Lawrence B. Lindsey
Encyclopedia
Lawrence B. Lindsey was director of the National Economic Council (2001–2002), and the assistant to the president on economic policy for the U.S. President
George W. Bush
. He played a leading role in formulating President Bush's $1.35 trillion tax cut
plan, convincing candidate Bush that he needed an "insurance policy" against an economic turndown. He left the White House in December 2002 and was replaced by Stephen Friedman
after he estimated the cost of the Iraq war
could reach $200 billion per year.
Lindsey, his wife, Susan, and children Troy, Emily, and Thomas reside in Clifton, Virginia
.
. He graduated from Lakeland Senior High School in Shrub Oak, New York in 1972. He received his A.B. magna cum laude and Phi Beta Kappa from Bowdoin College
and his A.M. and Ph.D. in economics from Harvard University
.
He is the author of The Growth Experiment: How the New Tax Policy is Transforming the U.S. Economy (Basic Books, New York, 1990) and Economic Puppetmasters: Lessons from the Halls of Power (AEI Press, Washington, D.C., 1999), and What A President Should Know ...but most learn too late: An Insiders View On How To Succeed In The Oval Office (Rowman & Littlefield Publishers, Inc., Maryland, 2008), and has contributed numerous articles to professional publications. His honors and awards include the Distinguished Public Service Award of the Boston Bar Association, 1994; an honorary degree from Bowdoin College, 1993; selection as a Citicorp/Wriston Fellow for Economic Research, 1988; and the Outstanding Doctoral Dissertation Award from the National Tax Association
, 1985.
During the Reagan
Administration, he served three years on the staff of the Council of Economic Advisers
as Senior Staff Economist for Tax Policy. He then served as Special Assistant to the President for Policy Development during the first Bush administration
Lindsey served as a Member of the Board of Governors of the Federal Reserve System for five years from November 1991 to February 1997. Additionally, Lindsey was Chairman of the Board of the Neighborhood Reinvestment Corporation, a national public/private community redevelopment organization, from 1993 until his departure from the Federal Reserve.
From 1997 to January 2001, Lindsey was a Resident Scholar and holder of the Arthur F. Burns Chair in Economics at the American Enterprise Institute
in Washington, D.C.
He was also Managing Director of Economic Strategies, an economic advisory service based in New York City
. During 1999 and throughout 2000 he served as then-Governor George W. Bush's chief economic advisor for his presidential campaign. He is a former associate professor of Economics at Harvard University
.
Lindsey is presently Chief Executive Officer of the Lindsey Group, which he runs with a former colleague from the National Economic Council and writes for The Wall Street Journal
, Weekly Standard and other publications. He is a visiting scholar at the American Enterprise Institute
.
, Director of the Office of Management and Budget, subsequently discounted this estimate as "very, very high" and stated that the costs would be between $50–$60 billion. This lower figure was endorsed by Defense Secretary Donald Rumsfeld
who called Lindsey's estimate "baloney".
As of 2007 the cost of the invasion and occupation of Iraq exceeded $400 billion, and the Congressional Budget Office
in August 2007 estimated that appropriations would eventually reach $1 trillion or more. On September 20, 2007, the Congressional Budget Office estimated the future annual costs of continuing occupation in Iraq to be between $25 and $30 billion.
Nobel Prize winning economist Joseph Stiglitz and Harvard Professor Linda Bilmes
predicted in 2006 that the war would cost between $1–2 trillion. They later raised that estimate to $3 trillion in their book "The Three Trillion Dollar War
".
In October 2007, the Congressional Budget Office estimated that by 2017, the total costs of the wars in Iraq and Afghanistan could reach $2.4 trillion. In response, Democratic Representative
Allen Boyd
criticized the administration for firing Lindsey, saying "They found him a job outside the administration."
back in 1996 while a Governor of the Federal Reserve. According to the meeting transcripts for September of that year, Lindsey challenged the expectation that corporate earnings would grow 11½ percent a year continually. He said, "Readers of this transcript five years from now can check this fearless prediction: profits will fall short of this expectation." According to the Bureau of Economic Analysis, corporate profits as a share of national income eroded from 1997 until 2001. Stock prices eventually collapsed, starting their decline in March 2000.
In contrast to Chairman Greenspan, Lindsey argued that the Federal Reserve had an obligation to prevent the stock market bubble from growing out of control. He argued that "the long term costs of a bubble to the economy and society are potentially great...As in the United States in the late 1920s and Japan in the late 1980s, the case for a central bank ultimately to burst that bubble becomes overwhelming. I think it is far better that we do so while the bubble still resembles surface froth and before the bubble carries the economy to stratospheric heights." During the 2000 Presidential campaign, Governor Bush was criticized for picking an economic advisor who had sold all of his stock in 1998.
According to the Washington Post, Lindsey was on an advisory board to Enron
along with Paul Krugman
before joining the White House. Lindsey and his colleagues warned Enron that the economic environment was riskier than they perceived.
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....
George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
. He played a leading role in formulating President Bush's $1.35 trillion tax cut
Tax cut
A tax cut is a reduction in taxes. The immediate effects of a tax cut are a decrease in the real income of the government and an increase in the real income of those whose tax rate has been lowered. Due to the perceived benefit in growing real incomes among tax payers politicians have sought to...
plan, convincing candidate Bush that he needed an "insurance policy" against an economic turndown. He left the White House in December 2002 and was replaced by Stephen Friedman
Stephen Friedman (PFIAB)
Stephen Friedman is the former Chairman of the United States President's Foreign Intelligence Advisory Board. He was nominated on October 27, 2005 to replace Brent Scowcroft in the position.-Life and career:...
after he estimated the cost of the Iraq war
Financial cost of the Iraq War
The following is a partial accounting of financial costs of the 2003 Iraq War by the United States and the United Kingdom, the two largest non Iraqi participants of the multinational force in Iraq.-Direct costs:...
could reach $200 billion per year.
Lindsey, his wife, Susan, and children Troy, Emily, and Thomas reside in Clifton, Virginia
Clifton, Virginia
Clifton is a town in Fairfax County, Virginia, United States located away from Washington, D.C. In 2010, the population was 282.-Pre-Colonial era:...
.
Biography and achievements
Lindsey was born on July 18, 1954 in Peekskill, New YorkPeekskill, New York
Peekskill is a city in Westchester County, New York. It is situated on a bay along the east side of the Hudson River, across from Jones Point.This community was known to be an early American industrial center, primarily for its iron plow and stove products...
. He graduated from Lakeland Senior High School in Shrub Oak, New York in 1972. He received his A.B. magna cum laude and Phi Beta Kappa from Bowdoin College
Bowdoin College
Bowdoin College , founded in 1794, is an elite private liberal arts college located in the coastal Maine town of Brunswick, Maine. As of 2011, U.S. News and World Report ranks Bowdoin 6th among liberal arts colleges in the United States. At times, it was ranked as high as 4th in the country. It is...
and his A.M. and Ph.D. in economics from Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...
.
He is the author of The Growth Experiment: How the New Tax Policy is Transforming the U.S. Economy (Basic Books, New York, 1990) and Economic Puppetmasters: Lessons from the Halls of Power (AEI Press, Washington, D.C., 1999), and What A President Should Know ...but most learn too late: An Insiders View On How To Succeed In The Oval Office (Rowman & Littlefield Publishers, Inc., Maryland, 2008), and has contributed numerous articles to professional publications. His honors and awards include the Distinguished Public Service Award of the Boston Bar Association, 1994; an honorary degree from Bowdoin College, 1993; selection as a Citicorp/Wriston Fellow for Economic Research, 1988; and the Outstanding Doctoral Dissertation Award from the National Tax Association
National Tax Association
The The National Tax Association is a non-profit organization committed to the education of tax issues to all people. NTA was first founded in 1907, and has since then strived to understand and address issues in the taxation system. Since its first founding, the NTA has become the leading...
, 1985.
During the Reagan
Ronald Reagan
Ronald Wilson Reagan was the 40th President of the United States , the 33rd Governor of California and, prior to that, a radio, film and television actor....
Administration, he served three years on the staff of the Council of Economic Advisers
Council of Economic Advisers
The Council of Economic Advisers is an agency within the Executive Office of the President that advises the President of the United States on economic policy...
as Senior Staff Economist for Tax Policy. He then served as Special Assistant to the President for Policy Development during the first Bush administration
George H. W. Bush
George Herbert Walker Bush is an American politician who served as the 41st President of the United States . He had previously served as the 43rd Vice President of the United States , a congressman, an ambassador, and Director of Central Intelligence.Bush was born in Milton, Massachusetts, to...
Lindsey served as a Member of the Board of Governors of the Federal Reserve System for five years from November 1991 to February 1997. Additionally, Lindsey was Chairman of the Board of the Neighborhood Reinvestment Corporation, a national public/private community redevelopment organization, from 1993 until his departure from the Federal Reserve.
From 1997 to January 2001, Lindsey was a Resident Scholar and holder of the Arthur F. Burns Chair in Economics at the American Enterprise Institute
American Enterprise Institute
The American Enterprise Institute for Public Policy Research is a conservative think tank founded in 1943. Its stated mission is "to defend the principles and improve the institutions of American freedom and democratic capitalism—limited government, private enterprise, individual liberty and...
in Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
He was also Managing Director of Economic Strategies, an economic advisory service based in New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
. During 1999 and throughout 2000 he served as then-Governor George W. Bush's chief economic advisor for his presidential campaign. He is a former associate professor of Economics at Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...
.
Lindsey is presently Chief Executive Officer of the Lindsey Group, which he runs with a former colleague from the National Economic Council and writes for The Wall Street Journal
The Wall Street Journal
The Wall Street Journal is an American English-language international daily newspaper. It is published in New York City by Dow Jones & Company, a division of News Corporation, along with the Asian and European editions of the Journal....
, Weekly Standard and other publications. He is a visiting scholar at the American Enterprise Institute
American Enterprise Institute
The American Enterprise Institute for Public Policy Research is a conservative think tank founded in 1943. Its stated mission is "to defend the principles and improve the institutions of American freedom and democratic capitalism—limited government, private enterprise, individual liberty and...
.
The Iraq controversy
On September 15, 2002, in an interview with the Wall Street Journal, Lindsey estimated the high limit on the cost of the Bush administration's plan in 2002 of invasion and regime change in Iraq to be 1-2% of GNP, or about $100–$200 billion. Mitch DanielsMitch Daniels
Mitchell Elias "Mitch" Daniels, Jr. is the 49th and current Governor of the U.S. state of Indiana. A Republican, he began his first four-year term as governor on January 10, 2005, and was elected to his second term by an 18-point margin on November 4, 2008. Previously, he was the Director of the...
, Director of the Office of Management and Budget, subsequently discounted this estimate as "very, very high" and stated that the costs would be between $50–$60 billion. This lower figure was endorsed by Defense Secretary Donald Rumsfeld
Donald Rumsfeld
Donald Henry Rumsfeld is an American politician and businessman. Rumsfeld served as the 13th Secretary of Defense from 1975 to 1977 under President Gerald Ford, and as the 21st Secretary of Defense from 2001 to 2006 under President George W. Bush. He is both the youngest and the oldest person to...
who called Lindsey's estimate "baloney".
As of 2007 the cost of the invasion and occupation of Iraq exceeded $400 billion, and the Congressional Budget Office
Congressional Budget Office
The Congressional Budget Office is a federal agency within the legislative branch of the United States government that provides economic data to Congress....
in August 2007 estimated that appropriations would eventually reach $1 trillion or more. On September 20, 2007, the Congressional Budget Office estimated the future annual costs of continuing occupation in Iraq to be between $25 and $30 billion.
Nobel Prize winning economist Joseph Stiglitz and Harvard Professor Linda Bilmes
Linda Bilmes
Linda J. Bilmes is the Daniel Patrick Moynihan Senior Lecturer in Public Policy at Harvard University. She is a full-time faculty member at the Harvard Kennedy School where she teaches public policy, budgeting and public finance...
predicted in 2006 that the war would cost between $1–2 trillion. They later raised that estimate to $3 trillion in their book "The Three Trillion Dollar War
The Three Trillion Dollar War
The Three Trillion Dollar War is a 2008 book by Nobel Prize laureate Joseph Stiglitz and Harvard professor Linda Bilmes, both of whom are American economists.The book examines the full cost of the Iraq War, including many hidden costs...
".
In October 2007, the Congressional Budget Office estimated that by 2017, the total costs of the wars in Iraq and Afghanistan could reach $2.4 trillion. In response, Democratic Representative
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
Allen Boyd
Allen Boyd
Fred Allen Boyd Jr. is the former U.S. Representative for , serving from 1997 until 2011. He is a member of the Democratic Party. He currently works for a lobbying firm, the Twenty-First Century Group.-Early life, education and career:...
criticized the administration for firing Lindsey, saying "They found him a job outside the administration."
Other controversy
Lindsey is famous for spotting the emergence of the late 1990s U.S. stock market bubbleStock market bubble
A stock market bubble is a type of economic bubble taking place in stock markets when market participants drive stock prices above their value in relation to some system of stock valuation....
back in 1996 while a Governor of the Federal Reserve. According to the meeting transcripts for September of that year, Lindsey challenged the expectation that corporate earnings would grow 11½ percent a year continually. He said, "Readers of this transcript five years from now can check this fearless prediction: profits will fall short of this expectation." According to the Bureau of Economic Analysis, corporate profits as a share of national income eroded from 1997 until 2001. Stock prices eventually collapsed, starting their decline in March 2000.
In contrast to Chairman Greenspan, Lindsey argued that the Federal Reserve had an obligation to prevent the stock market bubble from growing out of control. He argued that "the long term costs of a bubble to the economy and society are potentially great...As in the United States in the late 1920s and Japan in the late 1980s, the case for a central bank ultimately to burst that bubble becomes overwhelming. I think it is far better that we do so while the bubble still resembles surface froth and before the bubble carries the economy to stratospheric heights." During the 2000 Presidential campaign, Governor Bush was criticized for picking an economic advisor who had sold all of his stock in 1998.
According to the Washington Post, Lindsey was on an advisory board to Enron
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...
along with Paul Krugman
Paul Krugman
Paul Robin Krugman is an American economist, professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, Centenary Professor at the London School of Economics, and an op-ed columnist for The New York Times...
before joining the White House. Lindsey and his colleagues warned Enron that the economic environment was riskier than they perceived.