Bush Team Update
Jude Wanniski
November 16, 1988


The almost certain naming of NH Gov. John Sununu as White House chief of staff seems a much better idea than we earlier suggested. It is a drawback that he doesn't know the mechanisms of Washington, but we have checked with friends who know him better than we do and find he is not only smart and conservative, we which knew, but that he is a confirmed devotee of our style of Reaganomics. There's a better chance of getting supply-siders scattered throughout the Bush administration than with Craig Fuller or Bob Teeter in that seat. Not that they are hostile, which they are not, but they'd be more likely to take their cues from Jim Baker in assembling the administration.

The naming of Sununu, a surprise, was in fact a setback to JBIII, probably helped by the many stories suggesting JBIII will be the "deputy President," alarming many of GB's other friends. Sununu is anything but a pragmatist in the JBIII mold, and it will be something to watch him grapple with the Capitol Crocodiles. But it definitely gives the new team a more populist tone than if JBIII continued to place Ivy Leaguers in every corner of the new government. We're very happy with JBIII at State, of course, but a few hard-line growth people near the President are essential even to JBIII's ultimate performance at State. We're also pulling for Dick Darman at OMB; he'd be the first OMB director in history with an understanding of the impact monetary policy will have on the budget deficit, far better than Jim Miller, who remained monetarist to the end. Darman would do everything he could to keep the dollar firm, knowing the disastrous effects a weaker dollar would have on long-term rates and the costs of debt service.

Treasury remains a trouble spot. Charles Dallara, another JBIII lieutenant, but of the Marty Feldstein mode, and in tight with Brady, has a new Asst. Secty. of Policy Development post that grabs big turf from others at Treasury. Brady has other allies from Brady Commission days lined up to come in, more Ivy Leaguers. He'll need a strong Deputy Secty. to help him from being pulled down and none is yet in sight. Perhaps Sununu will identify the problem and help.

We're very nervous with word that Peter McPherson, who is now Dep. Secty. and yet another JBIII lieutenant is plugging for the U.S. Trade Rep. job, and we can be sure JBIII is plugging for him. This would be a disaster, McPherson was a weak AID director, weak Dep. Sec., and would be child's play for the protectionist forces. The WSJ says Rep. Bill Frenzel, an old friend of GB's from House Ways & Means days, is in the running. This would be great! Frenzel is an ardent free trader and savvy enough to be discreet about it, get confirmed, and hold off most of the Crocodiles. Wendell Gunn, RR's Cabinet secretary for commerce and trade in the first term, would be good too. Gov. Bill Thompson of IL, also mentioned, would be worse than McPherson on trade.
[Re this morning's hit in the markets, Alan Reynolds worries that Fed Chairman Greenspan "is virtually promising to push interest rates down in exchange for higher tax rates," the policy mix that gave us stagflation, and "frightening unless Bush advisers disown it as emphatically as they did Feldstein's call for devaluation." And, "All this inflationary rhetoric is making the Fed's job much tougher, banks and businessmen scrambling for short-term funds, pushing rates up in anticipation of a Fed squeeze."]