At economic helm, four close friends

Call them the four amigos.

Come inauguration day, the stewardship of the US economy is likely to rest, for the first time in memory, on four long-time friends. Their bonds are fraternity-close in some cases, though forged in Washington policy circles, not Econ 101.

Together, they will be tasked with guiding the nation out of its sharp stock-market slump, steering clear of what could become a mild recession next year, and facing any unforeseen crises in global markets. And they will have a big influence on the nature and size of the tax cuts Americans are likely to get next year.

The foursome includes Treasury Secretary-designate Paul O'Neill, Federal Reserve Chairman Alan Greenspan, Vice President-elect Dick Cheney, and Lawrence Lindsey, top economic adviser to President-elect George W. Bush.

"Every effort will be made to work smoothly together," says Harald Malmgren, an economic consultant and veteran Washington insider. "As the economy weakens, that kind of teamwork may be essential."

All four are mostly conservative on economic policy matters, supporting limited government.

The powerful Fed chairman, it is suspected, will change his views on the merits of a tax cut. That would make it easier for Mr. Bush to get at least so1sme portion of his proposed $1.3 trillion tax cut through Congress.

During the Clinton administration, Mr. Greenspan advocated using budget surpluses to cut federal debt. But with the economy slowing, surpluses expanding, and Congress showing a willingness to spend much of the new money, he may go along with tax cuts.

"Greenspan hates spending," Mr. Malmgren says.

Bush, of course, will be the manager of his team - while Greenspan heads the independent Fed. Yet, though key decisions will land on the Oval Office desk, Bush is known as a delegator. His style for considering decisions is to sit down with advisers, hear their views, take notes, then summarize their stands.

Those positions are likely to vary, analysts say, from the strong conservative bent of Mr. Lindsey to Mr. O'Neill's less-ideological tack.

O'Neill, who was tapped last week for the Treasury post, has spent 12 years heading Alcoa, the world's largest maker of aluminum. There he became known as a stickler for job safety, for talking with workers at every turn, and slashing costs - scrapping even his own corner office.

He likes to think long term, and is willing to be unorthodox. Four years ago, he told a CEO roundtable on global warming: "If people believe this is a serious issue, they ought to put their nationalism behind them.... We and the other developed nations are going to have to pay." The son of an Army master sergeant, O'Neill was a budget expert under Presidents Nixon and Ford.

During the Ford years, Greenspan was chairman of the Council of Economic Advisers. Mr. Cheney was chief of the White House staff. O'Neill, as a key player at the Office of Management and Budget, made sure that Cheney's budget wishes were enforced and implemented in the Washington bureaucracy.

CHENEY and Greenspan became close friends and have remained so. Indeed, it's suspected that Greenspan, as much as Cheney, was responsible for persuading Bush to name O'Neill for Treasury. Greenspan talked on the phone with Bush before meeting him formally on Monday.

Nicholas Brady, a former Treasury secretary under Bush's father, says O'Neill is "an excellent choice ... [who] will be welcomed by ... open-minded liberals and conservatives."

Mr. Brady himself clashed with Greenspan (seeking a looser monetary policy to lift the economy out of recession) and cut off regular meetings with him. O'Neill, who has met frequently with Greenspan in recent years to offer his own views on the economy, is not expected to clash in a similar fashion.

His place, he put it last week, "is to let Alan Greenspan make monetary policy."

As vice president, Cheney's economic role is less obvious, but analysts expect him to be very involved - both in policy discussions and in lobbying Congress for support on key bills.

Lindsey, meanwhile, is expected to head the National Economic Council (if that Clinton creation stands under Bush) or some similar White House body. He will help devise strategies to deal with the budget or global economy. He will put the all-important "cover memos" on memos concerning taxes and economics that are headed for Bush.

Lindsey's ties with Greenspan were strengthened during a five-year stint as one of the Fed's governors. Fed insiders say Lindsey became "like an adopted son."

His economic views are considered "far right" by some centrist economists. They note his enthusiasm for some "supply side" views - the brand of economics in vogue under President Reagan. One key tenet, for Lindsey, is the virtue of cutting marginal tax rates - freeing money for economic growth.

One academic describes him as "rigidly political and ideological." But he is also sophisticated in the intricacies of tax policy.

He's been a bear on the stock market for several years and didn't profit from the bull market - or take bad losses recently.

Other people rounding out Bush's economic team include Mitch Daniels, a drug-company executive and former Reagan aide who was named on Friday to be director of the Office of Management and Budget.

John Taylor, a respected Stanford University economist, may be named either Fed vice chairman or head of the President's Council of Economic Advisers. In the latter role, he would likely be less influential than Lindsey.

As friends go, one perhaps closest to Bush himself is the nominee for Commerce Secretary, Texas oilman Don Evans. The man who encouraged Bush's study of the Bible, he is considered less cerebral than the "friends four," but a "people person" who will be useful as a lobbyist for Bush on Capitol Hill.

(c) Copyright 2000. The Christian Science Publishing Society