Bush Economic Adviser to Step Down

WASHINGTON – Stephen Friedman (search), one of the President Bush's top economic advisers, is leaving the White House to return to the private sector in New York, a senior administration official said Tuesday.

Friedman, who served as the behind-the-scenes coordinator for the administration's economic policies, is to leave by the end of the year. There is no imminent announcement on his replacement, said the official, speaking on condition of anonymity.

Friedman replaced Larry Lindsey (search), who resigned with former Treasury Secretary Paul O'Neill two years ago in a shake-up of Bush's economic team.

The senior administration official said that while there has been wide speculation that Friedman might become treasury secretary in Bush's second term, Friedman had never been considered for the job because he had expressed no desire for the post. Friedman had expressed his intention to return to New York after the presidential campaign, the official said.

Bush named Friedman assistant to the president for economic policy and director of the National Economic Council (search) in December 2002. Friedman had spent 28 years with Wall Street investment giant Goldman Sachs & Company, where he served as co-chair from 1990 to 1994, sharing the job at first with Robert Rubin, who left in 1992 to join the Clinton administration.

One person mentioned as Friedman's replacement as head of the National Economic Council is Tim Adams (search), who served as policy director for Bush's re-election campaign and before that was chief of staff at the Treasury Department under both O'Neill and current Treasury Secretary John Snow.

The NEC was created in the Clinton administration to coordinate economic policy for the White House in much the same way that the National Security Council (search) coordinates foreign policy.

Friedman's selection by Bush initially sparked a revolt among conservative "supply siders," who questioned his commitment to further tax cuts because of his membership in the Concord Coalition, an anti-deficit group.

Friedman, however, allayed the concerns of conservatives and became an enthusiastic booster of the third round of tax cuts which passed Congress in the summer of 2003.

During his time in the administration, Friedman mostly worked behind the scenes, coordinating economic initiatives and serving as the administration's liaison to Wall Street.

At the beginning of the Iraq war in 2003, Friedman chaired daily meetings of a "watch group" of top economic policy-makers including Federal Reserve Chairman Alan Greenspan, who met at the White House to monitor the war's impact on global financial markets and oil markets.