Bentsen Appears to Be Front-Runner for Treasury Post : Finance: The Texas senator’s ‘star is rising’ in Clinton’s selection process, sources say. His appointment would reassure business sector.

President-elect Bill Clinton, who ran on a platform of economic change, appears to be leaning toward Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.), a member of Washington’s old guard, for the critical post of Treasury secretary.

Sources say that Bentsen’s “star is rising” in the selection process for the Treasury post, which many observers believe will be the most important economic policy position in the Clinton Administration.

While no decision apparently has been made, Bentsen now seems to be the top contender in a small group of candidates that also is said to include former Federal Reserve Chairman Paul A. Volcker and Robert E. Rubin, co-chairman of the Wall Street firm of Goldman Sachs. Both Bentsen and Rubin have met with Clinton in Little Rock, Ark., while Clinton reportedly consulted Volcker on economic matters occasionally during the campaign.

The rise in Bentsen’s fortunes appears to have occurred despite political concerns raised by Texas Democrats that the party might be unable to hold his Senate seat against a Republican challenge.

Announcements of appointments to Treasury and other key economic policy posts are widely expected to be made by Clinton sometime next week. A Bentsen spokesman on Friday denied reports that Bentsen already has been offered the Treasury job.

As the Senate’s top tax writer, Bentsen, 71, has a breadth of experience in economic policy-making that few in the Democratic Party can match. His appointment would offer reassurances to the financial markets and to the business community that Clinton is, indeed, a moderate Democrat.

“If you want somebody new and different and exciting at Treasury, then watch out for the stock market,” said one Democratic congressional staffer.

But critics say Bentsen is a longtime supporter of tax breaks for an array of business and other interests, and his selection may be interpreted as a signal of business as usual on tax and budget policy in a Clinton Administration.

“If Bentsen is appointed, it certainly won’t disappoint Washington lobbyists,” said one Democratic source.

“He is pro-growth, pro-investment and pro-savings, and I think criticism of him as a captive of special interests is just desperation” by liberal groups, argues one leading tax lobbyist who supports Bentsen.

Speculation about Clinton’s choice of a Treasury secretary has been intense, reflecting the importance that economic policy seems destined to play in his Administration. In previous Administrations, such scrutiny has usually been reserved for a President-elect’s selection of secretary of state. But the end of the Cold War and Clinton’s campaign focus on the economy have brought greater visibility to domestic and economic policy posts.

It seems increasingly clear that Clinton’s economic team will take on a traditional cast.

Not only is he looking at insider job candidates like Bentsen, he and his advisers also seem to have concluded that the traditional power centers in executive branch economic policy--Treasury, the Office of Management and Budget, and the Council of Economic Advisers--should remain powerful.

Sources say Clinton appears to have concluded that his proposed Economic Security Council, touted for a time as a domestic version of the National Security Council, will not dominate economic policy after all.

Instead, it will probably become more like the low-visibility Domestic Policy Council, and its head will merely act as a mediator of policy disputes. Robert B. Reich, Clinton’s chief economic adviser during the transition, has been widely expected to head the economic council. But he has made it clear that he would not be interested in the post if the council assumes a low-visibility role.

Clinton has made it clear that he wants to announce his selections for economic policy posts before his scheduled economic retreat in Little Rock on Dec. 14-15, meaning the appointments are likely to come next week.

In other key posts, it seems clear that Clinton has narrowed his choices to a handful of potential candidates.

Alice Rivlin, former director of the Congressional Budget Office, and Rep. Leon E. Panetta (D-Carmel Valley), chairman of the House Budget Committee, appear to be leading candidates for director of OMB.

Lawrence Summers, chief economist of the World Bank who is on leave from Harvard, seems to have emerged as the leading candidate for chairman of the Council of Economic Advisers. Both Rivlin and Panetta have visited Clinton in Little Rock, presumably to discuss the OMB job. Rivlin is widely known as strongly anti-deficit, and Panetta was openly critical during the campaign of Clinton’s economic program, which he said did not go far enough in attempting to reduce the deficit.

Rivlin, who appears to be one of the few women with a shot at a top economic post, is considered a leading contender both because of her lengthy experience in budget matters and because Clinton has made it clear he wants diversity in his economic team. Panetta, is being urged on Clinton by Democratic congressional leaders, who consider him a good team player who could improve the ties between OMB and Congress that were badly strained during the Bush Administration.

Summers, who was a key economic adviser to Democratic presidential candidate Michael S. Dukakis in 1988, is one of the only prominent academic economists to have gained an influential position within Clinton’s transition team. Summers and Roger Altman, a Clinton friend and vice chairman of the Blackstone Group, a Wall Street investment firm, have been heading up the effort within the transition team to craft a tax and budget package.

One open question is what role Reich, who has been Clinton’s most visible economic adviser during the transition, will play in the Administration. If he concludes he does not want to run the economic security council and other major economic policy posts are filled, he may assume another domestic policy post in the White House or elsewhere in the Administration.

Reich also could assume a role in trade and competitiveness policy-making, an area that Clinton seems likely to highlight. Or, he may even return to his job as a lecturer at the Kennedy School of Government at Harvard University and provide outside advice to Clinton, a longtime friend.