One of the winners from the administration's Friday purge may be someone just out of the headlines, a boyish professor from Columbia University who runs the Council of Economic Advisers. With the Treasury secretary and White House economic adviser gone, and with the deputy Treasury secretary likely to follow, Glenn Hubbard is the most senior figure of the core economics team to survive. If the rumors are true -- and if Hubbard now moves over to the No. 2 slot at Treasury -- Hubbard may emerge as the intellectual anchor of Bush's economics strategy.
This would be good news for Bush, because Hubbard is impressive. If he goes to Treasury as No. 2, he will be a younger equivalent of Paul Wolfowitz at the Pentagon: somebody whose strongly conservative outlook may provoke others to disagree, but whose seriousness deserves respect.
Hubbard wants to privatize Social Security and lower tax rates, and not everyone likes that. But he's too clever and decent to deploy the dishonest slogans that often pass for argument on these issues.
This would make a pleasant change: A big problem with the Bush economic policy has been its presentation. At the Treasury, Paul O'Neill was likable and honest but often just plain nuts; on development and emerging markets, he made one gaffe after another. At the White House, Lawrence Lindsey was smart and articulate but often disingenuous. He shares the blame for the administration's most irritating trait: Contempt for the audience's intelligence.
In campaigning against the estate tax, for example, the administration has been content to rail absurdly against the "death tax," blaming it for the destruction of family businesses and farms, and even (as Bush put it on a recent campaign stop in Colorado) for traffic congestion. But the intelligent case against the estate tax is that it is so often evaded: It's a one-time levy on rich people, who naturally hit back by hiring fancy tax experts to protect them. As it happens, the economist who's studied this issue is Douglas Holtz-Eakin, a professor who's now part of Hubbard's team.
Why hasn't the White House deployed his research to bolster its opposition to the estate tax? Apparently, because it thinks that the public is too stupid to appreciate a professor's arguments.
The same condescension has infected other tax debates. The rationale for the original mega-cut kept changing to suit the times. Apparently, the White House thought people would be too dumb to notice. The studies showing that the tax cut would go mainly to the rich were dismissed as the work of labor union-funded hacks, and the obvious effect on the long-term deficit was denied. Whom did these people think they were kidding?
With luck the new Bush economics team will be different. If the president has chosen skillfully, he will have picked people who combine O'Neill's honesty with Lindsey's policy fluency: People, in other words, in the style of Hubbard.
That would be good not only for Bush's credibility, it would make policy debates more interesting.
A Hubbard-style tax package, for example, would not be like the last one. It would be less about handing large amounts of cash to the Republican Party's plutocratic base and more about reforms that boost the economy's potential. The case for them would start with wonky documents such as the 1997 blockbuster from the Joint Committee on Taxation, which invited economists from all parts of the political spectrum to model the effect of taxing consumption rather than income. In the long run, according to the average projection, annual output would be 4.3 percent bigger than otherwise -- meaning that (using today's GDP as a base) there'd be $430 billion extra to go around each year, or $1,500 per person.
Or take the debate on Social Security reform. Republicans frequently pretend that switching to private accounts would boost the national savings rate and solve the long-run budget crunch. But switching money from government-run Social Security into private accounts does nothing to change how much money is being saved. Private accounts only relieve the budget crunch insofar as they invest in high-returning stocks, which is something the government could choose to do without privatization. But there is also an intelligent case for Social Security privatization, which Hubbard is more likely to make than most people in his party. This is that private accounts are a trick to put money beyond the reach of Congress and so encourage fiscal discipline; they are a stronger version of Bill Clinton's imaginary "lock box."
None of this means that a consumption tax or Social Security privatization is right. But it does mean that honest cases can be made for both. How nice if the president's new team proves serious enough to make them.