BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Tuesday, 21 August, 2001, 12:00 GMT 13:00 UK
The Bush economics team
George Bush names Paul O'Neill treasury secretary
George Bush names Paul O'Neill treasury secretary
President George W. Bush made it clear at the beginning of this year that reviving the domestic economy was his first priority.

First he nominated Paul O'Neill, the chairman of multi-national aluminium company Alcoa, to the role he describes as America's chief financial officer, the secretary of the treasury.

Lawrence Lindsey, Mr Bush's economic advisor
More recently, he has pursued his plans for massive tax cuts and marketed them as a much-needed boost for the US economy.

Former Fed governor Lawrence Lindsey, who crafted Mr Bush's tax cut proposals, became the White House economic advisor.

Bush economic appointments
Treasury Secretary: Paul O'Neill
Commerce Secretary: Don Evans
Economic Advisor: Lawrence Lindsey
Trade Representative: Robert Zoellick
Budget director: Mitch Daniels
Mr Bush also named Donald Evans, his campaign director, commerce secretary.

Mitch Daniels, a vice-president of pharmaceutical giant Eli Lilly, was appointed the head of the Office of Management and Budget (OMB), in charge of presenting the Federal Budget to Congress.

And he named Robert Zoellick, an official in the previous Bush and Reagan administrations, as the US Trade Representative, a cabinet-level post.

Robert Zoellick, the new trade representative

But the most important appointment was probably already made by his predecessor Bill Clinton, who in June reappointed Alan Greenspan to another four year term as head of the US Federal Reserve.

Mr Greenspan is widely credited with managing the US economic boom, the longest in US history, and still commands the confidence of financial markets despite the slowing economy.

Oil and dollars

Of the appointments, Mr Evans, a Texas oil industry executive who raised $100m for the Bush election campaign, was clearly the most political.

The Commerce Department, which oversees patents, promotes US businesses abroad and runs the Census, is generally seen as a platform for retaining links with the business community, rather than a key policy-making department.

During the Clinton administration, the House Republicans proposed closing the department and transferring its functions to other agencies.

Main Street, not Wall Street

And unlike many previous appointments, Mr Bush's secretary of the treasury, Mr O'Neill, comes from a business rather than financial background.

That may make it more difficult for him to command the confidence of financial markets if there is a financial meltdown - but his reputation as a conciliator may help him sell Bush economic packages to a divided Congress.

Mr O'Neill is credited with turning around Alcoa, which merged with its rival Reynolds in 1999 to create the world's largest aluminium company with $21bn in sales and 140,000 employees worldwide.

The most important player is not a Bush appointee
The most important player is not a Bush appointee
Alcoa is one the world's heaviest users of energy, but Mr O'Neill reportedly has some sympathy for attempts to tackle global warming.

Mr O'Neill is no stranger to Washington, however.

He was deputy director of the Office of Management and Budget (OMB) in the Republican Ford administration in the l970s, in charge of preparing the government's budget submission to Congress.

Greenspan friend

Mr O'Neill also worked closely with Federal Reserve boss Alan Greenspan, who was chairman of the council of economic advisors at that time.

That connection may be one of his most important assets. Mr Greenspan fell out with Mr Bush's father over interest rates and the independence of the Federal Reserve, and the ensuing recession did much to damage Bush senior's election chances.

Although there has been much talk about recession, Mr O'Neill professes optimism about the capacity of the US economy for sustained growth.

"I'm one who believes that we can operate at higher levels of non-inflationary growth than most economists would have told you 20 years ago was possible," Mr O'Neill said.

Mr O'Neill has also won strong backing from Mr Greenspan, who said at the time of his appointment: "In Paul O'Neill, the president-elect has attracted an exceptional and talented person."

Managing Congress

The new head of OMB, Mitch Daniels, is an experienced political operator who worked in the Reagan administration and for Republican Senator Richard Lugar of Indiana.

Unlike most budget directors in the past, he has inherited a huge budget surplus estimated by the Clinton administration at $5 trillion over the next 10 years.

His job will be to ensure that the surplus is kept in tact for tax cuts rather than spent in pork-barrel projects by Congress.

Mr Daniels worked with Democrats in the l970s in fashioning the bail-outs of Chrysler and New York City, but he faces a tough job in a Congress that is the most narrowly divided in US history.

After leaving government service, Mr Daniels helped transform the fortunes of drug company Eli Lilly, leading to a fourfold increase in corporate profits.

But his close links to that company worries the American Association of Retired People (AARP) which has long been pressing for a new prescription drug benefit for Medicare recipients.

"We'd look for assurances from him that he would not simply represent the interests of the pharmaceutical industry," said John Rother of AARP earlier this year.

The drug companies have opposed adding drug benefits to Medicare because they feared government price controls as a result.

Supply-siders galore

Meanwhile, Mr Bush named his key economic advisor during the election, Lawrence Lindsey to a key post in the White House.

Mr Lindsey, the chief advocate of the tax cut programme, is assistant to the President for economic policy, a new role with ill-defined powers which could bring him into conflict with Mr O'Neill.

Mr Lindsey is a long-standing advocate of tax cuts and reductions in the regulatory burdens facing business, which he believes will stimulate economic growth and investment.

He backed these "supply-side" proposals when they were advocated by President Reagan in the l980s.

At that time they led to a huge budget deficit and a clash with the Fed, which raised interest rates in response.

Mr Lindsey, who was a member of the Fed board of governors in the l990s, has also clashed with Mr Greenspan about the need for lower interest rates and his belief in the new economy's ability to allow higher growth rates without inflation.

He also served on the Council of Economic Advisors during the Reagan administration, and taught economics at Harvard University.

He is a fellow of the right-wing American Enterprise Institute.

Trade envoy

In contrast, Mr Bush picked Robert Zoellick, a moderate veteran of previous Republican administrations, to be the next US trade representative.

Mr Zoellick had served in the previous Bush administration as deputy chief of staff and under-secretary of state for economics, and worked in the US Treasury during the Reagan administration.

He is a close associate of James Baker, the former secretary of state who served as Mr Bush's spokesman during the controversy over the Florida election count.

The trade representative, a Cabinet-level post, has the authority to conduct all external trade negotiations for the US, and also initiates trade complaints against other countries.


Bush presidency:


Texts and transcripts:


See also:

14 Dec 00 | Business
Tax cuts and free trade
27 Oct 00 | Business
How to spend the surplus
18 Dec 00 | Americas
Bush builds White House team
18 Dec 00 | Business
Bush courts Mr Greenspan
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories