Bush Staffer Tries to Soothe Wall Street : Says New President Won’t Seek Lower Dollar

The head of President-elect George Bush’s transition team on Sunday sought to calm Wall Street with assurances that Bush sees no reason to push down the value of the dollar to increase exports.

Transition co-chief Craig Fuller said financial markets could be “misreading some of the tea leaves” by falling in reaction to calls for a cheaper dollar by Martin Feldstein, a former chairman of the Council of Economic Advisers who has advised Bush from time to time.

Feldstein said Wednesday he believes that the dollar should be about 20% cheaper in terms of major foreign currencies.

A cheaper dollar means it takes more of them to buy a German mark, Japanese yen or other currency. Other things being equal, this makes U.S. exports cheaper and thus more competitive but at the same time makes imported goods from cars to textiles more expensive, adding to inflationary pressures.

Though Treasury officials said they saw no reason to seek a lower dollar, the dollar declined on foreign exchange markets in what traders said was reaction to Feldstein’s remarks.

Dollar Policy Unchanged

Reacting in turn to those declines, the Dow Jones industrial index finished the week at 2067.03, a drop of 78.47 for the week of which 47.66 came on Friday.

“We see no reason to change the policies that are in place right now with respect to the dollar,” Fuller said in an appearance on the NBC-TV show, “Meet the Press.”

“I can tell you (Bush) listens to a lot of people” on economics, Fuller said. “He has not supported what Marty Feldstein said. It is not the policy of this Administration and it is not going to be the policy of the next Administration.”

On another interview program, Sen. Pete Domenici (D-N.M.), senior Republican on the Senate Budget Committee, said: “I am not at all impressed by the frenzy of Wall Street and the moneychangers. . . . They’re running around acting as if some living human being could have solved this problem--the deficit--in 10 days.”

“I think it will get solved about July or August,” Domenici said on the CBS-TV program, “Face the Nation.”

Fuller said: “What the markets need to know is that George Bush is committed to what he talked about during the campaign and that is to get spending under control and reduce the size of this deficit.”

Will Keep Tax Promise

To that end, he said, Bush’s first priority is the appointment of economic officials to prepare for discussions with Congress on how to reduce the deficit.

The projected $132-billion deficit will have to be cut by $32 billion in the next budget, as called for by the Gramm-Rudman-Hollings deficit reduction law.

Bush campaigned on a “read my lips--no new taxes” slogan, and Fuller said, “That’s what he’ll say in January. “He will sit down with the Congress and try to find a way to bring this deficit down by not increasing people’s taxes,” Fuller said.

But “there’s no question revenues must be a part” of any budget solution, Sen. Bennett Johnston (D-La.), a candidate for Senate majority leader, said on the ABC-TV show, “This Week With David Brinkley,”

“That’s not a question of philosophy. That’s a question of mathematics,” Johnston said.

As possible cuts, Domenici mentioned the $2 billion in annual subsidies for the Export-Import Bank, $80 million for the Appalachian Regional Commission, $450 million in regional economic development programs and as much as $1 billion in subsidies to Amtrak and mass transit.