The early reviews are in on the new George W. Bush administration.
It has all the elements of the classic horror story: a predictable
plot, familiar villains and an unshakable sense of déjà
vu. On the following pages, we take a look at Bush's nominees and
appointments, a diverse cast of characters in every way but ideology.
Left to their own devices, this collection of unrepentant cold warriors,
anti-choice extremists, Wise-Use desperados and corporate shills
(as well as a couple of reasonable old-fashioned conservatives)
could make for a harrowing next four years.
Can the forces of good thwart this evil plan? Well, as
In These Times went to press, thousands of townspeople were taking
their torches to Washington to protest Dubya's inauguration, making
one thing clear: There will be no honeymoon!
Lawrence Lindsey, who has been named as President Bush's top economic
adviser, is a supply-sider that progressives can live with. While
he is an ardent believer in the power of markets and proponent of
tax cuts, he also is willing to criticize the establishment and
take the concerns of the poor seriously.
Lindsey joined the Reagan Administration in 1981 after studying
economics at Harvard. He went back there to teach in 1984, before
becoming a top adviser to the first Bush administration in 1989.
In 1991, he was appointed as a governor of the Federal Reserve Board,
where he served until 1997. In that capacity, he was consistently
the most expansionary member of the board, regularly arguing that
the economy could grow faster, and the unemployment rate could fall
lower, than Alan Greenspan and other members of the board thought
possible. Since leaving the Fed, he has worked as a consultant and
maintained an affiliation with the American Enterprise Institute,
a right-wing think tank.
Lindsey was the governor responsible for enforcement of the Community
Reinvestment Act (CRA). This act is supposed to ensure that banks
make loans into the communities where they draw deposits, limiting
the outflow of capital from depressed areas. Enforcement of the
CRA has always been minimal, but Lindsey was willing to listen to
the community groups who were organizing around this issue, even
if he didn't go very far in following their recommendations. Since
many Republicans (and some Democrats) would like to see the CRA
scrapped altogether, Lindsey's attitude is certainly a positive
Lindsey's approach to the international economy may provide some
grounds for optimism as well. Lindsey has been critical of the IMF-Treasury-Department-engineered
bailouts in Mexico, East Asia and elsewhere. In particular, he was
harshly critical of the Clinton administration's effort to crush
a Japanese plan to set up an East Asian bailout fund to deal with
the crisis in the region in 1997. He clearly does not feel the need
to control the financial world from Washington. It is likely that
he will try to implement some of the recommendations of the Meltzer
Commission, which called for a scaling back of the power of the
IMF and World Bank.
Domestically, it is clear that Lindsey will stand solidly behind
Bush's tax cut proposal. But there may be more here than meets the
eye. He has already begun selling the tax cut as a counter-cyclical
demand-side policy that is needed to counteract an economic downturn.
While the phased-in elimination of the inheritance tax will not
stimulate the economy anytime soon (a key part of the Bush plan)
a more progressive set of tax cuts would have this effect.
There is a compromise here in which there is an increase in the
earned-income tax credit and a larger tax cut for moderate-income
families, coupled with some tax break for the rich. This could provide
an important stimulus to the economy, and a boost to many families
that need extra income, even if it does lower taxes on the rich.
Nor will Lindsey be shy about pressing the Fed to lower rates to
stimulate the economy. This could be very important in the next
few years, as there is likely to be some inflation resulting from
the decline in the dollar, which the Fed will see as a reason to
keep interest rates high. Lindsey was a critic of the Clinton-Greenspan
high-dollar policy, and should feel little hesitation about its
abandonment. He is likely to insist that Greenspan ignore the inflation
that results from the dollar's inevitable decline, and instead concentrate
on maintaining high levels of growth and employment.