The shake-up on President Bush's economic team, with the firing of Treasury Secretary Paul O'Neill and National Economic Council Director Lawrence Lindsey, is an important first step toward improving economic policy. But much more needs to be done to fix the structure of domestic policymaking in this administration.
While "personnel is policy," so is the policymaking process. Even the best and most creative people will fail if forced to operate within a structure that is ill-designed. In my opinion, the current White House policymaking operation is broken and desperately needs to be rethought and reorganized. If it isn't, then the replacements for O'Neill and Lindsey will likely be no more successful than they were and eventually meet the same fate.
A very interesting analysis of the malfunctioning of the White House policy operation comes from John DiIulio, a University of Pennsylvania professor who headed the White House office of faith-based initiatives early in the administration. As both a trained social scientist and an observer of Bush administration policymaking from the inside, DiIulio's observations bear serious consideration.
Unfortunately, DiIulio's insightful analysis has been overshadowed by the political firestorm ignited by it. He, the White House and Esquire Magazine, which is publishing an article based on DiIulio's comments next month, have been busy trading changes and counter-charges about whether DiIulio was properly quoted. However, the guts of DiIulio's analysis did not come from interviews, but from a long memo that is now posted on the Esquire website.
In the memo, DiIulio says that the Bush administration "has not done much, either in absolute terms or in comparison to previous administrations at this stage, on domestic policy." It is hard to quarrel with this observation because it obviously is true. Other than the tax cut and an education bill written largely by Sen. Ted Kennedy, D-Mass., there is virtually nothing to show.
DiIulio says that a key reason for the paucity of domestic initiatives results from a nonfunctioning policy-development process. The White House, he says, is "organized in ways that make it hard for policy-minded staff ... to get much West Wing traction, or even get a non-trivial hearing." As a consequence, DiIulio goes on, policy tends to be made "on- the-fly" via speechmaking, rather than through a serious analytical process.
Again, one cannot dispute this characterization because it clearly is true. Since the beginning of the Bush administration, insiders have complained to me that the policymaking process was not working. Talking points and press releases had become substitutes for interagency working groups and policy papers that explored issues in depth. As a result, the White House has often been ill-prepared and inadequately informed about the substance of policy issues arising on Capitol Hill or in the press.
This vacuum in terms of policy analysis has tended to be filled by those in the White House who look at issues solely in terms of their political implications. However, the problem is not that people like Karl Rove, President Bush's chief political adviser, have undue influence. Rather, it is that the White House is structured so as to short-shrift analysis of issues in favor of sound bites and shoot-from-the-hip responses to issues.
I think that both O'Neill and Lindsey suffered in this environment. The former spent 16 years as a budget analyst at the Office of Management and Budget before going into business and well knows how the policy process should work. The latter was a Harvard economics professor and Federal Reserve Board governor who has written extensively for top academic journals on issues such as taxation and monetary policy. But neither has ever been very good at politics or dealing with the press. So, given an administration that prizes political and press skills, while having little interest in policy analysis, it was probably inevitable that O'Neill and Lindsey would not fit in.
The danger is that they will be replaced by people whose skills are mainly in the areas of politics and public relations. This will lead to an even further deterioration of the White House's policy development organization. The result will be that Bush may be vulnerable in 2004 to someone who genuinely cares about policy, has new ideas and can make Bush appear ignorant, disengaged and superficial. Another danger is that the White House will simply lose control of domestic policy, with Congress driving the agenda, instead.
In appointing replacements for O'Neill and Lindsey, President Bush should take the opportunity to rethink, reorganize and reinvigorate his economic and domestic policymaking apparatus. Otherwise, he will probably remain dissatisfied no matter who fills their jobs.