NEW YORK – Although President Bush has replaced his big three economic advisers in a fit of post-midterm election housecleaning, many critics aren't sure much else will change and are waiting for the new dream team to map out a clear path to economic growth.
The next year will be a true test for the president and his new economic officials, who have already been roundly criticized for their past dealings. Bush is now under the gun to come up with a plan aimed at helping to employ workers and aid businesses said to be dragging behind consumers in keeping the bumpy economy aloft.
"Now that the White House is revamping its economic team, it is hopefully willing to overhaul these failed economic policies as well," outgoing House Majority Leader Richard Gephardt, D-Mo., said in a statement.
"While your economic advisers may have been part of the problem, merely replacing [them] is not a solution," outgoing Senate Majority Leader Tom Daschle, D-S.D., wrote in a letter to Bush earlier this month. "With our economy stalling, unemployment rising, and confidence suffering, it is clear that we need more than a few new faces. We need a new plan to stimulate our economy now."
On board to institute the president's agenda is former Goldman Sachs chief Stephen Friedman, who was named director of the National Economic Council to replace chief economic adviser Larry Lindsey.
The president also submitted old-economy railroad executive John Snow's name for secretary of the Treasury to replace outgoing Secretary Paul O'Neill. William Donaldson, co-founder of the investment banking firm Donaldson, Lufkin & Jenrette, has been named as a candidate to chair the Securities and Exchange Commission.
"Snow and Friedman will supposedly help Bush put the final touches on an excellent pro-growth plan that includes a lower tax burden on dividends, faster write-offs on business investments, expanded supersaver IRA and 401(k) accounts, and an acceleration of last year's income-tax cut," Kudlow & Co. CEO Larry Kudlow recently wrote in the National Review.
Kudlow forecasted that Snow will be a strong supporter of this package at Treasury, but that Friedman could be a tax-cut opponent in the White House. Friedman has been linked to the Concord Coalition, a group that obsesses over deficits and criticized the president's tax cut plan, passed into law last year.
"Should Friedman embrace the faux politics of class warfare and deficit obsession, he'll only chip away at the tax cuts that will drive growth and the 2004 election," Kudlow said.
Friedman and Snow's backgrounds have also been criticized by folks on the other side of the policy aisle.
Ralph Nader's Public Citizen group has filed requests with the Securities and Exchange Commission and the Federal Railroad Administration to obtain information about loans, stock sales, safety compliance and other matters involving Snow, who for years headed CSX Corp. and is a former chairman of the Business Roundtable.
"As head of CSX, Mr. Snow apparently was involved in some of the same questionable practices that have come under scrutiny recently and even been outlawed by Congress," said Joan Claybrook, Public Citizen president. "We question whether a top corporate executive who abused his position by benefiting from insider deals will be a good public servant."
The new team has a short window of time in which to get its act together. As soon as Congress returns in January, Bush wants lawmakers to pass an economic stimulus package.
First off, however, will be an extension of unemployment benefits, a policy that the president said he supported after several calls for him to get on board. Sen. Rick Santorum, the No. 3 Senate Republican, said Monday that unemployment insurance would be "one of our first orders of business out of the box."
On top of that, the president is proposing a 10-year, $300 billion stimulus package that will focus on boosting business and individual investment. Included in the package will be a cut in tax rates on dividends, accelerated income tax rate cuts set for 2004 and more bonus depreciations for business investment.
Groups such as the Business Roundtable are hopeful Bush's new team will help them further their economic agenda.
The CEO organization is calling for enactment of a $300 billion growth package to stimulate the nation's economy, which includes elimination for one year of the Social Security payroll tax, acceleration of the marginal income tax rate cuts and elimination of the double taxation of dividends for individuals.
"We have been very outspoken in the past month on the need for the government to take steps to help put cash in the consumers' pockets," said a BRT spokeswoman. "We're confident that our proposal has been well received and that the government will take early action."
Other tax-cutting groups warned, though, that more than just handouts are needed.
"Limited-duration handouts – whether in the form of tax rebates or benefit checks – are no substitutes for pro-growth tax policies that will truly put people back to work," Eric Schlecht, National Taxpayer Union's director of congressional relations, recently told lawmakers.