan 10, 2001 12:00 AM
Press reports indicate that President-elect George W. Bush is considering a sweeping reorganization of the White House's economic policymaking operations. According to the New York Times, he plans to abolish the National Economic Council (NEC), and may downgrade the U.S. Trade Representative (USTR). Much of the responsibility for trade policy would shift to the Department of Commerce. I believe that these changes may hinder rather than aid Bush's economic agenda. The biggest problem Bush will have once he becomes president Jan. 20 is keeping control of his agenda. As his cabinet secretaries are confirmed and take office they inevitably are going to start evolving their own agendas. There are many reasons for this: -- Cabinet departments have their own constituencies that will quickly begin to bear down on the secretary. We are seeing it already in the confirmation process, as the AFL-CIO tries to impress Labor Secretary-designate Linda Chavez with its views on affirmative action and other policies. On a more subtle level, we can assume that every other special interest in Washington is doing the same for the designated secretaries holding their portfolio. As time goes by, some secretaries can be expected to wholly give-in to such pressure, creating conflict with the president that will be exploited by his political enemies. -- Bush's political appointees are going to be challenged by the career bureaucracy to adopt their approach to policy rather than the president's. These efforts often take the form of slowly dripping water against a rock -- the impact is very slow, but inexorable. Oftentimes, the bureaucrats simply wait out their political masters, dragging their feet until a new secretary, assistant secretary or administration arrives. It can take enormous effort to overcome this bureaucratic resistance to change, which, in time, will affect a secretary's perspective on what he can and cannot do to implement the president's agenda. -- Lines of responsibility between departments are not nearly as clear as in a business. Practically every major issue will involve more than one department. For example, the Department of State has a major interest in almost everything the Department of Defense does, and vice-versa. And for deep-seated institutional reasons, one will generally tend to oppose whatever the other one does. Consequently, past presidents have recognized that a strong White House staff is essential to resolving conflict and keeping the departments from going their own way. Thus the main job of the National Security Council (NSC) is to broker the almost continuous struggle between State and Defense and ensure that the president's directives are acted upon. Similarly, the Office of Management and Budget (OMB) generally rides herd on the domestic departments, preventing them from giving away the store to their constituent groups. Trade policy has always been an especially difficult area to deal with because the president has a considerable amount of discretionary authority in this area. Also, trade conflicts tend to be extremely nasty, and the stakes can be very high, which puts enormous pressure on everyone involved. Historically, the Commerce Department has always represented the interests of aggrieved U.S. businesses, consistently pushing for trade restrictions to provide relief or retaliation against real or imagined injuries. Because Commerce's institutional role in trade policy is so clearly defined and impervious to change, it was recognized that the president needed an equally strong counterbalance, which is the job of USTR. As a part of the White House, USTR is much better able to resist the special interest demands for protection from the business community and Big Labor. Thus USTR tends to play "bad cop" to Commerce's "good cop." That way the special interests get their place at the table with an equally strong advocate for the general interest, which usually conflicts with the special interest position, there as well. However, there also needs to be a mechanism for resolving the stalemate that frequently arises between USTR and Commerce. The NEC has done this in the Clinton administration. It has also been the prime vehicle for resolving other inter-departmental conflicts, as well as coordinating policies and maintaining conformity to the president's priorities. Whether Bush keeps the NEC in its current form or abolishes it altogether, he is still going to need some organization within the White House that fulfills its function. Otherwise, he will either find the cabinet departments going their own way, contrary to his wishes, or he will personally have to resolve every conflict. Gene Sperling, current head of the NEC, told me that one of its prime functions was simply to give Clinton a way out when confronted by a cabinet secretary asking him to support a pet proposal. He could always defer by saying that it would have to be considered by the NEC before he could make a decision. Bush will also find it useful to be able to do the same. Thus, we see that over time, presidents have discovered that pure cabinet government simply does not work. Conflicts have to be resolved, and there has to be a means by which they can control the cabinet and keep it focused on the president's agenda, rather than their own. This led previous presidents to create NSC, OMB, USTR and NEC within the White House, through which they could exercise control and have an independent source of information on what their cabinet appointees were actually doing. Of course, there is nothing wrong with shaking up the White House and finding new organizational and managerial techniques for implementing and coordinating policy. But Bush needs to understand that conflict and non-conformity are inevitable, and he may need to strengthen, rather than weaken, the White House staff operation if he is to be successful in attaining his agenda. I think he will soon find that cabinet government will not suit this purpose.