New faces complicate tax-cut politics

WASHINGTON President Bush's economic team has changed completely in just six months, brings lots of new faces with little experience in dealing with Congress. And now is just when he most needs help in pushing through his tax cut.

The resignation last week of the president's budget director, Mitch Daniels, finished the reshuffling that began in December with the firings of Treasury Secretary Paul O'Neill and Lawrence Lindsey, chair of the White House National Economics Council.

Gone from the scene, too, is Glenn Hubbard, chair of the president's Council of Economic Advisers and a principal author of the tax plan. So is Deputy Treasury Secretary Kenneth Dam.

Not one member of the current economic lineup assigned to sell the proposal on Capitol Hill was present when it was developed.

They're trying to sell a package that may or not reflect their own thinking,'' said Mark Zandi, chief economist at Economy.com. He said their job is further complicated by the extremely difficult economic times. It would be tough even if they had an all-star team of economists and policy-makers.''

Former railroad executive John Snow was hired to replace O'Neill as treasury secretary, in large part because of his reputation for strong salesmanship.

Snow so far has managed to win few converts among Democrats or moderate Republicans for the size of the tax cut Bush wants. It has been a hard sell at a time of rising budget deficits and uncertain costs for the war in Iraq and reconstruction.

While Bush focused on the war, the GOP Congress sliced Bush's $726 billion, 10-year proposal: It fell to $550 billion in the House, $350 billion in the Senate.

Bush is trying to salvage what he can by traveling around the country promoting the plan and urging voters to lobby members of Congress. That is a central purpose of upcoming stops in New Mexico, Nebraska and Indianapolis.

Bush's economic team of newcomers contrasts starkly with his formidable veteran national security crew.

Its members may feud, but they still are on the job: Secretary of State Colin Powell, Defense Secretary Donald H. Rumsfeld, national security adviser Condoleezza Rice, CIA Director George Tenet, and Deputy Defense Secretary Paul Wolfowitz.

But battling a long-sluggish economy has proved more difficult and time consuming than winning the war in Iraq.

Despite an earlier round of tax cuts and 12 consecutive interest-rate cuts by the Federal Reserve, the economy has remained stagnant.

Changing faces is one way to try to create a sense of vitality and to show concern,'' said Thomas Mann, a political analyst at the Brookings Institute.

O'Neill and Lindsey became scapegoats for the continuing slumping economy, he suggested. Daniels, who is expected to run for governor of Indiana was not pushed out of the job unlike O'Neill and Lindsey.

Lindsey was replaced as chair of the National Economic Council by Stephen Friedman, a former Wall Street executive. Friedman has kept a relatively low profile in terms of lobbying lawmakers.

Most of the attention and criticism of the tax cut plan has focused on the elimination of stock dividends. Much of the rest of the proposal now seems likely to be enacted. That includes speeding up reductions in individual tax rates, increasing child credits to $1,000 from $600 and relief from the marriage penalty.''

Administration officials had emphasized the importance of the dividend tax cut and said the overall tax cuts must be no less than the $550 billion approved by the House. By week's end, they were stressing other parts of the plan that were likely to prevail.

The good news is that the debate has shifted from no tax relief, to how much tax relief,'' Bush told an Arkansas audience.

White House officials said they are hopeful that most key issues on the tax cut plan will soon be resolved. That might be an overly optimistic hope given a contentious Senate that Republicans only control by one vote.

Bush's choice to chair the Council of Economic advisers Harvard economist Gregory Manikow has not yet won Senate confirmation.

He had to deal with another indignity on behalf of the Bush economic team last week. Manikow and his staff of economists were moved out of the White House complex where the council has had offices for a half-century to an office several blocks away.

White House officials blamed it on security-related demands.

Tom Raum has covered Washington for The Associated Press since 1973, including five presidencies.