WASHINGTON - President Bush on Thursday capped a sweeping overhaul of his economic team by appointing Stephen Friedman as his chief economic adviser, rejecting protests by conservatives who questioned the Wall Street veteran's tax-cutting zeal.

Friedman, 64, will replace embattled National Economic Council chief Lawrence Lindsey, who was forced out on Friday along with gaffe-prone Treasury Secretary Paul O'Neill.

Wasting no time reaching out to his conservative critics, Friedman told a White House ceremony attended by Lindsey that he "strongly" shares Bush's "conviction that now is the time for a robust growth and jobs policy."

Friedman, who spent three decades at the venerable investment firm Goldman, Sachs, and co-chaired the company during the early 1990s with former U.S. Treasury Secretary Robert Rubin, cited rising joblessness and disappointing business investment.

"He understands the free-enterprise system, he knows how the economy works and he shares my objectives for stronger economic growth, high standards of corporate integrity, more small businesses across our nation and greater trade across the world," Bush said of Friedman, his third top-level economic appointment of the week.

Bush is counting on the biggest leadership shake-up of his presidency and a new round of tax cuts he will propose in the coming weeks to help reinvigorate the economy -- and the stock market -- before his 2004 re-election campaign.

Earlier this week Bush named John Snow, chairman of railroad giant CSX Corp., to replace O'Neill, and investment banker William Donaldson as the new chairman of the Securities and Exchange Commission, replacing Harvey Pitt.

Republican sources said other senior Bush advisers could leave the administration in the coming weeks, including Glenn Hubbard, the highly regarded head of the White House Council of Economic Advisers.

Unlike Snow and Donaldson, Friedman's appointment does not require Senate approval.

FRIEDMAN FACED DELAY, PROTEST

Friedman's appointment as the White House's point-man on the economy had been held up for several days by an exhaustive review of his finances and questions about his health.

Conservative Republicans used the delay to protest Friedman's association with centrist groups such as the Concord Coalition, which was founded to promote deficit-reduction policies.

Republicans who favor "supply-side" policies, such as low taxes and deregulation, warned that Friedman would be more interested in balancing the budget than supporting Bush's tax-cutting stimulus package.

White House spokesman Ari Fleischer dismissed criticism of Friedman as "nonsense" and rallied behind the appointment, reassuring conservatives that he would, unlike O'Neill, enthusiastically sell Bush's tax-cutting agenda to Congress and the American public.

The White House is crafting a stimulus package that is expected to total as much as $300 billion and include tax breaks for companies and individuals.

"We must increase the momentum of the recovery," Friedman said, echoing comments by Bush. "We must address pressure on family budgets and savings, the need to create more jobs, slow growth in our overseas export markets and disappointing business investment."

The White House hopes passage of the stimulus package will bolster the economy and, in turn, Bush's chance of re-election. A stagnant economy could be his biggest political liability.

Bush praised Friedman's "steady and sound judgment." Moderate Republicans called him a "rock solid nominee."

"He's not at the president's side to create or set economic policy, but to mold it, package it, and deliver it successfully," said Sarah Chamberlain Resnick, executive director of the Republican Main Street Partnership, the largest group of moderate Republican lawmakers.

Incoming Senate Finance Committee Chairman Charles Grassley, an Iowa Republican, welcomed Friedman's "stated commitment to carrying out the president's agenda on economic growth and job creation" and promised his close cooperation.

But Rep. Edward Markey, a Massachusetts Democrat, said Friedman may have a hard time squaring "his common-sense concerns for prudent fiscal policy with his party's commitment to new tax benefits for the well-to-do."

SHAKE-UP MAY CONTINUE

Republican sources say the leadership shake-up, which started with O'Neill and Lindsey, may be far from other.

Hubbard, on leave from Columbia University, has talked to colleagues about a possible return to teaching. But when asked on Monday if he would be staying in his current job given changes in the team, he replied: "I am happy where I am."

Sources said Kenneth Dam, deputy treasury secretary who worked closely with O'Neill in both the corporate and political worlds, also was likely to leave soon.

Friedman is currently a senior principal at Marsh & McLennan Capital Inc. and a limited partner of Goldman. He was a major contributor to the Republican coffers during the 2000 presidential campaign. ,