WASHINGTON — The dysfunctionality of the Bush administration’s economic policy team paraded into public view long before a plunging stock market slammed the point home this summer. Billions of investor dollars later, it is time for a change.
President Bush has stocked his Cabinet with officials with tin ears. They cannot hear what markets, the media and even their own advisers try to tell them. This is particularly true of the non-team Bush has non-managing the financial free-fall caused by the bursting of the stock bubble and a tsunami-like wave of corporate corruption.
Treasury Secretary Paul O’Neill — a good man, in Bush parlance and in reality — has devoted himself in office to tarnishing a once glowing reputation for efficiency and vision. He has spooked markets and antagonized or mystified other key members of the world financial community with puzzling regularity. His credibility as a reassuring spokesman — the most important single job a treasury secretary can have in times of turmoil — has shrunk to insignificance.
But O’Neill turns out to have only the second-thickest tin ear of Bush appointees. Harvey Pitt gets the trophy: In the middle of last week’s politically damaging shareholder stampede, the Securities and Exchange Commission chairman demanded a promotion to Bush’s Cabinet and a pay raise so he could fight fraud. Even the shame-free Bush White House disavowed Pitt’s effort to make his request part of a corporate reform bill.
The problem is that the problem does not end with O’Neill and Pitt. International economic policy — the strong point of the Clinton administration — is AWOL in the Bush years. It was missing before Sept. 11, and still is today, when other priorities understandably occupy the president.
Early promises of close coordination between the White House and Treasury on foreign economic challenges were never fulfilled. When Argentina or Turkey stumble financially, the international system cannot predict how — or if — Washington will decide to help out. Uncertainty prevails and inhibits action and investment.
The exception is trade. U.S. Trade Representative Robert Zoellick has labored to make it an area of initiative and accomplishment. But Zoellick gets little help and soldiers on with increasing difficulty since Sept. 11 reminded the world that borders exist and must be guarded.
Domestically, Bush’s economic advisers arrived with one arrow in their quiver: tax cuts. Once they shot it aloft, they had nothing else to offer. Every challenge they encountered or could envision had a single answer: tax cuts. Like the rest of us, they could not envision Sept. 11. Unlike the rest of us, they continue to pretend that the day of terror changed nothing in their theories or in the world.
Dysfunction alone may not be enough to get Bush to shake up this failing team. He is notoriously loyal to aides. He sticks with Army Secretary Thomas White as a great manager even though White cannot convincingly explain how he could have known nothing about the shady dealings of Enron, where he was a division manager.
Bush also seems to pay little notice to the gaffes by O’Neill, handpicked for his job by Vice President Cheney, the pratfalls by Pitt or the administration’s missing economic policy. Bush is either loyal to a fault or — equally dangerous for an elected leader — unwilling to admit that he could have made mistakes in filling key jobs.
The time rapidly approaches when Bush the loyalist meets up with Bush the candidate for re-election, however. Late July is when official Washington begins to think seriously about Act Two of a presidential term. It is midsummer night-and-day dreaming about jobs that may soon come open.
Congressional elections in November set the stage for the midterm ritual of orderly departures from the Cabinet by both the disappointed and the disappointing. Bush is too astute a politician to let slip that opportunity to bring in new faces.
But the question is whether he and the Republican Party can afford to wait that long. GOP expectations that the war on terrorism would automatically bring Republican gains in November are being ground down by the appearance of chaos and crime in the markets. Bush’s own standing suffers from the contrast between the integrity and discipline he demands of all in the war on global terror and his administration’s puny, begrudging and yes, tone-deaf, responses to national financial distress.
The costs of inaction in the face of continuing financial failure will be a high one for the nation, the Bush presidency and for the reputations of good men and women who have inadvertently made themselves millstones around the neck of their leader.
Jim Hoagland can be reached at The Washington Post Writers Group, 1150 15th St. NW, Washington, DC 20071-9200 or hoaglandj@washpost.com.
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