Kerry's short list: truth is, the Senator hasn't relied much on economic advisers, but the new team emerging is heavily Clintonesque

International Economy, The, Spring, 2004 by Alan Murray

Ask Senator John Kerry's long-time aides to name people he has relied on for economic advice and you're likely to get a blank stare. Push further, and they may mention a conversation he once had with the late MIT economist Rudi Dornbusch. Or an article he read by Blackstone Group Chairman Peter Peterson. Or a speech written for him more than a decade ago by former Commerce Undersecretary Robert Shapiro.

Troth is, Senator Kerry hasn't relied much on anyone for economic advice over the years. His Senate staff focused more on foreign policy, or POW/MIAs. A former prosecutor, he conducted investigations like the one into the BCCI scandal. Economic policy, say those who worked with him in the Senate, wasn't really his thing.

It is now. Candidate John Kerry recognizes that for all the focus on turmoil in Iraq, it's the economy and its troubles that offer his best shot at winning the White House. Key battleground states are suffering from large job losses. The state of Ohio, for instance, has lost more than 200,000 jobs since President Bush took office. To seduce such states from the Bush column, Kerry needs to show he can do better.

He plans to do that by relying on people who've already proven they can do better: President Clinton's economic team. When Kerry assembled a group of economic advisers in Boston in early April, the cast had a remarkably familiar look: former Clinton Treasury Secretary Robert Rubin was there, as was former Clinton Deputy Treasury Secretary Roger Altman and former Clinton National Economic Council Chairman Gene Sperling. Two younger alumni from the Clinton administration--Jason Furman and Sarah Bianchi--were also on hand. The only person missing was former Treasury chief Lawrence Summers. As head of Harvard University, he has to avoid an active role in the campaign. But as one of the others put it: "He takes our phone calls."

Kerry's full embrace of Clintonomics doesn't always sit well with the two other big influences in the Democrat's campaign--Senator Ted Kennedy, who came to Senator Kerry's rescue in the primaries, and organized labor, which will provide him with foot soldiers during the long year ahead. Both are less inclined to worry about fiscal rectitude, and more insistent on increasing government "investment"--read: spending. In an interview with mc, Kerry made a nod in their direction by saying one area of disagreement with President Clinton's economic policies was his belief that "there should have been more infrastructure investment." But for the most part, Kerry seems to have made an early decision to favor the Clintonites--whose focus is fiscal prudence--over their Kennedy-labor rivals.

Kerry disputes the notion that this is a new direction for him, and the notion that he is a neophyte in economic policy. He points out that he served ten years on the Senate Banking Committee, was a member of the Senate Commerce Committee, is now a member of the Senate Finance Committee, and chairs the Senate Small Business Committee--which he renamed the Small Business and Entrepreneurship Committee. He can rattle off a long list of moderate-sounding initiatives that he helped champion--low documentation loans, the New Markets initiative, a targeted capital gains tax cut, and so on. He is particularly proud of his early support of the Gramm-Rudman-Hollings deficit-cutting measure in the late 1980s. Speaking of Clintonomics, Kerry says, "It was sound policy, that I took part in. In fact, I preceded it."

What would a Kerry economic team look like? Any speculation at this early stage of the campaign has to be taken with a few buckets of salt. Twelve years ago, Bill Clinton was relying on the advice of a group of long-time friends and aides--Ira Magaziner, Derek Shearer, Robert Shapiro, and Robert Reich--none of whom, except Reich, ended up in major cabinet posts. Mr. Clinton surprised everyone when he picked Senator Lloyd Bentsen as his Treasury Secretary. Likewise, four years ago, pre-election speculation on who would be Treasury chief never even touched on former Alcoa Chairman Paul O'Neill, who got the job.

But with that huge caveat, here's the early handicapping:

Roger Altman. During the 1992 campaign, savvy commentators predicted Altman was Clinton's likely choice to be Treasury chief. He had all the right qualities: a small fortune earned on Wall Street, experience at the Treasury in a previous administration, and a longtime association with Clinton (they went to Georgetown University together.) When he was passed over for Senator Bentsen and named deputy Treasury secretary instead, the smart money said he would gain seasoning and replace the elderly Bentsen in a couple of years' time.

But Altman became a victim of the first Clinton scandal: Whitewater. As the number-two Treasury official, he became acting head of the Resolution Trust Corporation, set up to deal with the massive failure of savings and loans. While holding that post, he gave top White House officials a "heads up" about RTC criminal referrals that involved the Clintons. He then let a White House aide talk him out of recusing himself from the investigation, and had a phone conversation with another White House aide who called to criticize the RTC's choice of a Republican lawyer to head the investigation. After his contacts with the White House became public, Altman was forced to endure sixteen hours of grueling congressional testimony. Two weeks later, he resigned.