A Narrow Mandate, but Great Power

George W. Bush might not have much of a mandate after his narrow victory, but as president he will have a lot of power. So he will have a major impact on the economy and business in the next few years.

To be sure, a sharply divided Congress, though nominally Republican, will probably give Bush trouble on major programs such as big tax cuts or Social Security reform.

But presidents exert their will in other ways, through appointments of Cabinet secretaries, regulators and other officials to head government departments and agencies.

Those officials carry out White House policies on matters ranging from energy and the environment to agriculture, trade, technology, national defense, antitrust and telecommunications.

Bush’s principal economic advisor, for example, is Lawrence Lindsey, a former Federal Reserve governor who served as an advisor to Bush’s father, the former president, in 1989.

Partly because Lindsey has always favored a strong dollar, markets Wednesday pushed up the dollar against the euro and yen. Lindsey and President-elect Bush also agree on cutting taxes not only to spur the economy but to let people keep and organize more of their own money.

Yesterday such positions were theory; today they are the stuff of future policy--in all likelihood.

“It’s never wise to put too much store in campaign positions. An administration’s policies are often formed in response to economic circumstances,” notes economist John Mueller of Lehrman Bell Mueller Cannon, a Washington-area economic think tank.

The new Bush administration is inheriting a slowing economy, perhaps a recession, that conveniently it can blame on its predecessor, the Clinton administration. That will aid Bush’s ability to cut taxes, moderately at least. Lindsey will be a key economic helmsman behind the scenes on such a tax cut.

Global markets will need reassurance that the new administration has a steady hand on the tiller, even though the most important financial actor, Alan Greenspan, chairman of the Federal Reserve, will remain on the job at least four more years.

So Bush’s appointment as Treasury secretary will be an important signal to the markets, as Clinton’s Robert Rubin was.

Current Washington speculation mentions two names prominently for the Bush Treasury post: Walter Shipley, retired head of Chase Manhattan, and Kenneth Lay, a longtime friend and supporter of the Bush family and a seasoned international businessman. Published speculation on the Treasury post has also included Gerald Parsky, of Aurora Capital in Los Angeles, and William McDonough, head of the New York Federal Reserve Bank.

Lay, meanwhile, who just Wednesday ceded the chief executive post at Enron Corp., the Houston energy giant, also will be a major influence on energy. Development of energy resources, including natural gas in Alaska, will be encouraged. Tony Garza, head of the Texas Railroad Commission, which oversees the state’s critical oil industry, is reported as a candidate for Energy secretary.

The new Bush executive branch will favor far less regulation than a Gore administration would have, particularly on environmental matters. Carol Browner, the head of the Environmental Protection Agency and a Gore favorite, will be replaced by someone far less strict in enforcing environmental laws.

The defense industry will be influenced by Condoleezza Rice, who is slated to head the National Security Agency in the new Bush administration. She served as advisor on Russia to the earlier Bush administration.

Rice and other Bush advisors on national security aim to review the military stance of the United States, possibly cutting back some overseas forces. Bush policy would favor a bomber force based in the United States, capable of striking anywhere--a renewed version of Northrop’s B-2 bomber. But Bush thinking would cut back on proposed fighter projects, including the joint strike fighter program for which Boeing and Lockheed Martin are now competing.

Ted Forstmann, the billionaire financier who has created the Children’s Scholarship Fund education voucher program, is also mentioned, possibly for a post connected with Bush’s aim to reform education in America. Bush’s views on school vouchers are similar to Forstmann’s.

Bush policies on mergers and antitrust may be even more lenient than those of the Clinton administration, experts say. Bush might ease the antitrust action against Microsoft, for example. It will face many new acquisitions and mergers in telecommunications as well-heeled former Bell telephone companies take over cash-strapped Internet firms, says telecom consultant Peter Bernstein.

Bush may also relax cross-ownership rules to let newspapers own television stations in the same market, says analyst Lauren Rich of Merrill Lynch.

Foreign trade, particularly with Mexico and Latin America, will be a priority. On trade, however, Bush will need persuasive powers to get legislation through the divided Congress, something Clinton has failed to do in recent years.

To gauge the overall effect of the new president on business and the economy, however, it’s best to step back for perspective. A prominent investment manager, Kenneth Fisher of Woodside, Calif., notes that many of the appointments rumored for the new administration are friends or former aides of Bush’s father.

“If that pattern persists, investors and businesspeople will see only a Bush II administration, an uninspiring retread,” Fisher says.

“But if George W. can realize that he is president of the United States, not his father or his father’s aides, and make moves of his own in the first six months, he could inspire public enthusiasm and energize the economy.”