Do you know why I hate the guy you made president twice? Much like he did with Katrina, the kumquat has been off to the ME trying to find peace so that he can resurrect his presidency and not be the worst president in US history. He fiddles while Rome is burning.
ABB
“We still have not heard from the president as to what he wants to do on this,” Mr. Lazear said Tuesday. “He’s been focused on the Middle East.”
Two Views in the White House on an Economic Fix
By SHERYL GAY STOLBERG
Published: January 17, 2008
WASHINGTON — As President Bush weighs a stimulus package to jump-start the sagging economy, a debate has broken out inside the White House over how hard to push Congress to make Mr. Bush’s tax cuts permanent — a priority for the president, but one that Democrats say would kill the plan before it is even considered.
President Bush returned from the Middle East on Wednesday night and is expected to turn his attention to the economy.
They argue that the need for a stimulus is urgent, but have expressed concern that the administration may have to scale back its ambitions for permanent tax cuts to get a package through Congress.
On the other side, these people say, are staunch economic conservatives like Keith B. Hennessey, the new director of Mr. Bush’s National Economic Council. They have reservations about the need for an economic rescue package and maintain that if the White House proposes one, it should use the plan as leverage to press lawmakers into making the tax cuts permanent.
Mr. Bush, who has been traveling in the Middle East, has not yet received any formal recommendations from his economics team. But he is expected to make a stimulus package the centerpiece of his State of the Union address. He is due back in the Oval Office on Thursday, and is planning a conference call with Congressional leaders to solicit their views.
The president’s tax cuts, which lowered rates for individuals and investors, are set to expire at the end of 2010. Mr. Bush has said repeatedly that he will devote his last year in office to making them permanent, a vow he reiterated in a speech in Chicago before leaving for the Middle East.
“In a time of economic uncertainty,” the president said, “we ought to be sending a clear signal that taxes will remain low.”
Vice President Dick Cheney has also been a strong supporter of the tax cuts, although it is not clear what role he is playing in the current debate.
On Wednesday, the White House dismissed any suggestion that some of the president’s top advisers believed they might have to cede their ground. Tony Fratto, the deputy White House press secretary, said such reports were “flat-out wrong,” though he declined to offer specifics.
The debate casts a fresh spotlight on the White House economic team, a little-known collection of forecasters, strategists and business executives who have struggled for influence inside an administration that has long been preoccupied with terrorism and the war in Iraq.
It is a team that has often been in flux. Mr. Bush is on his third treasury secretary, Mr. Paulson, who was wooed away from his job as chairman and chief executive of Goldman Sachs by Mr. Bolten, himself a former executive there. (The first one, Paul H. O’Neill, cooperated in a tell-all book after he left, and the second, John W. Snow, was unceremoniously pushed out the door.)
Mr. Bush has had four National Economic Council directors; Mr. Hennessey replaced Allan B. Hubbard, an Indianapolis businessman who has known Mr. Bush since their days at Harvard Business School together. And there have been five chairmen of the Council of Economic Advisers, a group now headed by Edward P. Lazear, who is on leave from his job as a Stanford University business professor.
In an interview Tuesday, Mr. Lazear said the president was “very firm in terms of his principles that the tax cuts need to be made permanent.” And while Mr. Lazear declined to discuss the administration’s strategy — his job is that of economic forecaster, not political strategist, he said — he also made clear that the White House understood the political realities it faces. “We’re not doing this just to play games here,” he said. “So we obviously want to propose something that we feel would do the American economy some good, and that means it has to be enacted.”
Within the current economic team, Mr. Paulson clearly wields the most clout. With his Wall Street credentials, he has Mr. Bush’s ear, as well as that of some leading Congressional Democrats, including Senator Charles E. Schumer of New York. Kenneth M. Duberstein, a Republican strategist who is close to Mr. Paulson, calls him “first among equals.”
Mr. Schumer said that he has told Mr. Paulson it would “cause real problems” for the White House to insist that a stimulus package be linked to permanent tax cuts. One Republican close to the White House said he believed Mr. Paulson and the other pragmatists would ultimately persuade the administration that it would be worth making some concessions to get a rescue package through Congress.
“They’re not going to start off signaling that they’re going to be flexible, but Paulson and Bolten and Gillespie know that this is going to be a negotiation,” said this Republican, speaking on condition of anonymity. “Their view is a stimulus is essential and their No. 1 priority, and therefore everything else has to be negotiable to achieve the priority. It’s a huge shift.”
Mr. Paulson came into the administration viewed as someone who could bridge the divide with Democrats, yet he has had some difficulty doing so. His effort to forge a bipartisan agreement to revamp Social Security never got off the ground, although he was able to nudge the administration toward a more liberal policy of helping homeowners in the subprime mortgage crisis.
As a whole, the economics team has also drawn criticism for overly optimistic economic predictions. At the end of November, on the same day that Ben S. Bernanke, the chairman of the Federal Reserve, hinted strongly that the Fed would lower interest rates to stave off a downturn in the economy, Mr. Paulson and Mr. Lazear offered a rosier economic forecast for 2008.
Mr. Lazear predicted “solid growth,” and Mr. Paulson said the economy remained “broadly healthy,” while adding, “I expect the expansion to continue.”
On Tuesday, Mr. Lazear defended those predictions, saying they were in keeping with what most economists believed at the time. But he also said that the economic team had known since August, when the housing crisis grew especially acute, that it might have to consider an economic rescue package.
“We still have not heard from the president as to what he wants to do on this,” Mr. Lazear said Tuesday. “He’s been focused on the Middle East.”
Steven R. Weisman contributed reporting.
nytimes.com |
