WASHINGTON (AP) _ A week after ousting his top two economic advisers, President Bush has named their replacements and staved off a mini-revolt among supply-side conservatives.
Bush announced Thursday that he selected Stephen Friedman to direct his National Economic Council, replacing Lawrence Lindsey, whose resignation was demanded last week along with that of Treasury Secretary Paul O'Neill.
While O'Neill's replacement _ railroad executive John W. Snow _ elicited widespread praise from fellow Republicans, the choice of Friedman set off a small revolt in the party's supply-side wing, with critics saying they doubted Friedman's commitment to pushing for further tax cuts.
What made the conservatives suspicious was Friedman's close ties to Robert Rubin, his co-chairman at the investment firm Goldman Sachs in the early 1990s until Rubin left to join the Clinton administration. Rubin, a Democrat, won widespread praise from Wall Street investors for his deft relations with financial markets but earned the displeasure of Republican tax cutters because of his championing of Clinton's 1993 tax increase to help balance the budget.
In addition, the Republican Friedman has for many years been on the board of the bipartisan Concord Coalition, an anti-deficit group founded by the late Democratic Sen. Paul Tsongas and former Republican Sen. Warren Rudman. The group has often called for tax increases along with spending cuts to keep federal deficits under control.
In an effort to reassure supply-siders, Friedman told Bush during a brief White House ceremony Thursday that ``I strongly share your conviction, sir, that now is the time for a robust growth and jobs policy.''
Not all conservatives were convinced.
``The White House spin is that Mr. Friedman is not there to set policy but to sell it,'' said Tom Giovanetti, president of the Institute for Policy Innovation, a Dallas-based research group that advocates lower taxes. ``But we have to question how well someone can sell something that they don't believe in.''
Grover Norquist, president of the conservative Americans for Tax Reform, said he believed Friedman wouldn't have joined the administration if he did not fully support the need for further tax cuts to stimulate the economy.
``No one particular adviser or staffer is going to alter the direction the president and the administration are heading,'' Norquist said.
While supply siders were split, on Wall Street, investors believed Friedman would give the administration something it lacked with the old economic team _ a savvy investment pro with close ties to financial markets.
``Friedman's background in the securities industry will serve the nation well,'' said Marc Lackritz, the president of the Securities Industry Association, Wall Street's biggest lobbying group.
Sen. Charles Schumer, D-N.Y., praised Friedman as someone ``able to balance the need to both stimulate the economy but keep the deficit within bounds.''
Senior administration officials said shortly after Lindsey's Dec. 6 dismissal that Friedman was Bush's top pick. His official selection was delayed by questions about what was described as a minor heart condition that flared up last week, and an administration review of Friedman's extensive investment portfolio.
While Friedman's selection will not have to win Senate approval, Bush's nominations of Snow as treasury secretary and William H. Donaldson as the Securities and Exchange Commission chairman will have to win Senate confirmation.
Both nominees were expected to win Senate approval, although Snow was likely to face questioning about his conduct as the chief executive of CSX Corp., especially in light of the increased scrutiny corporate management is receiving in the wake of this year's corporate accounting scandals.
Snow said earlier this week that he would not accept a lucrative severance package estimated to total up to $15 million that the CSX board could have awarded him.
Public Citizen, a consumer watchdog group, said Thursday it was seeking government records on loans, stock sales and safety compliance issues involving Snow since he took the top job at CSX in 1989.