Post Election Jude Wanniski October 31, 1988

There's really not much we can advise on the shape of a Bush Administration until we get the first clues of his thinking after Election Day, November 8. Remember the transformation of Bush at the GOP convention in New Orleans, from mild-mannered, wimpy Clark Kent to a caped dynamo with an "S" on his chest. Next, we have to find out if this carries over to his administration, the degree to which he will be a "take-charge President," and the degree he will permit himself to be directed by his brain trust. (My guess is he will be more of a commander than not, that he will hear out JBIII, Nick Brady, Dick Darman, et al., but his own definite views will overshadow theirs.)

This will show up in the key appointments beyond those we already assume are fixed. That is, we'll probably get some out-of-the-blue surprises, and as we see them we'll have a better idea on the shape of things to come. Rumors that Bush wants JBIII to spend a year as chief of staff, to get things rolling, probably reflects a significant body of opinion that Craig Fuller, Bush's chief of staff as Veep, may not be heavy enough for the transition period. I'm hoping Baker goes to State immediately. Many of the issues that could haunt the administration in a year or two-international monetary reform, trade and Third World debt -- have to be dealt with sooner rather than later.

My preference would be to see Darman as chief of staff. He has the scope, intelligence and experience. But it's assumed he'll be OMB director and I'm told he actually prefers OMB to chief of staff. New Hampshire Gov. John Sununu is discussed as a chief of staff possibility, but Sununu would take a year to learn the ropes, the power mechanisms peculiar to Washington, and in that sense wouldn't be worth much in that period. Bush's pick will be of major importance here.

Brady at Treasury needs help badly. He's elite Old Guard to the core, and unless he has Treasury undersecretaries and a deputy to lean against his natural instincts, he'll be a major problem for Bush. Fed Chairman Greenspan, a bit more of a free-marketeer than Brady, at least has help from his colleagues in this regard. But too often Greenspan's instincts, as with his suggestion of disallowing tax deductibility of M&A interest payments, would fit hand and glove with Brady's, and the two would reinforce each other. We have to assume that Big Business will have more influence in these matters than it did in the early Reagan years, cutting into the entrepreneurial age. A healthy scattering of Reaganauts in the sub-cabinet posts would mitigate the damage.

At State as well, Baker needs a growth-oriented economics undersecretary and AID director of like mind, or his "Baker Plan" will remain on dead center. We hear he might bring Charles Dallara with him from his dual Treasury/IMF job, and if he does, he'll really need extra help. With Clayton Yeutter practically burned out, Bush will have to pick a new trade rep. We really have to keep our fingers crossed here, hoping for a supply-sider. We really have no reason to be optimistic on any of these appointments, although the Reaganauts are in a fairly good position to pick up a few. If Bush is to keep his campaign promise of no tax increases, he has to have a few people around him who know how to grow out of the deficit. A landslide against Dukakis and some positive surprises in the Senate side would be very helpful. In breaking the confidence of the Democrats, we'd at least have a better shot at getting the capital gains rate down in a Democratic Congress. We'll know that much on November 9.