Reading Bush's Reshuffle

How he acts on four key questions will reveal whether he plans to add fresh smarts to the Cabinet or reward loyal servants

By Mike McNamee

Turns out it's really shaping up to be a second-term shakeup. With Secretary of State Colin L. Powell leading three other Cabinet officers out the door on Nov. 15, the recasting of the Bush Administration is well underway. From the inner-circle Cabinet jobs of Powell and departing Attorney General John Ashcroft, to the netherland vacancies in the Education, Energy, and Agriculture Depts., President George W. Bush has plenty of opportunities now to spend all the "political capital" he talked about at his post-election press conference, with his 3.5 million voter margin of victory.

Only one of the six open slots has been filled so far, so it's too early to assess how Bush's Round Two Team will shape up. But here are some key indicators to watch as the transition -- Washington's favorite quadrennial sporting event -- unfolds. The answers to four questions will reveal much about whether the Bush Administration will tackle the second term with fresh blood and renewed vigor, or if it sees the next four years as just more of the same:

Will Bush finish the job? Defense Secretary Donald H. Rumsfeld got his first wish: He has outlasted Powell, his fierce opponent in a long series of intramural battles over foreign policy and the Iraq war. But if Bush is smart, he won't let Rummy savor that victory for long. Rumsfeld's stubborn refusal to plan for post-war conditions in Iraq fueled the mess in that beleaguered country. This week's military success in Fallujah doesn't make the U.S. endgame any clearer. Bush convinced voters not to change the country's Commander-in-Chief mid-war -- but that rule doesn't apply to the President's underlings. New realism on Iraq requires new leadership.

Does the same rule extend to the economic team? So far, only Commerce Secretary Don Evans -- a longtime Bush friend and sounding board whose main role was to help sell tax cuts on Capitol Hill -- has stepped down. Two behind-the-scenes White House officials -- National Economic Council Director Stephen Friedman and Council of Economic Advisers Chairman N. Gregory Mankiw -- are said to be planning voluntary exits.

Some disgruntled Republicans who'd like to see more creative thinking in economic policy hope that Treasury Secretary John W. Snow will follow them. But with overhauls for Social Security and the tax code on his agenda, Bush appears to want continuity in that key post.

Will Bush reward loyalty at the expense of competence? The promotion of National Security Adviser Condoleezza Rice to Secretary of State is a bad sign. The former Stanford University provost taught Bush most of what he knows about foreign policy and is his prism for viewing the world. But she has struggled to master the operations of the National Security Council, let alone the added task of coordinating Iraqi reconstruction. By putting Condi in charge of the vast bureaucracy at Foggy Bottom, Bush sends a message: It's more important to be right beside him than to be right.

Will Bush burrow in or reach out? The President's first post-election appointment -- naming White House Counsel Alberto R. Gonzales to succeed Ashcroft at the Justice Dept. -- hints that the new Cabinet will be even more insular than the first. Gonzales came to Washington with Bush from Austin and has spent the last four years defending his boss's dubious arguments about prisoner detention and torture.

At the Education Dept., a Texan-for-Texan switch appears to be in the works, as White House Domestic Policy Adviser Margaret Spellings is reportedly poised to replace Secretary Rod Paige. There's no further news on who will replace Energy Secretary Spencer Abraham or Agriculture Secretary Ann M. Veneman.

Arguably, though, with four years of Washington experience under their belts, Bush's Austin retainers are now ready for the big jobs. But in an Administration already known for wearing blinders, fresh viewpoints would be especially welcome.

McNamee is BusinessWeek's deputy bureau chief in Washington

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