Treasury secretary, Bush economic adviser resign

Two members of President Bush's economic team resigned Friday, amid growing concerns about the sluggish economy.

The resignations of Treasury Secretary Paul O'Neill and White House economic adviser Lawrence Lindsey coincided with the Labor Department's release of unemployment figures for November. Jobless rates rose to 6 percent last month, up from 5.7 percent in October.

"It has been a privilege to serve the nation during these challenging times," O'Neill wrote in a brief Dec. 6 resignation letter to Bush. "I thank you for that opportunity."

The resignations are not especially surprising, as Bush tries to allay the public's fears about the sluggish economy and avoid his father's mistakes, according to Don Kettl, a political science and governmental affairs professor at the University of Wisconsin-Madison. The shakeup will allow Bush to put new advisers in place before he gears up for a battle to make his tax cut permanent and stimulate the economy.

"Most close observers expected this to happen," Kettl said. "This is something that was clearly cooking for a while. The only question was the timing."

At his swearing-in ceremony in January 2001, O'Neill, former chairman of Alcoa Inc., the country's largest aluminum producer, said he chose to come out of retirement to lead the Treasury Department because he believed "deeply in the things that [President Bush] has articulated as a vision for our country."

But from the beginning, O'Neill's sharp tongue got him into trouble, according to Kettl.

"He never quite jelled with the capital culture," Kettl said. "He got into scrapes with some members of Congress. He also had difficulty finding a voice and speaking to the investment community."

O'Neill's statements about the economy often missed the mark and confused Wall Street. When stock values plummeted following the Sept. 11 attacks, he predicted the market would rebound to all-time highs within a year to a year and a half-a prophecy that the market did not fulfill.

O'Neill, who began his own career in public service as a computer analyst at the Veterans Administration, now known as the Veterans Affairs Department, later served as deputy director of the Office of Management and Budget in the Ford administration.

In a statement on the resignations, Bush praised O'Neill, his first Cabinet appointee to resign, for boosting the economy and his instrumental role in passing the 2001 tax cut, as well as trade promotion authority and terrorism insurance legislation.

"My economic team has worked with me to craft and implement an economic agenda that helped to lead the nation out of recession and back into a period of growth," Bush said. "I appreciate Paul O'Neill's and Larry Lindsey's important contributions to making this happen. Both are highly talented and dedicated, and they have served my administration and our nation well."

Sen. Chuck Grassley, R-Iowa, chairman-designate of the Senate Finance Committee, echoed Bush's praise for O'Neill's work on pushing the "largest tax cut in a generation" through Congress and also applauded O'Neill's candor.

"More of his unreserved honesty is needed inside the beltway," Grassley said.

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