Washington — President Bush, rejecting protests from supply-side conservatives, on Thursday named Wall Street investment banker Stephen Friedman as his top economic adviser.
Mr. Friedman said he "strongly shared" Mr. Bush's view that Congress needs to pass a new economic stimulus package.
Mr. Bush selected Mr. Friedman last week, but his appointment was delayed because of questions about his health and to give White House lawyers time to review Mr. Freidman's huge investment portfolio.
Conservatives, unhappy with what they saw as Mr. Friedman's lukewarm past support for tax cuts, used the delay to mount an aggressive campaign to try to derail the selection. But in the end, Mr. Bush stuck with his original choice.
Mr. Friedman, 64, served as co-chair of the giant Wall Street investment bank of Goldman Sachs from 1990 to 1994. He shared those posts with Robert Rubin until Mr. Rubin left the firm in 1992 to join the Clinton administration, first in the same position Mr. Friedman will now hold and then as President Clinton's second treasury secretary.
With the announcement of Mr. Friedman, Mr. Bush has now filled the two top economic policy jobs in his administration which became vacant last Friday when Mr. Bush demanded and received the resignations of Treasury Secretary Paul O'Neill, and Lawrence Lindsey, who Mr. Friedman will replace as director of the president's National Economic Council.
Mr. Bush on Monday announced he had picked railroad executive John W. Snow, the chairman of CSX Corp., as Mr. O'Neill's replacement.
In a brief ceremony in the White House Roosevelt Room, Mr. Bush said he had selected Mr. Friedman for his "wide experience and steady and sound judgment."
For his part, Mr. Friedman said he was committed to working in the administration to "increase the momentum of the recovery" from last year's recession.
The stop-and-go nature of the recovery was underscored last week when the government announced that the nation's unemployment rate had returned to an eight-year high of 6 per cent.
Seeking to reassure conservatives who are concerned about his commitment to further tax cuts, Mr. Friedman said, "I strongly share your convictions, sir, that now is the time for a robust growth and jobs policy."
Analysts saw the flap over Mr. Bush's new economic team is a replay of a two-decade-old struggle within the Republican Party. Supply-side tax cutters believe tax cuts, by stimulating output, can boost government revenues, while fiscal conservatives hold the more traditional economic view that tax cuts end up lowering revenues and increasing budget deficits.
The current fight also serves to underscore the challenges Mr. Bush will face in selling a new stimulus package, with as much as an additional $300-billion in tax cuts, to Congress next year even with an overhauled economic team.
Some analysts said the battle over tax cuts and the deficit harks back to the fight won by Ronald Reagan in the early 1980s to convince Congress to approve both a big tax cut and big increases in military spending.
Senior administration officials said shortly after Mr. Lindsey's dismissal that Mr. Friedman was Mr. Bush's top pick, but his final selection was delayed by questions about what was described as a minor heart condition that flared up last week. The administration also carefully reviewed his portfolio.
While not a Cabinet-level position, the economic adviser post is significant because the West Wing office gives the occupant access to Mr. Bush and top aides.
Mr. Snow requires Senate confirmation; Mr. Friedman does not.
© The Globe and Mail
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