Tuesday, December 10, 2002

Bush Nominates Snow As Treasury Secretary

By Mike Allen
Washington Post Staff Writer
Tuesday, December 10, 2002; Page A01

President Bush tried for a fresh start on a listless economy yesterday by nominating railroad executive John W. Snow for treasury secretary, with the mission of selling new tax cuts to voters and lawmakers.

The president nominated Snow, chairman and president of CSX Corp. of Richmond, three days after firing Treasury Secretary Paul H. O'Neill to make way for a more polished spokesman for measures designed to promote growth before the 2004 presidential campaign gets hot.

Bush hopes Snow, a Transportation Department official during the Ford administration who has spent the past 25 years in industry, will inspire confidence at a time when unemployment has risen and the value of stock portfolios has fallen. White House officials said they believe Snow, athletic and amiable, will be as disciplined as O'Neill was erratic in making Bush's case to Wall Street and Capitol Hill.

Bush had hoped to use yesterday's ceremony to present successors to both O'Neill and economic adviser Lawrence B. Lindsey, who also was forced out Friday. Lindsey's planned replacement, investment banker Stephen Friedman, has run into complications in the review of his financial holdings, and his nomination has been delayed.

Friedman, former co-chairman of Goldman Sachs, was supposed to be at Bush's side yesterday. But an official who last week put the chance of Friedman's nomination at 95 percent said yesterday it was 75 percent. "That situation is fluid," one aide said. A senior official said that scattered expressions of discontent from conservatives, who fear Friedman is not a sufficiently devout disciple of tax cuts, are not part of his problem.

Reflecting their view that Bush's handling of the economy is one of his vulnerabilities, Democrats made it clear they plan to give Snow no honeymoon and said they will use his Senate confirmation hearings to promote debate about Bush's stewardship of the economy in general and his tax cuts in particular.

Democratic strategists said they see the Finance Committee hearings as a chance to challenge Bush on the economy more clearly than they did during last month's elections. "They're plunging us back into deficits and dramatically increasing the national debt, and their only answer is to dig the hole deeper," said Sen. Kent Conrad (D-N.D.), a Finance Committee member and outgoing chairman of the Budget Committee.

Democrats, casting Snow as a new face promoting an old policy, said they would closely examine Snow's CSX compensation, about $20 million last year. "These are the kinds of things that can be said about any modern CEO," said Peter G. Peterson, who is chairman of the Federal Reserve Bank of New York and co-chairs with Snow a Conference Board commission examining corporate governance. "He's a decent, straightforward person, and if any CEO can get through the process today, he can."

Republicans said they will begin confirmation hearings shortly after the Senate convenes on Jan. 7, and said the hearings should take a few days. Snow will have to remain silent on administration policy until then. He made more than 20 courtesy calls to lawmakers yesterday.

Snow, 63, tried to dispatch one controversy right away by saying he would resign his membership in the Augusta National Golf Club, which does not admit women. Snow made the decision even though White House press secretary Ari Fleischer said Bush "does not judge that to be a disqualifying factor" for a Cabinet nominee.

A White House official said Bush will try to preempt criticism of Snow with a series of events designed to build support for a new economic stimulus package in the weeks before the State of the Union address in late January. "We have the bigger microphone," the official said.

Aides said that shortly after Jan. 1, Bush will announce proposals that could cost at least $300 billion over 10 years. Components are likely to include an extension and acceleration of last year's $1.35 trillion, 10-year tax cut, plus new incentives for investors, such as reducing the tax on dividends. Bush 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."

"John returns to public service at an important moment for our economy," Bush said. "This economy is strong, and we can make it stronger. I'm eager for the task, and so is our next secretary of the Treasury."

Bush declared that many Americans "have very little money left over after taxes" and that some parts of the nation "are experiencing persistent unemployment."

"Some struggle under a weight of debt that makes it difficult to save for retirement," he said. "Investor confidence needs to be strengthened in practical ways."

That was an unusually bleak description for Bush, who usually emphasizes bright spots in statistics while acknowledging that the recovery could be steadier. But aides said the overhaul of Bush's economic team was designed to show he recognizes problems and is determined to be as aggressive in handling the economy as he has been in running the war on terrorism.

Snow, who in the past has emphasized balancing the budget instead of cutting taxes, took the microphone and said he shares Bush's view, often expressed in campaign speeches, "that we cannot be satisfied until everyone -- every single person who is unemployed and seeking a job -- has an opportunity to work."

Mentioning an aspect of the job that Bush omitted, Snow said he understands "the importance of working closely with other countries to build and maintain a prosperous, growing and stable global economy as we successfully prosecute the war on terror."

"I pledge to you to use all my talents, my power, my energy and my ability to strengthen the current economic recovery and create an environment where millions of job creators . . . will grow and prosper," Snow said.

White House officials said they approached Snow several weeks ago as a possible successor to Harvey L. Pitt as chairman of the Securities and Exchange Commission. Members of Bush's inner circle, including Vice President Cheney, liked Snow so much that they decided to make him the leader of the economic team. The deal was sealed with a call from Bush on Friday night, after O'Neill angrily tendered his resignation.

O'Neill is the first member of Bush's Cabinet to be replaced. He was in his office next to the White House yesterday, but was conspicuously absent from the ceremony, where Bush said O'Neill and Lindsey "share credit for an historic tax relief and other economic policies that moved our economy from recession to growth."

Lindsey sat in the front row, next to Commerce Secretary Donald L. Evans. Asked if O'Neill had been invited, a White House official said, "Secretary O'Neill was told of the event well before it took place and he did not express an interest in attending."