Bush tosses out economic team leaders in search for political fresh start

<br>WASHINGTON (AP) _ President Bush pushed Treasury Secretary Paul O'Neill and economic adviser Larry Lindsey from their jobs Friday in a Cabinet shakeup designed to control political damage from

Friday, December 6th 2002, 12:00 am

By: News On 6

WASHINGTON (AP) _ President Bush pushed Treasury Secretary Paul O'Neill and economic adviser Larry Lindsey from their jobs Friday in a Cabinet shakeup designed to control political damage from the ailing economy.

Bush will quickly nominate a successor for O'Neill and unveil a new tax-cut package, advisers said, portraying the dramatic changes as a fresh start for the economy. New unemployment figures matched an eight-year high, underscoring the economic situation.

``I appreciate Paul O'Neill's and Larry Lindsey's important contributions,'' Bush said in a brief written statement. White House officials said the president sought their resignations.

``Firing its economic team is an overdue admission by the Bush administration that its economic policies have failed,'' said Democratic Senate leader Tom Daschle. During the midterm election campaign, Daschle had called for a shakeup of Bush's economic team as Democrats tried unsuccessfully to link the economic slump to GOP policies.

Despite the impressive Election Day showing for GOP candidates, Bush and his political advisers had already concluded the economy may be the president's biggest vulnerability when he seeks re-election in 2004.

Thus, the White House launched a search for O'Neill's replacement well before the joint resignations were announced, and Bush already has a nominee in mind, a senior White House official said. The job has not been offered, he said.

While searching for a new treasury secretary, Bush had chief of staff Andrew Card open discussions with O'Neill and Lindsey for the purpose of securing their resignations, officials said.

O'Neill frequently ran afoul with the White House for voicing views that ran contrary to Bush's economic plans. But officials said it was politics more than policy that prompted the shakeup: Bush wants to be sure voters see him as dealing aggressively with their economic woes, and also believes a change will reinvigorate his team, they said.

The departures came a month after Harvey Pitt resigned under pressure as Securities and Exchange Commission chairman, his handling of corporate accounting scandals threatening to undermine Bush's political standing.

Among those mentioned as possible successors to O'Neill were Joseph J. Grano Jr., head of UBS Paine Webber in New York; investment counselor Charles Schwab; Wayne Angell, a former member of the Federal Reserve and retired House Ways and Means Committee Chairman Bill Archer, R-Texas.

Senior Republicans peppered the White House with additional suggestions, including Sen. Phil Gramm and House Majority Leader Dick Armey, a pair of Texas Republicans and economists who leave Congress in January. Also mentioned: Commerce Secretary Donald Evans and Sen. John Breaux of Louisiana, a Democrat who broke with the majority in his party to provide key support for the president's $1.35 trillion, 10-year tax cut.

White House budget director Mitch Daniels and Glenn Hubbard, chairman of Bush's Council of Economic Advisers, are still in good standing with the president, officials said. But the they could not rule out the possibility that Daniels and Hubbard were eying opportunities outside the White House.

The weeks after midterm elections are generally a time for presidents to make changes and for officials to leave public service.

O'Neill, 67, is the first Cabinet member to leave Bush's administration. White House officials said there will be other high-profile departures, and the rumor mill was buzzing.

Health and Human Services Secretary Tommy Thompson, often whispered to be headed back to Wisconsin, recently told his staff he was staying put. Environmental Protection Agency director Christie Whitman is said to be frustrated with her low-watt role inside the administration.

Even as O'Neill broke the news of his departure to his staff Friday morning, a new set of economic data underscored Bush's concerns: The unemployment rate unexpectedly shot up to 6 percent in November, matching an eight-year high set in April.

Daschle said the departures were only a start.

``If they don't have a good plan, it doesn't matter which team they've got,'' he said.

The White House has been at work for months on a new economic package centered on additional tax cuts for lower- and middle-income individuals, playing down the administration's earlier focus on business-side tax proposals to stimulate investment.

Other ideas on the table would be designed to encourage individual investors in the volatile stock market.

Advisers are still debating whether to time the plan's announcement around the president's State of the Union address in late January, or make it sooner to head off criticism.

A long list of Democratic presidential prospects hope to capitalize on the weak economy, which has not hurt Bush's popularity thus far. Polls show his job approval rating is still high and voters don't blame him or his party for economic woes.

Sen. John Kerry, D-Mass., said in a speech this week the effect of Bush's tax policies will ``not be borne by any of us here today _ it will be paid for by our children. We're borrowing from Social Security and Medicare to put money in our pockets today _ and sticking our children with the bill.''