Bentsen at Treasury post pleases the key players

December 08, 1992|By Gilbert A. Lewthwaite | Gilbert A. Lewthwaite,Washington Bureau

WASHINGTON -- President-elect Bill Clinton's imminent choice of Senate Finance Committee Chairman Lloyd Bentsen as Treasury secretary sends special signals to key audiences.

To Congress, which has had difficulty in dealing with many Bush administration officials, it sends the message that a respected colleague will help shape and present economic policy.

This is likely to pay dividends at both ends of Pennsylvania Avenue as the Democrats try to end gridlock and get things done.

To the financial markets, always skittish when a Democrat moves into the White House, it is meant to say: Don't worry, here is a political moderate not a big spending liberal; in other words, the deficit is not about to skyrocket.

To the business world, worried about U.S. prospects in an increasingly competitive world, it is reassurance that executives will find a sympathetic ear in Treasury. Promoting productivity and fair trade have long been Bentsen priorities.

"It's a shrewd choice," said Gary D. Bass, executive direct of OMB Watch, which monitors fiscal affairs in the nation's capital. "But then if we have learned anything over the campaign, it is that Bill Clinton is a shrewd politician."

A silver-haired patrician, Mr. Bentsen brings political clout, financial expertise and personal charm to a job that is central to the Clinton administration's chances of revitalizing the economy.

He has the reputation of being a loyal colleague and committed team-player, vital attributes for the new administration's political point man on economic policy.

"Simply by putting Lloyd Bentsen's name on something will give a lot of the new president's economic plan . . . more credibility than it otherwise would have," said Stanley Collender, director of budget policy for Price Waterhouse. "With a Democratic president and a Democratic Congress, what people are going to be watching is whether they can make the trains run on time."

The Treasury secretary is one of four major economic appointments Mr. Clinton is expected to announce this week.

House Budget Committee Chairman Leon Panetta is favored over Alice Rivlin, former director of the Congressional Budget Office, to become head of the Office of Management and Budget; Robert Rubin, co-chairman of Goldman Sachs, is likely to be named head of the new economic security council.

Robert Reich, Harvard economist, close friend and adviser to Mr. Clinton for more than 20 years and head of the transition's economic team, is in line to be chief White House economic adviser.

"It is shaping up like they are appointing credible people who the market feels comfortable with," said Philip Braverman, of DKB Securities, New York, although he added that "the market" would have preferred Paul Volcker, former chairman of the Federal Reserve, at Treasury.

At age 71, Mr. Bentsen brings generational balance to the baby-boom leadership. But despite the age difference, his political character dovetails surprisingly well with Mr. Clinton's. He is a centrist politically, a conservative economically and a nationalist commercially.

In line with the overall thrust of Clinton policy, Mr. Bentsen has sponsored his own health care reforms, pushed for higher taxes on the wealthy and demanded stiff reprisals against foreign trade violations.

He is not, however, anyone's idea of the "new Democrat." He is very much a man of the establishment, a smooth operator intimately familiar with Washington's corridors of power ever since 1948 when he became, at 27, the youngest member of the U.S. House.

Ironically, the Texas Democrat was an original supply-sider, before supply-side economics became fashionable in the Reagan administration and attracted the vehement condemnation of Democrats. As chairman of the Joint Economic Committee in 1980, he issued a report calling for "a comprehensive set of policies designed to enhance the productive, the supply side of the economy" through tax reductions.

Although many of his ideas were eventually adopted by the Reagan administration, he became a critic of the Reagan-Bush policy of trickle-down economics.

One of his first moves as chairman of the Senate Finance rTC Committee was to derail a Bush administration proposal to cut capital gains taxes by linking it to a tax increase on the rich.

In the 1980 Joint Economic Committee report, Mr. Bentsen called for an end to the adversarial relationship between government, business and labor, much as Mr. Clinton is promoting "a new covenant" of cooperation. Mr. Bentsen also emphasized the need for industrial training, another of Mr. Clinton's economic priorities.

As Treasury secretary his prime responsibility will be tax policy. He will be charged with increasing the top income tax rate to 36 percent and levying a 10-percent surcharge on millionaires.

It is less clear that the administration will now offer a middle-class tax cut with the economy already showing convincing signs of renewed life.

Whether Mr. Bentsen will be able to promote expanded individual retirement accounts remains open to question. It is not an issue that has caught Mr. Clinton's attention. One concern is that Mr. Bentsen might sponsor too many breaks for business, particularly oil and gas.

"He was the original sponsor of the big Reagan corporate tax cut. He put in the bill that Reagan signed into law that almost wiped out corporate income tax at the time," said Robert S. McIntyre, director of Citizens for Tax Justice.

Thomas Mann, director of government studies at the liberal Brookings Institution, pointed out that Mr. Bentsen's pro-business record meshed neatly with Mr. Clinton's campaign emphasis on promoting business investment and job-creation.

"This is not a liberal Democratic president who is determined to punish business," said Mr. Mann. "Clinton saw real compatibility here, and thought he could work with Bentsen. Bentsen is not going to make policy so much as seek to sell it and implement it."

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