Wrestling with a shaky economy and criticism that his administration projects a muddled message on how to respond, President Bush on Friday dismissed his treasury secretary, Paul H. O'Neill, and the director of his National Economic Council, Lawrence B. Lindsey.
The move, announced in a brief written statement by Bush with lukewarm thanks to both men, is Bush's first Cabinet shake-up in his nearly two years as president. The fate of the two officials had been the subject of speculation for months, but it came as a shock to O'Neill, Lindsey, and many of Bush's allies in Congress.
Administration officials conceded privately that O'Neill had first lost the confidence of the markets and then gradually of senior White House officials, especially his initial champion, Vice President Dick Cheney.
In the coming months, as the White House rolls out a new tax plan and other economic measures to try to show that the president is as focused on the economy as he is on terrorism, the officials said it was crucial that their team speak clearly and uniformly.
While administration officials said they wanted more effective spokesmen on the economy, it did not appear to signal a broad new direction for Bush's policies. O'Neill and Lindsey took opposite sides on key internal debates. In sharp contrast to Lindsey, O'Neill persistently expressed skepticism about the need for a broad new package of tax cuts to give the economy a short-term stimulus.
The dismissals also come as business confidence is stubbornly low, investment is weak and joblessness is rising. Less than two hours before O'Neill surprised Washington with his resignation, the Commerce Department reported that unemployment surged at an unexpectedly fast rate last month, to 6 percent from 5.7.
Although Lindsey was a prime architect of the tax cut that Bush claims has been one of his signature achievements, both he and O'Neill had been widely perceived as weak links in the administration. O'Neill, in particular, attracted frequent criticism for rattling the markets with off-the-cuff remarks about the dollar and other major issues. The stock markets, which dropped after release of the report on joblessness, rebounded upon news of the shuffle. The Dow Jones average ended the day up 22.49 points, at 8,645.77.
Among the names most frequently mentioned as a successor to O'Neill was that of Gerald R. Parsky, a financier who ran Mr. Bush's presidential campaign in California, and Commerce Secretary Donald L. Evans.
Other names mentioned were Donald L. Evans, currently the secretary of commerce; Representative Bill Archer, who retired in 1999 as chairman of the House Ways and Means Committee; and a long list of wild-card choices like Sen. John Breaux, a Louisiana Democrat and a conservative who has supported Bush in some tax fights.
People close to the White House said Stephen Friedman, a former co-chairman of Goldman Sachs, was a strong favorite to succeed Lindsey.
The nominee for treasury secretary -- but not the choice to head the economic council -- must be confirmed by the Senate. Administration officials would like to have the team in place so they can begin pressing their economic plan when Congress convenes next month.
For the moment, at least, Bush has only a skeleton economic team. Even as he moves to replace the two advisers, the president must also find a replacement for Harvey L. Pitt, the chairman of the Securities and Exchange Commission.
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