Paul O'Neill at Treasury
Jude Wanniski
December 19, 2000


Paul O'Neill's name was "floated" so strongly yesterday, when George W. Bush "interviewed" him for the Treasury job, that we must assume the decision was made even before the interview. The only thing good we can say about O'Neill, 65, is that he was a very successful manager at Alcoa as its ceo. Otherwise, we know him as a very conventional, Old Guard Republican who is almost a pure distillation of the GOP political establishment. He would get the job primarily because he is a friend of Bush the elder and Bush the younger knows and likes him, in the way Bush the elder knew and liked his Treasury pick, Nick Brady of Dillon Reed. If the Cabinet continues to take this kind of shape, it really will seem that former President Bush will be getting a second term vicariously, through his son. The one time I met O'Neill was in the early spring of 1989, when President Bush invited me to Camp David with a few dozen economic types to discuss an economic strategy for his fledgling administration. O'Neill was as pleasant as punch, but he clearly was a budget-balancer, with no interest in the dynamics of Reaganesque supply-side policies. Richard Rahn, who was chief economist of the U.S. Chamber of Commerce at the time, was present at Camp David for that one-day conference and remembers O'Neill as a "deep root-canal Republican." As the accounts in today's papers make clear, O'Neill was an enthusiastic supporter of the 1990 Bush tax increase, which brought recession and Bill Clinton in '92. It is being said that he understands the international economy, but I'm afraid all that means is that he has traveled around the world making deals for Alcoa.

When the Baltimore Sun contacted me yesterday, inquiring about O'Neill, here is what I e-mailed him, for attribution: "George W. Bush does not need a Treasury Secretary who has his father's approval and wants to balance the budget. He needs a creative financier who knows how monetary policy works, how fiscal policy works, and how the two intertwine. He needs a Treasury Secretary who knows why there is so much poverty in the world, why so much financial volatility, and how to take steps to alleviate both. Steve Forbes would be the very best, former Fed Gov. Wayne Angell would be next best, Jack Hennessy okay as long as he had a strong deputy, a la David Malpass of Bear Stearns. Felix Rohatyn would be a good Democrat for the post. I can't imagine Paul O'Neill figuring any of it out fast enough to do Bush any good."

Of course, there was no optimism about Donald Regan of Merrill Lynch among supply-siders when Ronald Reagan picked him as his Treasury Secretary, but instead of bringing on like-minded deputies, Regan did hire several supply-siders in key posts. If O'Neill is picked, he has to do the same, or we could have the second one-term Bush presidency.