The Bush Administration's wonderfully aggressive push for a 15% capital gains tax is no flash in the pan. It reflects a solid commitment to the idea from several Bushies, including some important new appointments that gladdened our hearts. One key appointment is Harvard economist Larry Lindsey to the White House Office of Policy Development, perhaps the leading advocate of lower capital gains taxation in the academic community. Lindsey is an extremely sharp supply-side fiscalist who we had suggested to CEA Chairman Michael Boskin for a slot at the CEA. Boskin, a Lindsey admirer as it turned out, instead helped move him into the policy development slot rather than double-up support for the capital gains push in his office. Roger Porter, technically boss at OPD, coordinating economic and domestic policy for the White House, can use Lindsey's encouragement. Chief of staff Sununu is more of an enthusiast on a low capital gains tax than any of his four predecessors in the Reagan years. President Bush, we must remember, is not only the first President in modern times to come out of the business ranks, he is also the first wildcatting entrepreneur to wind up in the Oval Office. His backing of a capital gains cut is more determined than almost anyone in Washington expected.
At Treasury, Assistant Secretary for economic policy Mike Darby is continuing the push he began last year with a report arguing a revenue gain from a capital gains cut. Secretary Brady, though, seems hung up on narrowing the scope of the cut, trying to accommodate Democratic critics. There's good news with the appointment of John Robson as Deputy Treasury Secretary. Robson, chairman of the CAB in the Ford administration and Don Rumsfeld's No.2 man at G.D. Searle, was my office neighbor at AEI in 1977 when I was writing The Way the World Works, and he has been reading Polyconomics tracts for most of the intervening years. Although Robson is chiefly an administrator, he'll have some quiet influence on policy, I think. [Rumsfeld, by the way, would be high on the list for Defense Secretary if John Tower is kayoed — although we still assume Tower will make it as the White House now makes it a test of strength with Congress, a la Judge Bork. Rumsfeld would be a better SecDef on all counts than Tower, most folks I've talked to in DC believe.]
We still have no clear picture on where Jim Baker will take int'l economic policy at State, or if he will leave that to Brady while he works on global power politics. His choice of former Jesse Helmsman Richard McCormick as Undersec for Economic Policy is a positive move, though, especially considering the also-rans. McCormick is at least favorably disposed to supply-side and would not resist a gold-based international monetary reform if JBIII wants to pursue that G-7 avenue from Foggy Bottom.
On the trade side, US Trade Rep Carla Hills made us nervous in her confirmation hearings, which showed little finesse, but we withhold judgment until we see her in action. We're much happier with Anne Brunsdale, confirmed as chairman of the International Trade Commission. Nominated by President Reagan last fall, her appointment was delayed by the Dems who hoped a Dukakis presidency would give them the chair. Brunsdale, who I also worked with at the American Enterprise Institute in 1977, is a thoroughly committed free-trader with more than enough finesse. Kemp's chief of staff at HUD, Wendell Gunn, one of the earliest supply-siders and Reagan's assistant for commerce and trade in the first term, is another big plus; he may become the most visible and influential black in the Bush administration. So far so good.