Bush Purges Tax-Cut Foes

Updated from 1:57 p.m. EST

On a day the nation's unemployment rate reached its highest level in seven months, President Bush moved to shake up his economic policy team and eliminate one of the staunchest administration critics of further fiscal stimulus.

Economic experts say the resignations of Treasury Secretary Paul O'Neill and Bush economic adviser Lawrence Lindsay weren't a surprise. There's been speculation in political circles for months that the White House would move to revamp its economic policy team after the November election.

Indeed, some say they expect the White House to move quickly in naming a successor to O'Neill, whose habit of speaking his mind on everything from Enron to the economy had caused political headaches for the Bush administration and occasionally thrown currency markets into turmoil. It's likely the White House could name a successor to O'Neill as soon as next week to avoid unsettling the stock market.

"My guess is these resignations wouldn't have been announced if they didn't have a name ready," said David Wyss, chief economist for Standard & Poor's, the credit rating agency. "O'Neill had lost credibility. There was this feeling they needed to do a housecleaning on the economic policy side."

There has been speculation that the White House may look to Wall Street for a successor to O'Neill. Several weeks ago, Charles Schwab's name circulated as a potential successor. The discount brokerage king played a major role in a White House economic policy forum.

Other potential candidates, according to Mickey Levy, chief economist with Bank of America Securities, are Peter Fisher, a Treasury undersecretary; Glenn Hubbard, chairman of the White House Council of Economic Advisors and Martin Feldstein, a Harvard University professor. Fisher, who voted this week to deny an emergency government loan to United Airlines, is also said to be under consideration for the top job at the Securities and Exchange Commission.

Economic and policy experts say the president also may want to send a message to the public that the White House is going to spend more time focusing on the economy, especially in light of the surprising three-tenths of a percent rise in the nation's unemployment rate.

But experts differ about the kind of fix the White House may settle upon to stir the ailing economy.