Economic Opportunity

It’s housecleaning time at the White House. The resignations of Treasury Secretary Paul H. O’Neill and top advisor Lawrence B. Lindsey don’t signal radical change, but they probably amount to more than the superficial scrubbing that critics have been predicting. If President Bush trusts his new advisors and receives sensible proposals, he could modify his tax policies in ways that would better lift the economy out of the doldrums.

It’s hard to avoid the suspicion that the forced resignations were precipitated by news that unemployment had reached 6%. All along, the White House has been worried that Bush could be vulnerable in his reelection race, as his father was, to the charge of ignoring the nation’s economic ills. Bush waited until he had no choice but to dismiss Securities and Exchange Commission Chairman Harvey L. Pitt.

In contrast with his foreign policy advisors, Bush’s economic team has been glaringly inept. O’Neill, a former chief executive at Alcoa, never came close to earning the bipartisan confidence enjoyed by a predecessor, Robert E. Rubin, on Wall Street and Capitol Hill. O’Neill repeatedly made controversial and inappropriate remarks about the health of the economy, the strength of the dollar and the state of the stock market. He seemed indifferent to the prospect of a recession, sounding like Herbert Hoover when he declared that “markets go up and down.” He characterized Enron’s bankruptcy as a tribute to the “genius of capitalism.”

Lindsey, who drafted the tax cut plan on which Bush ran in 2000, was seen as a poor salesman for administration policy.

Bush is wedded to sweeping tax cuts and will not willingly abandon their heavy weighting toward the wealthy, but a fresh set of advisors could persuade him to pump money more swiftly into the economy. Newcomers with the bipartisan support that Rubin enjoyed could work with Sen. Joseph I. Lieberman (D-Conn.), who has offered a recovery plan that seems in sync with White House thinking. It calls for a short-term business tax credit for investments in information technology and a payroll tax credit for hiring new employees. Business investment has sunk to an annual average of minus 7.6%, and the economy will continue to stall until it returns to plus territory.

Bush also should start lobbying for restoration of temporary extended unemployment benefits for almost a million workers who will be cut off a few days after Christmas. Unlike tax rate reductions, such outlays stimulate the economy swiftly because they’re spent as quickly as they’re received.

A Treasury secretary who speaks with a steady voice, rather than shooting from the hip or simply embracing the status quo, will also have a calming effect on the economy -- as would getting the right, and an upright, replacement for Pitt.

Bush has disposed of the front men for his economic problems. If he puts advisors of real substance in their place, worried consumers could see immediate benefits and the president could get the lift he seeks in 2004.