WASHINGTON – The delay in bringing former Goldman Sachs Chairman Stephen Friedman on board the White House economic team as economic advisor is due to a minor health problem that his family has concerns about, sources told Fox News.
The sources, speaking on condition of anonymity, said Friedman is being checked out by his doctor. The delay is not related to any political matter and is not in relation to criticism that Friedman is not a full supporter of the president's tax cuts.
It was reported Tuesday that Friedman, officially still leading the pack to replace Larry Lindsey as head of President Bush's National Economic Council, might not get the job after all.
White House officials, speaking anonymously, told The Associated Press the final decision on Friedman was being held up pending the resolution of some personal and professional issues that recently arose. The sources would not say what those were.
These officials denied that the delay was due to complaints from conservative Republicans who doubted Friedman's ardor for cutting taxes. Friedman has a record of being a strong advocate of balancing the budget.
Meanwhile, Bush filled another vacant slot on his economic team, tapping investment banker William H. Donaldson to replace Harvey Pitt as head of the Securities and Exchange Commission.
The president said Donaldson's mission would be "to vigorously enforce our nation's laws against corporate corruption" — exactly what Pitt was widely accused of not having done.
Donaldson, in turn, pledged to restore confidence in U.S. corporations and financial markets, which he said had been "seriously eroded during the past few years" — an oblique reference to the wave of corporate scandals which followed the bursting of the Internet stock-market bubble.
To give Donaldson a leg up, Bush announced that he would ask that the SEC budget to be increased to about $850 million for fiscal year 2004.
Few candidates could have matched Donaldson's financial experience. He co-founded, and then ran, the major investment bank of Donaldson, Lufkin & Jenrette in 1959, served as chairman of the New York Stock Exchange from 1990 to 1995, chaired the insurance giant Aetna and now runs his own Donaldson Enterprises.
His political and personal ties are no less impressive. Donaldson's first Wall Street job was at the brokerage of G.H. Walker & Co., run by former President George H.W. Bush's uncle Herbert Walker. He was also a Yale classmate of the former president's brother, Jonathan, and is friends with the Bush family.
During the Nixon and Ford administrations, Donaldson was counsel to Vice President Nelson Rockefeller and undersecretary of state with then-secretary Henry Kissinger.
On Monday, Bush selected railroad executive John W. Snow to replace former Treasury Secretary Paul O'Neill, who along with Lindsey was fired by Bush in last Friday's purge of his economic team.
Reaction to the president's first move — his selection of Snow, the chairman of railroad giant CSX Corp. as Treasury secretary, has been generally favorable although Democrats complained that it was not the personnel but the administration's policies that needed to be changed and some critics said Snow had not excelled in corporate skills when running CSX.
Snow, who headed the freight railroad company for more than a decade, was selected to replace O'Neill who along with Lindsey were ousted on Friday after the president decided he needed a new team to sell his program to Congress and the country.
"The president is trying to send a message loud and clear that he is not going to make the same mistake his father did in 1992 of being perceived as ignoring the economy," said Dan Danner of the National Federation of Independent Business.
Snow's first job will be to convince Congress to adopt the administration's new economic stimulus package, which Bush indicated the administration would be sending to Congress next month.
Bush said the package would include "specific steps to increase the momentum of our economic recovery," citing in particular the need to provide further tax relief, bolster the confidence of investors shaken by the long bear market and help Americans save for retirement.
Congressional and business lobbyists who have been briefed by administration officials said Monday that Bush was considering a package of tax cuts and spending measures that would cost between $250 billion and $300 billion over the next decade.
These officials, who spoke on condition of anonymity, said the major tax cuts the administration was considering were accelerating the personal tax rate reductions scheduled to take effect in 2004 and 2006; boosting tax breaks to encourage businesses to invest more, and lowering the tax on stock dividends, long a Republican goal.
House Democrats on Monday convened a two-day forum to help devise their own economic stimulus package that they will put forward as an alternative to the Bush program. They said Bush's sacking of the top two members of his economic team showed the president's policies have failed to generate sustained growth.
"The economy has not worked. Every family in America knows that," said Rep. Nancy Pelosi, D-Calif., the incoming House minority leader.
Snow, who spent part of Monday making telephone calls to key lawmakers, was expected to encounter questioning during his Senate confirmation hearing about government support for CSX, but both Democrats and Republicans predicted swift Senate approval of his nomination.
One potentially damaging issue was dealt with Monday when presidential spokesman Ari Fleischer announced that Snow was resigning his membership in Augusta National, the Georgia golf club under fire for not admitting women.
Sen. Charles Grassley, R-Iowa, incoming chairman of the Senate Finance Committee, said he hoped to move forward as quickly as possible with hearings on Snow's nomination. Incoming Senate Majority Leader Trent Lott, R-Miss., who said he has known Snow for 20 years, predicted the nomination would have a positive impact "from Main Street to Wall Street."
White House officials said Snow had originally been considered as the new chairman of the Securities and Exchange Commission to replace Harvey Pitt, who resigned last month under pressure, but that Snow made such a strong impression, the decision was made to offer him the Cabinet job.
Fox News' Jim Angle and The Associated Press contributed to this report.
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