More (Or Less) On A White House Purge

by Seth Sandronsky

Dissident Voice

December 16, 2002



Increased job loss led to a purge of sorts in the Bush White House following the Dec. 6 announcement that the nation’s official jobless rate rose from 5.7 percent in Oct. to six percent in Nov., nearly a nine-year high. Subsequently, the president ousted two of his top economic advisers.


One of the purged was Treasury Secretary Paul O'Neill, a former CEO of Alcoa Inc. He supported the elimination of the corporate income tax. That would put more money in the hands of the top one percent of income earners whose income is equivalent to the income of the bottom 40 percent of the U.S. population.


O’Neill also backed the high value of the dollar. This harmed U.S. manufacturing by making its products (priced in dollars) more costly than those of global competitors. The human cost of this currency policy has been high.


In Nov., 45,000 jobs were lost in U.S. manufacturing, the biggest drop of any employment sector. Factory payrolls have fallen for 28 straight months. Over three million manufacturing jobs have been lost since 1997.


The president has tapped Jack Snow to replace O’Neill. Snow, a Republican, is also the chief of CSX Corp., a rail freight firm that has benefited from government deregulation of the industry. The White House has claimed that Snow has “Main Street experience.”


The other purged policymaker was Lawrence Lindsey, head of the National Economic Council, who the Dec. 7 New York Times reported was more willing (than O’Neill) to ponder the course of “aggressive tax cuts.” That is, cutting taxes to boost the buying power of ordinary people, a view that appears to be a blasphemy to some in the GOP. Significantly, Lindsey was a driving force behind the president's $1.35 trillion income-tax cut in 2001.


The president has chosen Stephen Friedman to fill Lindsey’s shoes. Friedman, a former top Goldman Sachs executive, also has a leadership role in the Concord Coalition. The group “has repeatedly issued documents that grossly exaggerated the size of future (federal) deficits,” wrote economist Dean Baker, co-director of the Center for Economic and Policy Research (


In the meantime, black American workers might perhaps be wondering when the benefits of the not-yet permanent Bush income-tax cut will arrive. Their official unemployment rate in Nov. climbed to 11 percent, up 1.2 percent from 9.8 percent in Oct. In Nov. the jobless rate for white workers was 5.2 percent, up a tenth of a percentage point from 5.1 percent in Oct.


Thus in Nov., African Americans' joblessness rose at a rate 12 times that of whites! If the U.S. was the beacon of freedom that the White House claimed it was, the newly appointed economic experts would promptly address such racialized joblessness. Corporate journalism could help push these new palace guards to address the economics of racism.


That ideal reality confronts another, which may well divert the focus of corporate journalists. Namely, the White House’s desire to build a better image for its economic policies. “A fresh team, administration officials said, should be better able to sell the president's pre-existing agenda,” the Dec. 7 New York Times reported.


In other words, new wrapping for a fiscal policy that accelerates the transfer of tax dollars away from low- and middle-income households to high-income households. The Bush $1.35 trillion income-tax cut over 10 years is a case in point. He and the GOP call it “economic stimulus,” on tap to be broadened and quickened next year.


True, the tax cut has put some cash back in the hands of the U.S. public. But this tax refund has generally been a drop in the bucket to what’s needed by low- and middle-income people to boost their buying power. Against this backdrop, local and state governments are facing fiscal fragility nationwide.


At the same time, a so-called third economic stimulus package is on the way from the White House. It includes many tasty treats for rich people such as cutting the tax that investors pay on stock dividends. But does the U.S. economy need more money to be invested in financial speculation?


And a likely White House proposal for 2003 to exempt the Social Security payroll tax from the first $10,000 of workers’ wages? Big business executives back this tax code change. Perhaps they think it will in part serve to weaken public support for Social Security, which is fully funded through 2041 without any adjustments.


It is worth noting that Friedman and Snow have backed the idea of balanced federal budgets. However, a new round of up to $300 billion in tax cuts next year will likely increase the federal deficit. How will these anti-deficit advisers sell the president’s plan to stimulate the U.S. economy through tax cuts that will expand the national deficit?


Meanwhile, workers’ growing joblessness is causing the U.S. economy to sputter. Harsh spending cuts by local and state governments will deepen this job market trend. There’s a lot of pain out there being felt by unemployed workers and their families.


Bush’s purged economic advisers have their wealth and power to fall back on. The nation’s workers don’t have this cushion of privilege. The U.S. economic divide is growing.


Seth Sandronsky is an editor with Because People Matter, Sacramento's progressive newspaper. Email: