Bush taps an economic salesman
Bush names John Snow as new Treasury chief with task of selling tax cuts and buoying confidence.
President Bush's sudden move to appoint a new economic team - the first major shakeup of his administration - is more about chemistry and teamwork than it is about taking the US economy in a bold new direction.
The administration hopes its retooled economic junta will better promote the White House's goal of a new tax cut to stimulate the economy and, as a possible side benefit, shrink the size of the federal government in nonsecurity areas. Clearly, it hopes do this without so much public dissonance, something that became common under outgoing Treasury Secretary Paul O'Neill's tenure.
By appointing John Snow, a railroad executive, as Treasury secretary Sunday, and probably Stephen Friedman, a Wall Street executive, as White House economic counselor Monday, Mr. Bush will be getting two people who are, by all accounts, consensus builders and "listeners."
That will help the administration speak more with one voice on the economy, but not necessarily result in new initiatives. "I think the president is looking for a new messenger, not a new message," says Sung Won Sohn, chief economist at Wells Fargo Banks, of Mr. Snow's appointment. "So he would be a good messenger."
More than anything, the White House wants to bolster business and investor confidence, and, not coincidentally, the president's prospects for reelection in 2004. Homeland security seemed to outweigh the economy as an issue in the midterm elections. But the White House does not want to count on that being the case in two years. In particular, Bush and his advisers are intent on not repeating the mistake his father made of seeming unconcerned about the economic plight of average Americans.
The new team takes over at a delicate time. Though the economy is growing, so is unemployment. The jobless rate rose to 6 percent in November from 5.7 percent a month earlier. Bush doesn't want a "jobless recovery" like that of 1991 which damaged his father's fortunes.
So far this year, real gross domestic product, the nation's total output of goods and services, has grown at a 3.4 percent rate. This is slightly faster than the average 3.1 percent growth rate of the past 30 years. But it's slower than the usual immediate postrecession rate of growth.
Bush, introducing Mr. Snow, chief executive of CSX, a railroad holding company, at the White House Sunday, said he will be "proposing specific steps to increase the momentum of our economic recovery and the Treasury secretary will be at the center of this effort" as the senior member of the economic team.
If the hints of a more vigorous recovery prove sound, a stimulative tax package could be redundant. Mr. O'Neill argued along that line within the administration. It may be one reason for his ouster.
Curiously, Snow, as chairman of the Business Roundtable of many of the nation's top corporate executives, is also a fiscal conservative, unhappy with high federal deficits. Nonetheless, he would be required to toe the administration's fiscal line.
Early reaction to his appointment is mixed. "Snow is a political operator; that's what he is being hired for," says Robert Brusca of Ecobest Consulting in New York. "This guy has a PhD in spin. What does he know about running the Treasury and how is he going to discuss economics with finance ministers?"
But others have a more positive view. Snow "understands the crucial role of investment in economic growth," says Jerry Jasinowski, president of the National Association of Manufacturers.
Mr. Jasinowski expressed confidence that Snow would be a strong advocate of the nation's export sector. "He understands the importance of exports to strengthening our domestic economy," the NAM chief said.
Oddly, one early problem for O'Neill was his slowness in adapting a "strong dollar" policy. A weaker dollar, sought by the NAM, would promote exports. If he follows Treasury precedent, Snow will early on talk of the benefits of a strong dollar.
John Albertine, chairman of Albertine Enterprises, a Washington economic policy consulting firm, says Snow has a huge amount of business and public-policy experience.
"O'Neill was out of sync with the economic policy of this administration," says Mr. Albertine. "Snow will be right down the middle. He is a corporate economist, corporate CEO type. He will be very interested in capital gains reduction ... very interested in elimination of the double taxation on dividends."
Snow has a reputation as a middle-of-the-road Republican. He worked in the Ford Administration and thus knows some key Bush officials from that era. Albertine calls Snow "a very buttoned-up type of guy," unlikely to "pop off" as O'Neill did on occasion with policy views that differed from those of the White House or were controversial.
Scott Grannis of Western Asset Management in Pasadena, Calif., worries that Snow does not have "supply side" credentials. Supply-siders often figure that tax cuts can sufficiently stimulate the economy to make up much of the lost federal revenues.
Also, Mr. Grannis is concerned that he will favor a weaker dollar. But, like many on Wall Street, he says, "We don't know his beliefs."
Still, Robert Dilenschneider, who runs his own PR firm and knows Snow, calls him "a real business-oriented kind of guy, not a person who is a back-slapper." He says Snow is known for calling for "enlightened policies" with respect to workers and fiscal issues.
One possible controversy facing Snow is his membership in the male-only Augusta National Golf Club. It has been targeted by some women for its exclusive membership policy.
Mr. Friedman, who is expected to replace Lawrence Lindsey as chairman of the White House's National Economic Council, is a former co-chairman of Goldman Sachs, a major Wall Street investment banking firm. The financial community has been hoping that one of its own would become key figure in the White House.
Robert Hormats, the vice chairman of Goldman Sachs International, who has worked with Friedman for years, calls him "extremely bright and very focused." He says Friedman will be "good at helping the president understand the various economic alternatives. He's a consensus builder. His great strength is organizing concepts and ideas into a coherent whole."
Although Friedman is now associated with Marsh & McLennan, he maintains a close relations withGoldman Sachs and is on the investment bank's board of directors. He had been at Goldman for years. Unlike former Treasury Secretary Robert Rubin, who made his reputation in bonds at Goldman Sachs, Friedman was on the equities side of the firm.
• Staff writer David T. Cook contributed to this report.