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Treasury Secretary To Resign
With Prof. Jose-Luis Guerrero-Cusumano
Associate Professor,
Georgetown University McDonough School of Business
Friday, Dec. 6, 2002; 4 p.m. ET
The top two members of President Bush's economic team announced their resignations Friday morning at the request of the White House, according to sources. Treasury Secretary Paul O'Neill announced his resignation in a letter to the president Friday morning. White House economic adviser Lawrence Lindsey then submitted his resignation, White House officials said.
Georgetown University business professor Jose-Luis Guerrero-Cusumano was online on Friday, Dec. 6 at 4 p.m. ET, to discuss the resignations, what they mean for the economy and international reaction.
Professor Guerrero-Cusumano’s research interests include benchmarking and competitive quality, quality control methods applied to the judicial system, information theory, quantitative methods applied to Finance (stock diversification, options and futures markets) and information systems.
The transcript follows.
Editor's Note: Washingtonpost.com moderators retain editorial control
over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.
Rockville, Md.:
Has there been any discussion of a successor such as Phil Gramm?
Jose-Luis Guerrero-Cusumano: The treasure said it was not yet decided. but two names have been metioned, Mr. Schwab and mr. gramm
Arlington, Va.:
Paul O'Neill always reminded me of Bobby Ray Inman, the guy everyone thought was so great until he went wacko, as Paul O'Neill was touted for every administration since Carter as head of Alcoa and then when he gets in, he basically goes off with Bono and fights with Bob Byrd about who was the poorest and who had to go to the outhouse. Thank god O'Neill did today.
Jose-Luis Guerrero-Cusumano: thanks
Morristown, N.J.:
Changing the players on the Bush economic team is akin to shuffling chairs on the Titanic. What is needed is a coherent economic policy that recognizes that the current econmic downturn is atypical. There is a need to better understand and address the special economic factors contributing to the current slow down in economic activity -- the changing economic fundamentals both domestic and abroad.
The administration must do more that express rhetorical concern over rising unemployment and corporate abuses.
Jose-Luis Guerrero-Cusumano: thanks
New Rochelle, N.Y.:
Another friday and I guess there was no way the White House could hold the news till 4 p.m. as they have done the past two weeks. Secretary O'Neill is the only member of the Bush cabinet that appeared to be human and I think his trip to Africa with Bono was underplayed here in the States. He might not have been the best spokesperson but who could with the current policies of this government? I wish him well and I'm glad he's out of D.C. where it seems as if they eat you alive unless you toe the line 100 percent.
Jose-Luis Guerrero-Cusumano: thanks
Alexandria, Va.:
This may sound like a silly question, but can you explain why we had the two resignations today, and why there have been so many recently? If the president is behind them, as some claim, then what are his motives? Do you expect more in the future? And do you think that these changes will help make the economy more or less stable?
Jose-Luis Guerrero-Cusumano: the president needs to decide in a strong economic stimulus package, his re-election and etc. The last unemployment figures were very bad...my opinion is that part of his political future depends on the next year economic performance
Orlando, Fla.:
Is Bush going to seriously consider Phil Gramm? The government legislative engineer, with his wife Wendy, for the Enron mess?
Phil Gramm and Harvey Pitt look like twins.
Bert Lance would at least be a step up.
Jose-Luis Guerrero-Cusumano: Mr. Gramm supposedly is in the list with Mr. Schwab.
Potomac, Md.:
Isn't true that the real reason O'Neill got fired was because he toured Africa with Bono? Come on.
Jose-Luis Guerrero-Cusumano: I think that wall street was never too concerned about his trip to Africa.
Thanks:
How much is this O'Neill/Lindsay falling on their swords to enable Bush to seem like he's doing something about the economy? How much of a coincidence is it that this happens on a day w/bad unemployment numbers? Not that those numbers precipitated the moves, but that today was as good a day as any?
Jose-Luis Guerrero-Cusumano: I think that President Bush might have been dissapointed with Economic Policy that mssrs. O'Neill/Lindsay have delineated in the recent past. It seems to much of a coincidence that bad unemployment number and resignation. President Bush needs an economic stimulus soon and he might have thought that Wall street may put its trust in a set of new characters
Tiverton, R.I.:
It doesn't seem likely that both top economic advisors would resign simultaneously by their own choice.
Do you think that the Bush administration realizes that it has neglected economic affairs and is making this move partly to further strengthen its position for the 2004 elections?
Jose-Luis Guerrero-Cusumano: I think that it is highly possible that more attention should have been put to Economic policies in the past, and the thought of 2004 election may play a role.
Vienna, Va.:
Secretary O'Neill had two major objectives: abolish Social Security (replacing it with individual stock investment accounts) and he wanted to reduce taxes paid by millionaires. Do you think that his leaving will result in someone aggresively taking on these objectives?
Jose-Luis Guerrero-Cusumano: Some people in Wall street may desire a drastic tax cut, with the thought that this money may revitalize the economy
Baltimore, Md.:
What brought Secrtary O'Neill to the point of resigning? Were there were any early warning signs that this might happen or is it more of an unexpected event?
Jose-Luis Guerrero-Cusumano: My perception was the Mr. Oneill was not the favorite of the business community in the USA but internatinally, some of his comments has not only offended international leaders but also created unnecessary problems in financial market, e.g. Brazil and Argentina
Washington, D.C.:
Which effect, if any, could O'Neill resignation have on the International Economic Policy of the Bush Administration? O´Neill was the first to talk about "a Chapter 11" for sovereigns. Could that initiative (now in the hands of the IMF) be abandoned? What about the policy towards Lula´s Brazil?
Jose-Luis Guerrero-Cusumano: I think that some foreing leaders may be please with Mr. Oneill resignation. His comments on some latin american markets had very negative effects. As you may know, at this moment, in Rio de Janeiro, the Mercusor/Andean pact are working on the fate of the south american continent. Lula is trying to create a counter economic balance through trading blocks and make these blocks more robust.
Boston, Mass.:
In the election, the country just rewarded the president for the job he is doing. People seem to be satisfied with the state of affairs -- including the economy, judging by the popularity of the president.
Jose-Luis Guerrero-Cusumano: In the last two years, we in the USA have gone through many changes. The president's popularity is not only measured by economic terms but also other actions that tend to please his/her constituency. We need to take a more careful look at the economic situation. Unemployment is a big issue. The last study by the Pew Organization showed that internationally, we are not observed so positively as two years ago
Baltimore, Md.:
From an economist's point of view, how close are we to another Great Depression? It seems the bad news keeps piling up for average Americans while the top 5 percent are making a killing thanks to Bush's tax cuts.
Jose-Luis Guerrero-Cusumano: I do not think that we are very close to another Great depression. A tax cut seems to be a good idea for a short planning horizon to keep the economy moving...in the long term it could be a disaster from a deficit point of view
Burke, Va.:
Who do you think are some possible replacements for O'Neill?
Jose-Luis Guerrero-Cusumano: Some people mentioned Mr. Schawb and MR. Gramm
Washington, D.C.:
President Bush and several of his advisors have claimed that making the large tax cut permanent would be an important component in any economic stimulus package. Do you think this is the case? In light of already large federal deficits, could this create more problems than is solves?
Jose-Luis Guerrero-Cusumano: I think that in the short term, any tax cut will be important for the economy...to make it permanent is another matter. Some economists argue that it will be a total disaster to the future deficit
Alexandria, Va.:
Why was O'Niell disliked by Wall Street? Was he not conservative enough in the tax cuts he supported?
Jose-Luis Guerrero-Cusumano: I think that several comments made by Mr. Oneill infurited Wall Street. Some comments affected foreign countries where America has many interests (Brazil) and other comments created economic turmoils (Argentina). Also, some predictions made by Mr. Oneill about the economic were thought as not very well informed by Wall Street
Athens, Ga.:
Which is more important to the short run economy, replacing Harvey Pitt or Replacing Paul O'Neil? Why?
Do you believe the Bush administration will try to include a payroll tax deduction in their upcoming effort to make the 2001 tax cuts permanent? What effect would a payroll tax cut have on the short run economy? What about the long run? Would it matter if a payroll tax cut were financed by shifting the future tax cuts of the 2001 package versus just a new cut?
Jose-Luis Guerrero-Cusumano: Any tax cut may be positive for economic in the short run. People will spend that money and simply put the economy will be working faster than before. In the long term, many business people argue that it will be very negative, e.g. for the federal deficit
Replacing Harvey Pitt or Replacing Paul O'Neil??? Unfortunately in some areas, i think taht Mr. Oneill was not as appreciate as Mr. Pitt
Washington, D.C.:
Will a new Treasury Secretary really do anything for the economy? It seems to me that the dismal unemployment numbers released today really aren't going to be affected by this.
Jose-Luis Guerrero-Cusumano: I think that Mr. Bush needs to infuse my life to his economic team. You are right, the unemployment numbers are terrible... There is a perception that a more focus economic agenda is necessary...immediately
Annapolis, Md.:
The president skated on the economy and the Democrats did little to draw attention to it during the elections - instead focusing on drumming up a war with Iraq. In light of the fact that Bush was not held to account on the economy, why dump O'Neill now?
Jose-Luis Guerrero-Cusumano: There is many comments in Washington. For some people, Mr. Oneill message was not focused enough on realistic economic approaches...his candidness in the US and abroad did not fare very well..and this might have created tensions among the economic team. Also, elections are coming and it is imperative to see the economic light at the end of the tunnel
Stanton Park, Washington, D.C.:
Who would you like to see become the new Treasury Secretary?
Jose-Luis Guerrero-Cusumano: Sorry, I have not favorites
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