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Bush Revamps Economic Team - 2002-12-07

On Friday, nearly two years into his presidency, President Bush made his first major change of personnel. He asked for the resignations of two of his principal economic policy advisors, Treasury Secretary Paul O'Neill and White House advisor Larry Lindsey.

Paul O'Neill had made few friends since arriving at the Treasury in January 2001. The 67-year-old industrialist prided himself on speaking his mind. His trademark blunt demeanor got him in trouble with powerful members of the Senate. And his often curt dismissal of financial engineering and Wall Street in general made Mr. O'Neill less than popular within the traditionally Republican investment community.

Paul O'Neill had been selected for the Treasury job by Vice President Dick Cheney, who reportedly last Thursday night delivered the news to Mr. O'Neill that his services were no longer needed. The white haired, always impeccably attired Mr. O'Neill was reportedly hurt and angered. Instead of going quietly, Mr. O'Neill composed a terse 50 word resignation letter which he delivered to the White House Friday morning. By mid-day the Secretary was back in his hometown of Pittsburgh.

In remarks to a business audience last month, Mr. O'Neill reflected on the importance of being a team player where the president is in charge.

"You know there are different responsibilities in the government," he said. "I've never had any delusions about who has the responsibility to make the critical decisions. That person, by tradition and constitutional law, is the president of the United States."

At the White House presidential spokesman Ari Fleischer was asked about the forced resignations of not only Mr. O'Neill but Larry Lindsey, the architect of the big tax cut that was approved by Congress last year. Mr. Fleischer read out a statement from the president commending both men for the work they had done in laying the foundation for economic growth.

"I appreciate Paul O'Neill and Larry Lindsey's important contribution in making this happen. Both are highly talented and dedicated. They've served my administration and the nation well. I thank them for their excellent service," Mr. Fleisher read.

Political observers suggest that Mr. O'Neill and Mr. Lindsey were in effect made scapegoats for the weak economy and prolonged slump in the stock market. Greg Lavaliere, an analyst at Charles Schwab brokerage in Washington, says the political operatives closest to the president argued that a new economic team was needed to lay the stage for Mr. Bush's 2004 re-election campaign.

"Advisors worried that President Bush could suffer the same fate as his father, doing well in foreign policy but stumbling on the economy," he said. "So, I think they really do have a sense that this is the time to shake things up."

The expectations are that a new treasury secretary will be more enthusiastic about a new round of tax cuts than was Mr. O'Neill, who had his eye on the mounting budget deficit.