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        Volume CCXXXIII, Number 29        January, 2003              Page 2

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NBC’s Tim Russert:
O’Neill, Lindsey
didn’t meet the test

WASHINGTON, Dec 6 —  The announcement Friday that, at the White House’s request, Treasury Secretary Paul O’Neill would resign was quickly followed by the revelation that White House Economic Adviser Larry Lindsey was tendering his resignation as well. Tim Russert, NBC’s Washington bureau chief and moderator of “Meet the Press,” spoke with MSNBC about the reasons and implications of the changes.

       MSNBC: First came word Friday that the jobless rate had risen to a nine-year high of 6 percent. The last time it was that high America was in a recession. Now Mr. Bush has apparently requested the resignation of Mr. O’Neill and Mr. Lindsey. What’s up?
       
       Russert: I’ve been talking to people around Washington and at the White House and trying to find out exactly what happened and how this developed. Thursday it was Chief of Staff Andrew Card who made telephone calls to Mr. Lindsey at home, who was snowed in, and Treasury Secretary O’Neill and began to talk to them about their futures.
       The White House believed very, very strongly that halfway through the term it is imperative that they have an economic team that is highly respected on Capitol Hill and on Wall Street and they are messengers who have the ability to talk directly to the American people.
       When President Bush nominated Paul O’Neill as treasury secretary, he said I need someone who can calm the markets, someone who can address the fears or insecurities of American people if economic times are not so good.
       The president, as he embarks on the war with Iraq, in all likelihood, realizes that it is the economy that can be politically troublesome in the months and years ahead, and made a decision it was time to put in place a whole new economic team.

       
       MSNBC: Was it a matter of policy or style?
       
       Russert: Both.
       Clearly Lawrence Lindsey was someone who helped formulate the tax cut plan for the president and Paul O’Neill implemented it. They believe and try to point to the Bush tax cut as one of the reasons that there is a recovery or, if there’s no recovery, certainly less of a recession. Democrats will counter it was their idea to do a tax rebate.
       All that being said, they realize there are still jitters on Wall Street, there is still insecurity across the country and it was necessary to have, in place, an economic team that commanded the respect of the Hill, of the Street and eventually the American public.
       I pointed out to some folks at the White House that it was about a week ago that Paul O’Neill, in an interview with the Financial Times, said that reform of the tax code system was more important than tax cuts. That rebounded around the corridors of the Bush administration, because it suggested that he wasn’t on the team.
       The White House insists that was not the primary reason that he left. It certainly is one of many reasons that can be added to a long list.
       But in the end, the bottom line was, with a sluggish economy, the president thought it was imperative that he had someone as head of his economic team who is focused, who is articulate, who was a messenger, who commanded respect on the Street and on the Hill. And for all kinds of reasons, Paul O’Neill, who’s a very nice gentleman, did not meet that test.
       
       MSNBC: We’ve heard criticism of O’Neill for some time now. Was it a case of the president giving him a chance again, and again and again, and he just wasn’t cutting the mustard?
       
       Russert: I had the opportunity to interview Secretary O’Neill in July on “Meet the Press” and it was a long and difficult interview, because I kept asking him if he was going to resign. He said no — this was back in July.
       He had been on a trip to the former Soviet republics when there was a near meltdown in the stock markets and people were wondering why he didn’t return. And also, around that time, he suggested he was surprised that people even care about what he does.
       It was concluded then, by many people at the White House that, in fact, he did have a tin ear to politics and to the public relations aspect of his position. But there was a loyalty to him because he was a good foot soldier and he is a good guy.
       He’s also extremely close to Vice President Richard Cheney. Vice President Cheney is one of the people who recruited him and recommended him some two years ago. And I’m told that there was a phone call between Vice President Cheney and Secretary of the Treasury O’Neill yesterday.

       
       MSNBC: What do you think was said in that conversation?

       Russert: Well, old friend …

       MSNBC: It’s time to go?

       Russert: Time’s are tough and you’ve been a wonderful addition to the administration, but we’ve decided that it’s in the best interest of the country and the economy and the administration, but we’re going to make some changes … and I’m pleased that you’ve come to the same decision.
       I do point out that both these letters of resignation, as stated by the White House, were requested by the White House, which is unusual parlance when it comes to resignations.
       
       MSNBC: White House spokesman Ari Fleischer declined to say when a successor will be announced, saying the president is going to look for people who are expert in the economy, have faith and confidence in the markets, and people who are leaders of experience and judgment, dealing with private methods, private sector — a good understanding of government service.

       When the announcement first came that President Bush was nominating Paul O’Neill, he said he was like that. So, this time around, where will he look?

       Russert: Well, it’s not going to happen today, I can tell you that.
       They realize that if they trot someone out today, that would become the story, rather than the resignations, but it will not be happen today. A replacement will not be announced.
       The president seems to place a premium on someone who has a background, not only steeped in business, but with real practical experience. So, if he can find someone who ran a business and who has Wall Street experience and probably a deft political touch, they’ll find his candidate.
       Someone suggested former Sen. Phil Gramm, of Texas, but I was waved off that.
       This will generate a whole lot of interest from a wide spectrum of people. But this is a very important series of appointments for this president. You can change a team once. If you do it again, as you approach an election, it gives the real appearance of panic.
       The president is now at the height of his political popularity, the height of his political power — having just won the midterm elections. They feel very comfortable about the Louisiana senate race Saturday. So they think they’re playing from a position of strength.
       If the next team doesn’t work out and the president thinks about replacing it a year from now, that’s right in the middle of the presidential season and that creates real chaos.

       MSNBC: And right on the heels, as you said, of the resignation of Harvey Pitt.

       Russert: Yes. We are waiting for the new head of the Securities and Exchange Commission. There had been some rumblings that was coming. Sen. Richard Shelby, the Republican incoming chairman of the banking committee, had urged the White House not to rush into it. But this president now has three major appointments that he must make — his secretary of the Treasury, his chief economic adviser and head of SEC.
       Stay tuned.

Copyright, MSNBC/General Electric Co.

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