Federal Reserve Board official Alice Rivlin testifies on Capitol Hill in July 1997 about the state of the economy. (AP)

By David A. Vise
Washington Post Staff Writer
Thursday, May 7, 1998; Page A01

President Clinton wants to appoint Alice M. Rivlin, the number two official at the Federal Reserve Board and one of the nation's foremost experts on the District, as the next chairman of the D.C. financial control board, people familiar with the matter said yesterday.

Rivlin, author of the most authoritative study ever done on the District government, would ascend to the city's most powerful post at a pivotal time in its history. With more clout under the law than the mayor and the D.C. Council combined, Rivlin would take charge of the city government as it seeks to sweep away the remnants of a financial crisis and recover rights stripped away by a Republican Congress demanding fundamental changes in the city's moribund bureaucracy.

People familiar with the decision said Rivlin is seriously considering the White House request and is eager to help the city tackle its problems.

Though Rivlin did not return phone calls yesterday, she made clear her views on the control board and the restoration of power to the city's elected officials in a recent speech at Georgetown University.

"A newly appointed control board, if it is to have the confidence -- or even the tolerance -- of city officials and the electorate, has to make crystal clear from Day One that it is here to work itself out of a job as quickly as possible," Rivlin said. "The president should make that clear when he announces the appointments, or reappointments, and the board itself should say it frequently and far more emphatically than the present board has done."

The 67-year-old economist also suggested that the new panel should take a different approach than the board has under first-term Chairman Andrew F. Brimmer, who has been criticized as overly autocratic and secretive.

"The new board should work far more closely and visibly with elected officials than the board has and reach out for input from citizens and their representatives," she said. "At the same time, elected officials and candidates for elected office have to recognize that unless the D.C. government visibly embraces substantial managerial and operational reform, they will never get real power back."

Rivlin's views mirror those of Del. Eleanor Holmes Norton (D-D.C.), who sent Clinton a memo last month saying the board should shift focus from finance to management while providing for a smooth transition of authority to the city's political leaders.

Rep. Thomas M. Davis III (R-Va.) described Rivlin yesterday as an "outstanding choice." Davis, chairman of the House Government Oversight subcommittee on the District, worked closely with Rivlin in 1995 on the legislation that created the control board. At the time, Rivlin was serving as federal budget chief.

"She has a great respect for democracy in the city," Davis said. "She would continue to add to the credibility that Andrew Brimmer brought to the position. I think her nomination would be a coup for the city. She has a long involvement in the city as an adviser to a number of mayors. She has an international reputation and impeccable credentials. . . . She is a 10."

Before Rivlin could accept the job, Davis said, Clinton administration lawyers must address issues that would arise from her continuing service as vice chairman of the Federal Reserve, the nation's central bank, and her volunteer service on the control board.

Davis expressed confidence that the issues could be resolved and said he would sponsor legislation, if necessary, to permit Rivlin to hold the positions simultaneously.

"She is a Democrat, but she is a professional who I respect greatly," Davis quipped.

The 1990 report compiled under her direction by the Rivlin Commission accurately predicted that the District would face insolvency unless spending and personnel were slashed, a giant pension shortfall was transferred from the city to the federal government and additional revenue was raised by taxing commuters or increasing the annual federal payment.

After Sharon Pratt Kelly was elected mayor in 1990, Rivlin offered to become the city's chief financial officer in a bid to help the District avert financial collapse. But Kelly declined to appoint her, the city's deficit mounted and the District ended up needing emergency loans from the U.S. Treasury to pay its bills.

During her tenure from 1994 to 1996 as President Clinton's federal budget chief, Rivlin chaired an interagency task force on the District, looking for ways the federal government could assist the city.

Rivlin, who earned a doctorate in economics from Radcliffe College, has held prestigious posts both in and out of government. Before serving as vice chairman of the Federal Reserve and federal budget director, she was director of the Congressional Budget Office and director of economic studies at the Brookings Institution -- a Washington-based think tank -- and taught public policy at George Mason University.

Rivlin has stumbled politically at times. In "The Agenda," a book by Washington Post writer and editor Bob Woodward about the Clinton administration, Rivlin was portrayed during her White House tenure as "prickly" and lacking in political sensibility.

The terms of the five current control board members expire early next month, and administration officials have said the president will make new appointments at that time.

"We are working diligently to put together a list of recommendations for the president," said Linda Ricci, spokeswoman for the federal Office of Management and Budget.

Although he would prefer to see control board member Constance B. Newman named as the next chairman, Brimmer said yesterday that Rivlin would make a terrific control board chief.

"If the president were inclined to appoint Alice, I would applaud that," he said.

The control board will remain in charge of running the District government until the city has balanced its budget for three more consecutive years. While Congress initially created the board to rescue the city from financial ruin, it subsequently expanded its mandate to include overhauling District government operations and improving services.

If Rivlin agrees to serve as control board chairman, it would make it easier for the Clinton administration to recruit four additional members for the panel. Some current board members, including Newman, might be willing to serve under Rivlin.

The White House also is in the midst of compiling a list of possible board candidates that includes Assistant Labor Secretary Bernard E. Anderson, who served as chairman of Philadelphia's control board, and Jim Gibson, who is a senior associate at the Urban Institute and a longtime adviser to Mayor Marion Barry. While Anderson lives and works in Washington, he is a Pennsylvania resident and votes in that state.

In her March 19 speech at Georgetown University, Rivlin described the District as "one of the world's most beautiful cities" but said it suffers from a declining tax base and "race and class tension." She also said Congress is "micromanaging as if it would rather be a city council than a national legislature."

Rivlin said the city's schools and other programs "don't have to be Cadillac services but they have to work. That means kids coming out of school who can read and write and reason and can handle the technology of modern jobs. . . . It means responsive emergency services, medical care, foster care, drug treatment and a host of other services that citizens need, especially if they are poor."

Despite the problems, Rivlin said, the city's economy has tremendous growth potential and she remains "hopeful" about the District's future. She also emphasized that the control board must be nothing more than an interim mechanism in the city's financial and political recovery.

"The current vesting of power in an unelected control board can be justified only as a temporary response to crisis and a transition to democratic process," Rivlin said. "The control board was never intended to become the city government."