We were off a bit on our calls last Friday, correctly predicting Lloyd Bentsen at Treasury and Roger Altman as his deputy, but missing on Alice Rivlin -- who gets the No.2 job at OMB, not director, which goes to Rep. Leon Panetta. The World Bank's Larry Summers won't get CEA chairman because of statements he made last year about the efficiency of shipping toxic wastes to Third World countries, implying that life is cheaper there. The most important, positive posting announced yesterday was Bob Rubin of Goldman Sachs as chairman of the new National Economic Council. Note in yesterday's New York Times that James Tobin and Robert Solow produced a frantic, hand-wringing op-ed decrying the formation of this council, which diminishes their influence on the Council of Economic Advisors. The fact that Rubin is strictly a markets man, who made his fortune in arbitrage, is a blow to the national industrial planners. We know Bentsen will be a positive influence on capital gains taxation. We don't know Rubin's views, but do know that Bob Hormats, his chief economist at Goldman Sachs, is an enthusiast. Berkeley Prof. Laura Tyson, a liberal planning type, will get the CEA chairmanship, but the Bentsen-Rubin axis will make her even less influential than Michael Boskin was against the Brady-Darman axis. Panetta and Rivlin will spend their energies chasing nickels and dimes, I think, and will not have serious influence on macro policymaking.
The academics (Tobin & Solow) are still frantically trying to place C. Fred Bergsten of the Institute of International Economics at one of the top two international slots. Bergsten, in my view, did more to destroy the Carter Administration than any other single individual, excepting perhaps Fritz Mondale, who got Bergsten the Treasury post under Michael Blumenthal. Roger Altman, a Carter Treasury assistant secretary is trying to bring Bergsten back into Treasury, which would be downright awful. Hormats of Goldman Sachs would be infinitely superior and provide a bridge between Bentsen and Rubin. If Hormats gets the job, the academics will try feverishly to get Bergsten the Undersecretary of State post for economic affairs, where he can also do a lot of damage. This is why we should all be rooting for Senator Bill Bradley of New Jersey for the top job at State, as he would be able to dominate Bergsten, even if he would be forced to swallow him. However, it still appears as if Warren Christopher will get State. The Clinton team is already worried about losing Bentsen's Senate seat to the GOP. If Bradley is pulled into State, they'd worry that Christine Todd Whitman, who came close to defeating Bradley in '90, would likely pick up that seat for the Republicans.