President George W. Bush is nominating Harvard University professor Gregory Mankiw to head his Council of Economic Advisers, replacing Glenn Hubbard, the chief architect of the administration's latest tax-cut plan.
Mankiw, who must be confirmed by the Senate, would take over the White House economics research arm at a time when Bush is pushing a US$690 billion, 10-year tax cut that he says would give a lift to the economic recovery and that Democratic critics say would deepen federal deficits and stifle growth.
Hubbard's departure may be a blow to Bush's success in selling the tax cut. He has championed its centerpiece, repeal of the tax investors pay on dividends, for at least a decade.
"The jury is still out on how successful this new team will be on Capitol Hill," said Greg Valliere, chief strategist at Schwab Capital Markets. "They are not very seasoned when it comes to dealing with Congress."
Hubbard, who will step down Friday, is the latest member of Bush's economic team to depart. In December, the president dismissed Treasury Secretary Paul O'Neill and Lawrence Lindsey, head of the National Economic Council. Harvey Pitt announced in November that he was leaving as chairman of the SEC.
"If the stock market hasn't performed for three years and the economy is mediocre, you have to bring in fresh blood," Valliere said.
Bush picked CSX Corp Chief Executive Officer John Snow to replace O'Neill and William Donaldson, former chairman of Aetna Inc, to succeed Pitt. Of Bush's inaugural economics team, only Commerce Secretary Don Evans and Office of Management and Budget Director Mitch Daniels remain.
Hubbard, 44, said in a letter to Bush that he is leaving because "family needs are my most significant concern."
He has said he wants to return to Columbia University. He has two young children and commutes weekly to spend time with his family in New York City.
He left open the possibility of returning to Washington. "I hope that I may serve again in this or a future administration, and I remain at your service in my work in academia and business," Hubbard wrote.
The Council of Economic Advisers works with the president on economic trends and policy, and is traditionally a more academic post than the more politically oriented National Economic Council chairmanship, now held by former Goldman Sachs Group Inc co-chairman Stephen Friedman.
"Mankiw is a good mainstream economist with a specialty in monetary economics, yet his success as a textbook writer means he knows all branches of economics which is useful for the [council]," said Jeffrey Frankel, a Harvard colleague.
Hubbard used the council position to help craft Bush's latest tax-cut proposal, his third in two years, and has been criticized by some academics for saying wider budget deficits don't push up interest rates.
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