Bush Rebuilds Economic Team

While the White House prepared to names choices as early as today to replace two ousted members of the administration’s economic team, Democrats took aim Sunday at the upper-bracket tax cuts at the heart of President Bush’s economic policy -- saying the country needs resources to fight the war on terrorism.

Former Goldman Sachs Chairman Stephen Friedman is the likely successor to Lawrence O. Lindsey as White House economic advisor. And Bush has chosen CSX Corp. Chairman John W. Snow as Treasury secretary, succeeding Paul H. O’Neill, administration sources told the Washington Post late Sunday. Other news organizations confirmed the report.

Lindsey and O’Neill were abruptly forced out Friday.

The shakeup is “long overdue,” Senate Majority Leader Tom Daschle (D-S.D.) said on CNN’s “Late Edition.” But, he added, “simply changing the team if you don’t change the plan doesn’t do anything at all.”

Administration officials said last week that the president needed better salespeople for his policies. On Sunday, a Commerce Department spokesman, Trevor Francis, said that although the economy is weak, Bush’s tax cut had prevented an even worse slide.

“To think that we’ve had 3 1/2% growth a little over a year after the attack on our country and the stock market responding to corporate misfeasance, it’s almost remarkable where we are today,” he said.

Still, “the economy can use an insurance policy, and Bush and [Vice President Dick] Cheney are well aware of that,” another source said.

The White House is expected to announce soon a package of stimulus proposals that would make its income tax cuts permanent and possibly speed up decreases that were to phase in later in the decade. A number of “investor-friendly” moves, such as reduced taxes on dividends and cushioning capital losses, are also being considered.

Democrats, meanwhile, linked the economy to the security issue that Republicans wielded so powerfully in the midterm elections. Sen. Jon Corzine (D-N.J.) said on “Fox News Sunday” that “Democrats should make sure we have resources to protect the American people,” and warned against “governments with huge deficits.”

“This is one of the first times we’ve been at war that we haven’t asked for sacrifice,” Corzine added.

On the same show, Sen. Joseph I. Lieberman (D-Conn.) called for “some investment in public works too, including particularly homeland security money to the states and localities.”

On the Sunday talk shows, Democrats said any short-term tax cuts to get consumers spending again should be targeted toward the working and middle classes rather than the wealthy.

Sen. Mary Landrieu (D-La.), who won reelection Saturday, told Fox that “95% of the people in Louisiana have household incomes of under $75,000. So when I fashion a tax cut with the president, I’ve got those people in mind.”

Former Vice President Al Gore said on ABC’s “This Week” that the Bush administration “drained $1.3 trillion out of revenues with this current plan” and added: “The rich have been getting richer and I don’t begrudge them that, but the poor have been getting poorer.”

He suggested repealing tax cuts for the wealthy that are “yet to occur” and canceling the scheduled elimination of the inheritance tax while increasing the exemption.

The White House will probably not take the recommendations that the opposition party floated over the airwaves Sunday, but the administration recognizes that Democratic votes may be needed, especially in the Senate, to get its plan passed, said one source.

Corzine, who worked with Friedman at Goldman Sachs, described the presumed White House economic advisor as “a pragmatist, not an ideologue” who is “interested in long-term fiscal stability in this country.”

The White House post, unlike the nomination for Treasury secretary, does not need Senate confirmation.

Snow, 63, who was a Transportation Department official in the Ford administration, is chairman, president and chief executive of CSX, a freight and transportation conglomerate based in Richmond, Va. The firm runs the largest rail freight network in the eastern U.S. Since O’Neill’s ouster Friday, the White House was said to be looking for a successor with knowledge of how government works, a strong economics background and good communication skills.

Besides Snow, another possibility was said to be Gerald L. Parsky, a Los Angeles financier who co-chaired Bush’s campaign in California and was rumored to be in the running when Bush first took office. Another Californian mentioned was Charles Schwab, founder of the brokerage that bears his name.

Another on the list was Commerce Secretary Donald L. Evans, a longtime friend of Bush who spent the weekend with him at Camp David. Evans, said his spokesman, “enjoys his job as secretary of Commerce and looks forward to continuing to work as a member of the president’s economic team as well as a member of the Cabinet.”