Wall Street mogul becomes Bush's new treasury chief
George Bush has turned to a 32-year Wall Street veteran, Goldman Sachs chief Henry Paulson, in a bid to breathe life into his economic agenda and revive his troubled presidency.
The appointment of Paulson yesterday as Bush’s next US Treasury secretary marked the latest major change in the president’s personnel line-up that started two months ago with the replacement of his chief of staff and has grown to include his CIA director, budget chief and top trade representative.
Paulson, 60, was named to succeed John Snow, former head of railway company CSX Corporation, who had led the Treasury Department since February 2003. Snow resigned yesterday after a long period of speculation about his job security in the Cabinet, but plans to stay at least until mid-June to ensure a smooth transition.
Paulson comes to the Treasury after retiring as chairman and chief executive of Goldman Sachs, a global financial powerhouse, his position since May 1999.
“He has a lifetime of business experience. He has intimate knowledge of financial markets and an ability to explain economic issues in clear terms,” Bush said of Paulson, whose nomination is subject to Senate approval.
The White House hopes those credentials will help multi-millionaire Paulson, who will be Bush’s third treasury secretary since he took office in 2001, to make a more forceful case for the president’s economic policies at home and abroad.
There is little expectation of major economic initiatives the rest of this congressional election year or even during the rest of the president’s tenure.
It also remains to be seen the extent to which Bush will entrust Paulson with forging economic policy.
The Treasury Department under Snow and his sharp-tongued predecessor, Paul O’Neill, played a very limited role in the policymaking process, which was tightly controlled by the White House.
Paulson was paid £16.5m (€24.1m) in compensation in 2004 by Goldman Sachs, almost 40% more than in 2003. He is a major Republican donor and fund raiser.
His nomination follows another important change in the nation’s economic guard. Federal Reserve chairman Ben Bernanke, appointed by Bush, took charge of the Federal Reserve from Alan Greenspan on February 1.
Bernanke, who has had a bumpy start in terms of communicating with financial markets, described Paulson as “highly respected throughout the financial world”. Given the new Fed chief, economists said it could not hurt to have Paulson’s seasoned market experience on the Bush team.
Paulson is to take over the Treasury post at a time when the economy, which posted its strongest growth spurt in 2 years in the opening quarter of 2006, is expected to log slower growth.
Rising energy prices are a wild card for the economy, while big budget and trade deficits also pose risks.
Trying to defuse trade tensions with China is another challenge. The US racked up a record-high £112bn (€164bn) trade deficit with the Chinese last year.
As Treasury secretary, Paulson not only will become the president’s top economic salesman but also the top spokesman for the US dollar.
Snow’s financial diplomacy led China to take important actions to revamp a currency policy that some in the United States had blamed for the huge trade deficit and a loss of manufacturing jobs.
With his worldwide contacts, Paulson might be able to cause further change to relieve the trade situation, some economists and policymakers say.
Clad in a dark suit, Paulson accepted the nomination as the president and Snow looked on.
“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,” Paulson said. “It is truly a marvel, but we cannot take it for granted. We must take steps to maintain our competitive edge in the world.”
