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US Treasury Loses Plain-Speaking O'Neill

by Mike Godfrey,, Washington

09 December 2002

The long-predicted resignation of US Treasury Secretary Paul O'Neill finally took place on Friday, and was immediately followed by that of Lawrence Lindsey, the President's chief economic adviser.

The White House claimed that both resignations were voluntary, but it is more likely that they result from a conscious decision on the part of the President to set a new economic course. Paul O'Neill has seemed unable to control career officials in the Treasury, who have continued with a Clintonesque agenda despite their boss's clearly right-wing ideas; his frequent statements about the need to reform the US tax code have not resulted in significant reform. Larry Lindsey, for his part, is said to have had an uncomfortable relationship with other members of the administration.

On the search for replacements, White House spokesman Ari Fleischer said: "The president is going to look for people who are expert in the economy, who have faith and confidence of the markets and people who are leaders of experience and judgment."

Democrats were immediately critical of the administration's economic strategy, saying that the resignations proved the President's policies had failed; but right-wing commentators in Washington regretted the departure of two men who had the right ideas, even if they couldn't implement them.

Andrew F. Quinlan, President, Center for Freedom and Prosperity, said: "We have always thought that Secretary O'Neill had the right instincts, however, we believe that he had a hard time controlling his Department's career staff. For the last two years, many free market activists have been fighting the entrenched bureaucrats at Treasury and the Internal Revenue Service, rather than spending our limited resources on helping the President move his pro-growth economic agenda forward.

"We hope that Secretary O'Neill's replacement will be someone who will aggressively secure control of the Department and withdraw Treasury support from anti-tax competitive policies like the proposed IRS's nonresident alien interest reporting regulation and the European Union's Savings Tax Directive.

"In addition, we hope that the new Secretary will give stronger support to policies that foster jurisdictional tax competition, financial privacy and fiscal sovereignty. And we hope the new Secretary will be more committed to the pro-growth, free market tax agenda of President Bush and Congressional tax reformers."

Mr Quinlan said he was very sorry to see Larry Lindsey leave the White House, adding: "He fought aggressively for President Bush's tax agenda and he will be missed. We hope that his replacement is as committed as Dr. Lindsey has been to sound free market, pro-growth tax policies."

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