Economist Layoffs

By JOHN DICKERSON

Who would have thought long meetings about the economy could be so entertaining? During the past year, as the Bush Administration has wrestled with how to handle the downturn, the leaders of its economic team have often bickered so openly that aides have found themselves struggling to suppress snickers. Bush's top economic adviser, Larry Lindsey, and Glenn Hubbard, chairman of his Council of Economic Advisers, don't just tug at each other over whether or how to combat the slide in the stock market. They like a good roll in the dirt over such issues as the definition of a market bubble. Says one spectator: "It's like a boxing match but with highly dweeby language." Treasury Secretary Paul O'Neill, who prides himself on his real-world pragmatism, honed during 13years as head of Alcoa, belittles Lindsey's academic theories by telling war stories from his boardroom days. Inreturn, Lindsey once denounced an O'Neill suggestion as "yet another bad idea."

Senior White House officials tell TIME there will be a "major shake-up in the economic team" after the election. Lindsey is the most likely to go. He contributed to the criticism that he has made too many on-the-record gaffes by speculating last week in the Wall Street Journal that a war with Iraq might cost from $100 billion to $200 billion on the very day the President was preaching fiscal discipline. White House officials insist Lindsey is not being forced out but that he may conclude on his own that he should go. "No one has been asked to leave yet," says one top aide. Hubbard is well regarded but may also leave to resume his academic career and rejoin his family in New York.

Though Republican advisers to the White House have pushed for a voice with credibility on Wall Street, no new names have surfaced to fill any vacancies. Secretary O'Neill has survived his numerous verbal blunders and is likely to stay, but in the background. Aides say Commerce Secretary Don Evans will step up to become the public voice of the economic team, but that's a prediction they have been making for months, and it has yet to happen. "The President really wants it," says a top official, "but it's not that easy to do." The White House tried to give Evans a big platform at its economic conference in August, but it didn't work, in part because Evans' office is not a natural place from which to drive economic policy. What would give him sway among elites, Wall Street and the media is the one thing Evans will not leverage: his friendship with the President. On the phone with Bush as many as three times a day, the longtime pal from the Midland, Texas, years has enormous influence. "He's just not forceful about taking this role," says a senior White House aide. Recently he helped convince Bush that the political timing was not right to embrace stimulative tax cuts for investors.

Whoever joins the new economic team may very well be pushing next year for a complete overhaul of the tax code. Bush has not fully settled on the idea, but it makes political sense. It would show the Administration taking a big swipe at fixing the economy and would allow Bush to defend any new tax cuts by arguing that the reductions are just one part of making the system fairer.

With reporting by James Carney