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LOS ANGELES TIMES INTERVIEW : Laura Tyson : Controversial Economic Adviser Wins New Friends, Charms Old Enemies

March 28, 1993|James Risen and David Lauter | James Risen covers economic policy and the Treasury for The Times. David Lauter covers the White House for The Times

WASHINGTON — Four months ago, Bill Clinton caused an intellectual furor with his selection of Laura D'Andrea Tyson for the post of chairman of the Council of Economic Advisers. Clinton's naming of the 45-year-old Tyson as the first woman to become chief White House economist stunned and angered many old-line economists and outraged the academic Establishment.

They viewed this UC Berkeley economist as a renegade who held heretical (read: hawkish) views on trade and industrial policy and whose academic work had avoided the traditional macroeconomic focus of previous CEA chiefs. What was worse, from the perspective of many traditional economists, was that Tyson, a former member of the Los Angeles Times Board of Economists, had been selected over the profession's most promising young star--Lawrence Summers, chief economist of the World Bank and a former Harvard professor. Summers, now at the Treasury Department and still on good terms with Tyson, had seemed to have a lock on the job until a controversy arose about his views on environmental protection and the Third World.

But the dire warnings of Tyson's detractors--that she would be shut out of policy-making or that other top economists would refuse to work under her--have been disproved. Since January, Tyson has become a key member of Clinton's economic team and was deeply involved in developing the Administration's economic plan. She has also begun to settle into her new post--hiring two well-regarded economists to fill the other seats on the CEA. This past week, she moved her 10-year-old son to Washington to join her. Her husband, Erik Tarloff, a screenwriter, plans to move east soon.

Now, while continuing her efforts to sell the economic plan to the public and Congress, Tyson is also turning to work on many of the critical issues pressing in on Clinton's presidency: international trade, defense conversion, health care and aid to Russia.

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Question: What can the United States do now to help Russia that is different from what the Bush Administration tried?

Answer: I guess I would start by saying that we're working with a set of very serious constraints. The constraints are that (the Russians) have a reform process, and the extent to which it moves forward or doesn't move forward is something which we have fairly limited ability to influence. So the aid issue really becomes helping the reform process that's (already) under way. It's very hard for the G-7 (leading Western industrial nations) to really influence that.

I think that when the reform process picks up, (we can look at) issues like support for the unemployed in transition, support for training of entrepreneurs. The things that have been tried and worked well in Eastern and Central Europe would apply here. We want to maintain as much of the support as we can during the process.

Q: Does that mean that there will not be any large increase in U.S. financial aid?

A: I think that really depends upon--that would have to be in concert with the G-7. I think we would like very much to work with the G-7 to make a substantial commitment to addressing the problems of the Russian debt, addressing problems of getting food in, things like that.

Q: Now that the frenzy over putting together the budget is over and things have subsided, what's it like to be here? Have you managed to settle into the job?

A: I have a feeling it's never going to be quite settled. Settled is a word that never would apply to this job. Talk to me in July.

I expect the reason it's never quite settled is because there are a tremendous number of issues. What we're trying to do is achieve a balance between reacting in the short run, doing policy analysis, and thinking about what issues we ought to address over the long term so as to try to shape some thinking about the future. So that's what we're doing now.

Q: On the budget, why do we still need the stimulus plan when the economy is already recovering?

A: I don't think an economy with an unemployment rate of 7% can be considered in good shape. You can look at the recovery, at the whole period of recovery and say, "My goodness, we still have an underutilization of workers." So why not just use a package to try to help the economy move more quickly. Particularly a package which is also encouraging a shift in spending toward investments.

Q: Is there a consensus now as to what ails the California economy? How much is attributable to defense, for instance?

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