- The Washington Times - Saturday, December 7, 2002

President Bush yesterday fired Treasury Secretary Paul H. O'Neill and economic adviser Lawrence Lindsey in the administration's biggest shake-up because he is dissatisfied with the economy's "fits and starts and stops."
A senior administration official told The Washington Times the president asked weeks ago for their resignations, which were submitted yesterday morning. The White House waited until after last month's midterm elections to announce the firings, which were couched as forced "resignations."
"My economic team has worked with me to craft and implement an economic agenda that helped to lead the nation out of recession and back into a period of growth," the president said in a brief written statement. "I appreciate Paul's and Larry Lindsey's important contributions to making this happen.
"Both are highly talented and dedicated, and they have served my administration and our nation well," he added. "I thank them for their excellent service."
But privately, Mr. Bush had come to view their service as less than excellent. Mr. O'Neill had a tin political ear and periodically riled markets with impolitic remarks. He toured Africa with left-wing rock singer Bono and publicly contradicted the president's tax policies.
From the beginning, he gained the reputation as the only loose cannon in an administration that prided itself on message discipline. During his confirmation hearing nearly two years ago, Mr. O'Neill said the economy would not receive much of a boost from a 10-year, $1.3 trillion tax cut, the centerpiece of the president's economic plan.
The former head of Alcoa Aluminum derided Wall Street financiers as "not the sort of people you would want to help you think about complex questions." But one of those financiers, Robert Rubin, had achieved great popularity when he served as President Clinton's Treasury secretary.
A recent series of White House meetings with business executives convinced the president that Mr. O'Neill did not have the confidence of Wall Street at a time when the economy continued to struggle. In fact, the firings came on a day when the nation's unemployment rate jumped to 6 percent, underscoring the rocky road to economic recovery since last year's recession.
"Fits and starts and stops," said White House Press Secretary Ari Fleischer. "That is indeed the growth pattern that we have witnessed in this past year."
The Dow Jones Industrial Average, which fell about 100 points on news of the unemployment jump, rallied after Mr. O'Neill's ouster was disclosed, closing up 22.49 points. The Nasdaq Composite Index closed up 11.69 points.
A White House official told The Times that replacements will be named "swiftly" but would not name likely candidates. Names being mentioned include Wayne Angell, a Kansas economics professor; Howard Baker, the ambassador to Japan; and James A. Baker III, a former Treasury secretary.
Other names include Commerce Secretary Donald L. Evans; retiring Sen. Phil Gramm, Texas Republican; and Federal Reserve Bank President William McDonough. Rounding out the list are Gerald Parsky, a Treasury official in the Nixon and Ford administrations, and Charles Schwab, who helped invent the discount brokerage business.
Democrats seized on yesterday's firings as evidence that the administration has mismanaged the economy.
"Congratulations to President Bush," said Terry McAuliffe, chairman of the Democratic National Committee. "After numerous unsuccessful attempts, he finally figured out how to make the market go up. He fired his economic team."
He added that if the economy does not turn around, "the resignations will be cold comfort to the 2.2 million Americans that have seen their jobs disappear and the millions more that have watched their nest eggs dwindle since Bush came to office."
Republicans on Capitol Hill praised the outgoing Treasury secretary.
"I enjoyed Paul O'Neill's candor about everything," said Iowa Sen. Charles E. Grassley, incoming chairman of the Senate Finance Committee. "More of his unreserved honesty is needed inside the Beltway."
Sen. Patrick J. Leahy, Vermont Democrat, said it was a mistake for the Bush administration to let Mr. O'Neill go.
"Secretary O'Neill is not the problem the administration's policies are," he said. "In fact he has often been a constructive influence.
"Delaying this step until after the elections is cynical enough, but it will be worse if the White House tries to cast him as the emblem of what's wrong with the economy. The White House's economic agenda has been a policy of squander. They have squandered the surpluses and turned them into deficits."
Senate Minority Leader Tom Daschle agreed.
"Firing its economic team is an overdue admission by the Bush administration that its economic policies have failed," said the South Dakota Democrat. "However, the fundamental problem is that this administration has no comprehensive plan to get the economy back on track."
Democrats who are mulling presidential campaigns were especially eager to pounce on the firings.
"When you're headed in the wrong direction, you don't just need new people in the deck chairs you need to change course," said Connecticut Sen. Joseph I. Lieberman. "For too long this administration has sat back passively as the economy stagnated and the middle class suffered, offering no economic growth plan.
"We need a real growth strategy, based on proven principles and new ideas for realizing them, not knee-jerk ideologies that lead to unfair and unaffordable tax plans."
Outgoing House Majority Leader Dick Armey, himself an economist, praised Mr. O'Neill's service but suggested that the administration had not made good use of him.
"I don't know the circumstances," he said. "But my feeling is that the secretary of the Treasury should be the most prominent spokesman for an administration's policy, and [Mr. ONeill] never had that role. Why, I do not know."
Incoming Senate Majority Leader Trent Lott said, "Secretary of the Treasury Paul O'Neill and White House Economic Adviser Larry Lindsey did an outstanding job and made significant contributions to our country. The White House now has the opportunity to build a new team that will focus on economic growth and creating American jobs."
Mr. Lindsey might be replaced by Glenn Hubbard, the current head of the White House Council of Economic Advisers.
Meanwhile, Mr. Bush is still seeking a replacement for ousted Securities and Exchange Commission Chairman Harvey Pitt.

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