Bush Economists May Play Musical Chairs - George W. Bush - Brief Article

International Economy, The, Jan, 2001

George W. Bush may have settled on his team of economic advisers, but don't be surprised to see them moving into new jobs before his term is over.

Bush's chief economics triumvirate consists of Treasury Secretary Paul O'Neill, White House economics coordinator Lawrence Lindsey, and would-be chief economist John Taylor. Two of the three have their eyes on other posts, and one may not stick around a full four years.

O'Neill, the long-time CEO of Alcoa, was a surprise choice for the Treasury post. Bush had been looking for a Wall Streeter or someone with a high-tech background, but the top candidates proved to be wanting or took their names out of contention. Some of Bush's advisers had recommended William McDonough, the president of the Federal Reserve Bank of New York, even though McDonough is a Democrat. But Vice President-elect Dick Cheney vetoed the move and offered up his old pal, O'Neill, who had worked in the Ford White House as a budget official when Cheney was chief of staff.

Lindsey, a former Federal Reserve governor and White House policy adviser to former Presidents Ronald Reagan and George Bush, Sr., served as the younger Bush's chief economics adviser during the presidential campaign. He had hoped to become Treasury secretary himself, but Bush decided instead to make him White House economic adviser, effectively head of the National Economic Council (NEC), a White House agency created by President Bill Clinton to coordinate economic policy the same way the National Security Council manages foreign policy. Ironically, Lindsey will head an agency that he wanted to scrap. Perhaps he'll change its name.

But Lindsey can still hope to follow the Robert Rubin path to the Treasury Department. Rubin, the former co-chairman of Goldman Sachs, joined the new Clinton administration as head of the NEC and became Treasury secretary two years later when Lloyd Bentsen left the Cabinet job. Lindsey has reason to hope that O'Neill, at 65 years of age, won't want to stay until 2004.

Bush has wanted Taylor, the distinguished Stanford economist, to be chairman of the president's Council of Economic Advisers, a panel on which he served as a member during the first Bush administration. But colleagues say Taylor wouldn't move cross-country just to head an advisory group that hasn't had much clout within the White House for more than two decades. Taylor's real aim, according to friends, is to replace Federal Reserve Chairman Alan Greenspan, whose fourth four-year term expires in June 2004. Greenspan will be 78 at the time and presumably will want to call it quits. Taylor might become a Fed governor in the meantime.

Taylor, considered by many academics as a future Nobel Prize winner, devised the Taylor Rule, which is a guide for setting monetary policy. His impressive credentials give him the heft that will certainly be required to follow in Greenspan's footsteps. Of course, if Greenspan manages to pull off another soft landing, his health holds, and his interest in the Fed job doesn't flag come 2004, Bush almost certainly will let him stay on for a fifth term. In that case, Taylor would have to put his ambitions on hold and hope that Bush wins a second term so he'll be in a position to name a Fed chairman.

And what is to become of departing Treasury Secretary Lawrence Summers? In the short term, he plans to hang out at a Washington, D.C.-based think tank to ponder what to do next. One possibility is returning to Harvard--where he used to teach--to become the university's president, a post Al Gore recently turned down. Another option for Summers, who has spent his entire career in academia or government: follow his mentor, Rubin, now vice chairman of Citigroup, to Wall Street to get some hands-on financial experience.

Ultimately, friends predict, Summers will want to return to government to occupy a job he has long coveted, Fed Chairman. That is if John Taylor hasn't gotten there first.