For Now, Bush’s Economic Bench Is Mostly Empty
Short of a foreign policy crisis, there is no quarter as likely to deal President-elect George W. Bush a nasty--and agenda-jolting--surprise as the economy.
In the mere five weeks since the Nov. 7 election, the economic outlook has slipped from sunny to something approaching stormy. Growth has appeared to slow abruptly. Unemployment has edged upward. Holiday retail sales have proved deeply disappointing. On Friday, the stock market took another in a spectacular series of swan dives.
But for all that, the shape of the president-elect’s economic team remains surprisingly out of focus. Although the names of candidates for such jobs as Treasury secretary and budget director have surfaced, only one has remained there, that of campaign economic advisor Lawrence B. Lindsey. And in Lindsey’s case, there’s uncertainty over what position he’ll finally land.
The contrast with the foreign policy side of the fledgling administration--where it’s all but certain that the top job will go to retired Gen. Colin L. Powell, perhaps today--is prompting some Republicans to worry privately, and some Democrats to ponder publicly, that the Bush economic bench is not as deep as it was once thought to be.
“They could have a problem,” said Robert E. Litan, a former Clinton Justice Department official who heads economic studies at the Brookings Institution, a nonpartisan think tank in Washington. “They’ve got economic firepower. The question is can they induce it to come to Washington.”
The answer in the early going is: Not yet.
‘People Are Concerned About the Economy’
Bush acknowledged during his first brief press appearance as president-elect Friday that he worries about economic slowdown
“I think people are concerned about the economy,” he said during a photo opportunity with Sen. John B. Breaux (D-La.). “I think there are concerns about some of the manufacturing base. I’ve heard concerns expressed about the automobile sector.”
As if to underscore Bush’s worries, the chief barometer of the high-tech sector, the Nasdaq Composite Index, slid 74.09 points, or 2.7%, to close at 2854.42. The Nasdaq has lost more than 16% of its value just since election day.
To be sure, Bush secured his lock on power only a few days ago, not much time to assemble and name a Cabinet. And the dizzying speed with which names of possible Cabinet members have come and gone is standard operating procedure when it comes to top jobs in Washington.
“To carry out the transition dance successfully, you have to flirt with every girl on the floor,” quipped Robert D. Reischauer, a former director of the Congressional Budget Office and now president of the Urban Institute, a nonpartisan policy research group.
But the Bush team has had more than a month to think about it, and even some veteran Republicans acknowledge being uncomfortable about how uncertain the choices are for top economic and budget positions, especially given the economy’s uneasy state and Bush’s stated ambition to cut taxes and overhaul Medicare and Social Security.
“It isn’t lost on people up here that [Bush] has a foreign policy team almost completely in place but no economic team,” said one senior Republican on Capitol Hill who asked not to be identified.
Economist Likely to Play Key Role
Part of Bush’s problem in assembling an economic team is Lindsey, the former Federal Reserve governor who exercised immense influence during the campaign and is expected to be equally powerful during the new administration.
The 45-year-old economist is expected to play a crucial role, most likely as head of the White House National Economic Council. He was the principal architect of Bush’s tax cut and has influenced his views on international economic issues.
“I can see why a Wall Street executive would be reluctant to come to Washington if he knows all the power is going to be concentrated in the White House with Lindsey,” said Litan, the former Clinton Justice official.
Some GOP insiders said Lindsey still stands a chance of landing the Treasury secretary’s post, despite having almost none of the private-sector experience that traditionally has been a requirement for the job.
The Treasury job once concerned mostly wealthy old ladies and bond traders, but in an era of globalization and international financial crises, the Treasury secretary has emerged as a sort of second secretary of State.
Immediately after the election, knowledgeable Republicans floated three names, all from Wall Street: former Chase Manhattan Corp. Chairman and Chief Executive Walter V. Shipley, former Credit Suisse First Boston Inc. Chief Executive John M. Hennessey and PaineWebber Inc. Chairman Donald B. Marron.
But by early this week, the Bush camp seemed to back away from the three in favor of a member of Congress, a high-tech executive or a Democrat. A senior Bush aide said Friday that the president-elect was not limiting himself to Wall Street in seeking a Treasury secretary. “We’re looking at Wall Street, but it’s certainly not limited to Wall Street,” the aide said.
In quick succession, attention focused on two Texas Republicans in Congress, Senate Banking Chairman Phil Gramm (aides categorically denied he was interested) and retiring House Ways and Means Committee Chairman Bill Archer (aides suggested he was interested, but other knowledgeable Republicans said he stood little chance).
Other names included Kenneth L. Lay, chairman and, until this week, chief executive of the Houston-based Enron Corp., and John Chambers, chief executive of Cisco Systems Inc. But both appear pinned down by business obligations; in Chambers’ case, the second of his two chief deputies quit Thursday.
There was brief talk of Bush making a gesture of bipartisanship by asking Clinton Treasury Secretary Lawrence Summers to stay on. But almost everyone, including key Summers aides, dismissed the notion. There was also talk about William McDonough, president of the New York Federal Reserve Bank and a Democrat, but key Capitol Hill leaders signaled they would object.
Matters are little clearer when it comes to the director of the Office of Management and Budget, a job that Bush must fill quickly if he is going to recast the Clinton administration’s last budget and push a substantial tax cut.
Almost everyone’s first choice is Stanford University economist John F. Cogan, who helped the Bush campaign and is now in charge of assembling a list of Bush’s major campaign promises. But Cogan, who has a large family, has said he can’t afford to move to Washington. With Cogan out of the running, a contest is brewing between moderates who oppose large tax cuts and favor using the budget surplus to pay off the national debt, and conservatives who want to press for the 10-year, $1.3-trillion tax cut touted in the campaign.
The moderates favor Senate Budget Committee staff director G. William Hoagland. The conservatives back Timothy Muris, a former Federal Trade Commission official who is the No. 2 official at the Bush transition office.
