Posted on 12/06/2002 2:43:06 PM PST by blam
Tactless and outspoken, O'Neill is shown the door
Search on for new team to confront economic slowdown, as Bush administration is consumed by prospect of war with Iraq
By Rupert Cornwell in Washington
07 December 2002
The resignation yesterday of Paul O'Neill as Treasury Secretary, is not just the first cabinet-level change in the 23 months since George Bush took office. It also removes one of the very few senior government officials prepared to speak his mind, against the prevailing doctrine of one of the most tight-lipped and disciplined administrations in recent memory.
Since he left the chairmanship of Alcoa, the world's largest aluminium producer, to become Mr Bush's principal economic policy spokesman, Mr O'Neill, 66, has been immersed in controversy after controversy. His sometimes tactless chief executive's manner, impervious to the political niceties, coupled with a refusal to acknowledge the evident difficulties of the economy, undermined his credibility – as did a suspicion that he never quite believed in the tax cuts advocated by the President.
"Recession, what recession?" might have summed up his public pronouncements on the economy, even when in mid-2001 it was evident that the long Nineties boom was over. A week after the 11 September terrorist attacks, he opined that that the Dow Jones average could be back to all-time highs within 12 to 18 months. Fifteen months on, the market is 20 per cent off its peak.
Throughout, Mr O'Neill was the one member of the Bush administration prone to stray "off message". When the International Monetary Fund was conducting delicate negotiations with Argentina, he lambasted such bailouts as "crazy". Earlier this year, he dared speak out against the steel import tariffs imposed by Mr Bush which aroused international outcry.
Steadfastly resisting pressure from ruined shareholders and employees to intervene in the Enron crisis, he blithely dismissed the record bankruptcy filing in December 2001 with the words: "Companies come and go ... it's part of the genius of capitalism."
Mr O'Neill also gave the dollar some jittery moments, once describing currency traders as "not the sort of people you would want to help you think about complex questions." That language did not endear him to Wall Street, or inspire global confidence in US economic management – in sharp contrast with his Clinton administration predecessors Robert Rubin and Larry Summers, who were highly respected in the US and abroad.
Tellingly, the Dow actually rose immediately after news of Mr O'Neill's resignation became public yesterday, after declining sharply at the opening on the dismal November unemployment figures, showing a jump to a near nine-year high of 6 per cent.
On Capitol Hill too, he was not popular, having on one occasion described a Republican economic initiative as "show business". What small influence Mr O'Neill did possess in Congress was undermined by insistent reports of quarrelling with Larry Lindsey, the White House economic adviser who also stepped down yesterday.
The most lasting image of his cabinet tenure may well be his tour of famine-stricken Africa with the pop star Bono – a worthy mission, but not one calculated to greatly appeal to Wall Street.
The search is now on for a new economic team to confront those challenges, at a moment when the attention of Mr Bush and his closest advisers is largely consumed with the showdown with Iraq.
Among possible successors is Phil Gramm, the outgoing Republican Senator from Mr Bush's home state of Texas, and a former chairman of the powerful Senate Banking Committee. Other names circulating are those of Don Evans, the Commerce Secretary and a close friend of the President, Wayne Angell, a former Federal Reserve board member, and even James Baker, who was Treasury Secretary under Ronald Reagan and remains a trusted associate of the Bush family.
Mr O'Neill and Mr Lindsey bear scant responsibility for the current woes of the economy, whose slowdown was inevitable and overdue after the implosion of the dot.com and telecommunications sectors, nor for the string of accounting and corporate scandals, whose seeds were sown in the Clinton years.
Impressions, alas, are all important. Whoever succeeds them must project a commitment to stimulate economic growth and action to match, including the enactment of further tax cuts sought by Mr Bush. With the new Congress entirely in Republican hands, the blame if things do not improve will rest squarely with Mr Bush and his party.
The President's problems with his economic personnel could be compounded if Alan Greenspan, the Federal Reserve chairman (and a good friend of Mr O'Neill), retires before the election, as has been rumoured.
The wit and wisdom of Paul O'Neill
* "If you set aside Three Mile Island and Chernobyl, the safety record of nuclear is really very good." – O'Neill on energy
* "9,500 pages of gibberish." – O'Neill on the US tax code
* "Companies come and go. It's part of the genius of capitalism." – O'Neill on the calamitous collapse of Enron, about which he did nothing
* "Swiss bank accounts." – where O'Neill said loans to Brazil would end up; the remark sent Brazil's currency into freefall
* "We don't follow, as is often said, a strong-dollar policy. In my opinion, a strong dollar is the result of a strong economy." – O'Neill helping out the currency. (It plunged)
* "Have you ever tried to do business in Russia? Ever try to write an enforceable contract? It doesn't take a genius to figure out it's not a great place to put capital." – O'Neill doing his bit for relations with a crucial ally
* "This abusive pounding that comes with the territory gets a little wearisome." – O'Neill on how much he loved his job
I agree with him here.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.