Bush Stirs Things Up, Out on Economic Team

December 6, 2002 (PLANSPONSOR.com) - President Bush shook up his economic team on Friday by forcing out US Treasury Secretary Paul O'Neill and White House economic adviser Lawrence Lindsey.

The moves brought an abrupt end to O’Neill’s two-year tenure, which was often marked by what many considered ill-timed comments and criticism from many quarters that O’Neill wasn’t effectively serving as chief economic spokesman. O’Neill, who turned 67 on Wednesday, was considered to be on relatively solid ground since he was leading the administration’s effort to reform the nation’s tax code.

In fact, since the Republican electoral successes last month, both O’Neill and Lindsey appeared to be solidifying their holds on their jobs. However, as the outside pressure for a shake-up diminished, White House officials decided the time was perfect for a house-cleaning, according to the Washington Post, citing White House and congressional sources.

Texas “Toasts?”

White House officials expected O’Neill’s replacement to be named soon, with a search already under way. Various names already bandied about for the post include three recently “retired” Texans:

  • Senator Phil Gramm
  • Representative Dick Armey
  • Representative Bill Archer

Gramm and Armey are economists, while Archer headed the House Ways and Means Committee.

Also mentioned, according to the NY Times have been Charles Schwab and a Democrat, Senator John Breaux of Louisiana.

Family “Feuds”

According to Reuters, Lindsey’s departure as director of the National Economic Council came about an hour after O’Neill’s resignation letter was released at the Treasury Department. Lindsey, a former member of the Federal Reserve Board and economics professor at Harvard, had been feuding with O’Neill for months about the need for an economic stimulus package. Lindsey had been a strong advocate for such a package – O’Neill has been saying for months that the economy is recovering smartly and needed no such package.

Published reports in the Washington Post and NY Times say that Stephen Friedman, a former chairman of Goldman Sachs, has the National Economic Council post if he wants it.