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George W. Bush knows he's in a serious bind, with half the country voting for his Democratic opponent, Congress paralyzed, and the economy in a precipitous decline. So it appears the President-elect isn't going to take any chances when it comes to shaping his economic team. As was the case with his foreign-policy selections, the Texan seems inclined to pick seasoned veterans for his key economic appointments, trading flash and fresh thinking for steadiness in tough times.
Case in point: Bush's Dec. 20 selection of Alcoa Inc. Chairman Paul H. O'Neill as his Treasury Secretary. Although the 65-year-old O'Neill is low-key to a fault, he's well-respected by his fellow CEOs, who credit him with turning a stodgy Old Economy company -- the world's largest aluminum company -- into a modern, more productive enterprise.
FIRM MACRO GRASP. The former Deputy Director of the Office of Management & Budget under President Gerald Ford, O'Neill has a reputation as a sophisticated manager with a firm grasp of macro policy. His appointment "hits the ball out of the park," says Jerry J. Jasinowski, president of the National Association of Manufacturers. Adds former Republican OMB official Frederic V. Malek: "O'Neill is one of the most thoughtful, most analytical executives I've worked with."
What O'Neill clearly isn't, however, is a devotee of supply-side economics, which holds that tax cuts are a cure-all for society's ills. He's cut from very traditional GOP economic cloth, putting his primary stress on fiscal discipline. And that already has tongues wagging in some GOP quarters. "He's certainly not a movement supply-sider," says Lawrence Kudlow, chief economist at ING-Barings. "There's considerable grumbling in the ranks of my supply-side brethren."
With a traditionalist at the Treasury, supply-siders will have to take their case to Lawrence B. Lindsey, the American Enterprise Institute stalwart who Bush is expected to tap as his White House economic coordinator. Trouble is, Lindsey is only half a supply-sider: His thinking has evolved over the years, and he now favors lots of Keynesian-style stimulus and aggressive tax relief for the working poor. Capital-gains tax cuts and other business breaks? Lindsey, like Bush, believes that after a 10-year boom, Corporate America doesn't need more help via the tax code.
MASTER OF MONEY. One unanswered question is how Lindsey and O'Neill would handle the relationship with Federal Reserve Chairman Alan Greenspan. O'Neill knows the Fed chief and would be responsible for ongoing contact. But Lindsey, a former Fed governor, also has pipes into the central bank. Bush, for his part, is bending over backward to stroke the Master of Money. On his first post-election trek to Washington, Dubya chose to break bread with the Fed chairman even before he called on President Clinton or Vice-President Al Gore.
Privately, Bush's people hope a little judicious stroking will convince the Fed chairman to provide the monetary ease that will stave off a serious recession next year. Greenspan, of course, has independently come to this conclusion on his own.
Bush still has a couple of big economic slots to fill, notably, Budget Director and Chairman of the Council of Economic Advisers. And according to his aides, he has several solid candidates to choose from.
SHORT LIST FOR OMB. Hoover Institution economist John Cogan, the early favorite of the Bushies to head OMB, seems reluctant to head back to Washington for a second stint at the agency. If Bush can't talk him into it, former Federal Trade Commission official Tim Murris or ex-House Budget Committee Chairman John Kasich of Ohio could fill the bill. For CEA, Stanford University monetary economist John Taylor has the inside track. Like O'Neill, Taylor has Greenspan's respect and would restore some luster to the CEA.
What would such a team say about soon-to-be President Bush? When it comes to economic management, he's not inclined to take chances. Familiar faces and old-school ties -- especially with Greenspan -- are more important than youthful sizzle and energy. So color Bush's team gray, that special bland-on-bland shade that describes Vice-President-elect Richard B. Cheney. Exciting? No. But competent -- definitely.
RESUME: PAUL O'NEILL
Alcoa:
Chairman and chief executive from June, 1987, to May, 1999. Director since Jan. 10, 1986.
Previous jobs:
President of International Paper Co., New York City; an engineer for Morrison-Knudsen Inc. in Anchorage, Alaska; computer systems analyst with the U.S. Veterans Administration; staff of the U.S. Office
of Management & Budget; Deputy director of the OMB
Education:
Bachelor's degree in economics, Fresno State College; a master's degree in public administration from Indiana University; graduate
study programs in economics at Claremont Graduate University and George
Washington University
Born:
St. Louis, Mo., Dec. 4, 1935
By Lee Walczak, Rich Miller, and Laura Cohn in Washington, with Michael Arndt in Chicago Edited by Douglas Harbrecht
Copyright 2000, by The McGraw-Hill Companies Inc. All rights reserved.
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