Lindsey drove Bush tax cut, struggled to inspire

Lawrence Lindsey, who resigned on Friday as one of US President George W. Bush's top economic aides, was an architect of Bush's signature tax cut but struggled to build confidence in the administration's handling of the economy.

Like Treasury Secretary Paul O'Neill, who also announced his resignation on Friday in the biggest shake-up of Bush's presidency, Lindsey has made gaffes that clashed with Bush's attempts to impose strict discipline on the White House message.

But it was his failure to inspire confidence - especially among small-business leaders at the heart of Bush's political constituency - in a time of economic weakness that proved to be his undoing, Republican sources and analysts said.

"The economic troubles were being blamed on the messengers, and both O'Neill and Lindsey exuded zero confidence around the country when it came to selling the president's economic agenda," said Republican consultant Scott Reed.

Lindsey had been Bush's biggest influence in economic policy, Republican consultant Charles Black said, adding, "I doubt that the president thinks less of his expertise... it's just a case of being in the wrong place at the wrong time."

Brookings Institution analyst William Gale said the near-simultaneous resignations of O'Neill and Lindsey, who represented opposite poles in the administration in debates over issues including tax policy, indicated the departures were more about communications than a sign of a policy shift.

Lindsey clashed privately with O'Neill last summer over the contents of a possible economic package to benefit investors, with Lindsey being open to additional tax cuts.

The 48-year-old Lindsey is an outspoken former Federal Reserve governor and Harvard University economist who is regarded as a committed supply-side backer of low taxes and market deregulation.

He came to the White House in 2001 as an original member of Bush's economic team, after being a major architect of the $1.3 trillion tax cut that was a centerpiece of Bush's presidential campaign.

Congress passed a version of the tax cut last year, in what has been Bush's biggest legislative success in economic policy. Democrats have criticized the measure as a giveaway to the rich that helped fuel a $300 billion one-year swing in the federal budget back to deficit.

Bush campaigned heavily on the measure in this year's congressional election, saying it kept an economy he acknowledged was in the doldrums from weakening further.

One Republican source said Lindsey had an academic demeanour that grated on Bush's backers among small-business leaders.

"Larry's background in a classroom did not bode well for men and women that run small businesses. They thought it was all abstract... no one took him seriously," the source said.

"They're (small-business leaders) the engine of growth and they're also the people that both Bush and (Vice President Dick) Cheney were running into at all of these campaign events in the last three months," he said.

Like O'Neill, Lindsey also "wandered off the reservation" in his public comments, Gale said.

Lindsey got into trouble with the White House in September when he estimated a war with Iraq would have minimal effect on the economy and could cost $100 billion to $200 billion, a figure quickly rejected by White House budget director Mitch Daniels as too high. The figure has been in the range of later outside estimates.