Bush Turns to Wall St. for Treasury Secretary
WASHINGTON — President Bush on Tuesday nominated a high-powered Wall Street figure, Goldman Sachs Chairman and CEO Henry M. Paulson Jr., to replace Treasury Secretary John W. Snow, whose long-expected resignation Bush accepted.
Snow became the highest-ranking official to leave the administration in a midterm shuffle that began when White House Budget Director Joshua B. Bolten became chief of staff two months ago. Snow joined CIA Director Porter J. Goss and White House Press Secretary Scott McClellan on the list of former administration officials.
Bush, at a brief White House ceremony, praised Paulson for his experience with financial markets and said he would be his “principal advisor†on economic policy.
“Hank shares my philosophy that the economy prospers when we trust the American people to save, spend and invest their money as they see fit,†the president said.
But it was unclear how much Paulson would shape administration policy. Bush’s first Treasury secretary, Paul H. O’Neill, was frustrated that he did not have much influence. Snow found himself cast as a cheerleader for economic policies that were largely forged in the White House rather than at the Treasury Department.
Paulson, 60, seemed on track to win Senate confirmation, as even Democrats rallied to his side. Sen. Charles E. Schumer (D-N.Y.) praised his “deep understanding†of economic issues and called him “the best pick America could have hoped for.â€
Paulson made brief remarks but took no questions from reporters.
“The whole world is dependent upon the U.S. economy as a major engine of its growth,†Paulson said. “And our economy’s strength is rooted in the entrepreneurial spirit and the competitive zeal of the American people, and in our free and open market. It is truly a marvel, but we cannot take it for granted.â€
Paulson’s nomination also attracted some critics. One group said Paulson, like Snow before him, would find himself relegated to the role of promoter of ill-advised White House economic policies.
The administration hopes “to tap into Wall Street’s legendary ability to put lipstick on a financial pig,†said Peter Schiff, president of the Connecticut brokerage firm Euro Pacific Capital.
Paulson, a multimillionaire, received $38 million in overall compensation from Goldman Sachs, the New York investment house, in 2005. He raised at least $100,000 for Bush’s 2004 reelection campaign, making him a “pioneer†in the Bush campaign. He also personally gave $100 million in Goldman Sachs stock this year to a family foundation dedicated to conservation and environmental education.
Paulson follows in the path of Robert E. Rubin, who left the chairmanship of Goldman Sachs in 1993 to become an economic advisor to President Clinton and was promoted to Treasury secretary two years later. Rubin, who presided over a period in which the federal budget moved into surplus for the first time in three decades, is widely regarded as the most effective recent secretary.
Circumstances may make it difficult for Paulson to play this kind of role.
James Glassman, an economist at J.P. Morgan Chase Securities, said the role of Treasury secretary in the current climate is “very limited.†“With the economy doing fairly well, it’s not clear there’s any need for anything major,†such as new tax cuts or increases, Glassman said. “It really may be more public relations, sort of getting-the-message-out idea, that’s most critical.â€
White House Press Secretary Tony Snow insisted that Paulson would be a key economic policymaker. “You don’t bring in a Treasury secretary as a PR man,†he said, although he declined to identify the policy issues in which Paulson would play a central role.
John W. Snow announced his departure from the Treasury secretary’s job in much the same style that he has filled it since February 2003 -- as a pitchman for Bush’s economic policies.
“Your economic policies have put the American economy on a strong upward path,†he told Bush at the White House ceremony. “And I’ve been pleased to have had a part in working with you to advance those policies.â€
Snow had been rumored as a candidate for involuntary departure from the Treasury Department ever since Bush won reelection in November 2004. He held on to the job with unflinching public loyalty to administration economic policies. Last year he served as a major advocate of the administration’s unsuccessful proposal, developed in the White House, to divert some Social Security payroll taxes to personal retirement accounts.
Snow, 66, was chairman and chief executive of railroad company CSX Corp. before becoming Treasury secretary.
Bush said as recently as Thursday that he had not talked with Snow about his departure.
“No, he has not talked to me about resignation. I think he’s doing a fine job,†Bush said then, during a press conference.
As it turned out, Paulson had accepted the Treasury job four days earlier, said Tony Snow, the White House spokesman. No public announcement was made because Paulson was still undergoing background checks.
John W. Snow has not set a date to leave the Treasury, and plans to attend the G8 summit of the heads of the seven major industrial countries and Russia in St. Petersburg in July. He has quoted former Secretary of State Colin L. Powell, who said as he prepared to leave office: “You’re secretary until you’re not.â€
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