White House's Top Economic Adviser Resigns

President Bush's top White House economic adviser said yesterday that he will resign by the end of the year, and a longtime staff member was named to replace him.

Allan B. Hubbard, an Indiana businessman who has been director of the National Economic Council since 2005, will return to the private sector in Indianapolis. Hubbard's deputy, Keith Hennessey, is to take over the job.

The shuffle comes as the administration confronts the greatest economic challenge of the president's second term, turmoil in the mortgage and credit markets. It adds to a loss of senior staff members as the administration prepares to enter its final year.

Hubbard, a friend of Bush's from their days at Harvard Business School in the 1970s, leaves the job with few major achievements. He helped lead efforts to introduce private Social Security accounts at the beginning of Bush's second term, a proposal that went nowhere on Capitol Hill. He also developed a plan to make changes to how health-insurance plans are taxed that was aimed to make health care more affordable, which also stalled.

"My frustration is that we haven't gotten as many things passed through Congress as I would have hoped," Hubbard said in an interview yesterday. "I know we advanced the ball, and hopefully we've made it easier for the next president to deal with them in a productive way."

Hubbard said he is leaving the White House to spend more time with his family.

Treasury Secretary Henry M. Paulson Jr. has taken the lead role in shaping the Bush administration's response to the mortgage and credit markets, and the replacement of Hubbard could strengthen his hand as top economic policymaker for the remaining 14 months of the Bush administration.

Hennessey joined the White House staff five years ago and before that was a budget aide to Sen. Trent Lott (R-Miss.). Hubbard said to expect continuity in the White House's approach to economic issues. "It's going to be a seamless change," he said. "Keith has been here since the fall of 2002 and is a remarkably talented person . . . he understands economics, politics, Congress and knows all the players extremely well."

Still, the departure means one fewer veteran hand as the White House approaches its final year.

"The administration is about to enter that twilight-zone period where a new person disappears every day," said Kevin A. Hassett, a senior fellow at the American Enterprise Institute and staff member in the George H.W. Bush administration.

"They'll have enough career staffers to do the budget, and responding to an international crisis is something the Treasury secretary can do," Hassett said. "But if we went into a deep recession and felt like we needed a stimulus package, then the White House might be a little constrained by a lack of manpower."