Trouble at Treasury

July 28, 2002

CONVENTIONAL WISDOM has it that Paul O'Neill, the treasury secretary, is the wrong man for the job with Wall Street in such flux. Sad to say, conventional wisdom is right. But just look at the reasoning behind it:

The markets, we are told, need someone at the Treasury who can speak their language. An authoritative figure with a background in finance would give the Bush administration some credibility now that it's so badly needed. Jittery investors want a can-do man at the helm, no matter how much this looks like a can't-be-done sort of moment. Give us a Robert Rubin, say Wall Streeters longing for the glorious bubble of the 1990s and the former Treasury secretary who presided over it.

Instead the country has Mr. O'Neill, a businessman who ran a tight ship at Alcoa before joining the Cabinet, who believes in value and sound finances, and who has a penchant for frankness and honesty. Not what the doctor ordered.

Mr. O'Neill was criticized for being out of the country when the stock market got the shudders, and for not using his clout -- or, more accurately, for not having any clout.

He's one of those people who's skeptical about politicians' ability to steer the markets. He believes Wall Street will recover because the economy is showing some strong signs. He doesn't believe in politicking. "It's almost as though people have a compulsion to talk -- and thinking is discretionary," he said recently.

That kind of attitude doesn't get you ahead in Washington. And consider this: Mr. O'Neill has had the temerity to point out that foreign aid hasn't been spent very effectively, which it hasn't, that throwing money at failing Brazilian banks wasn't a brilliant idea, which it wasn't, and that when President Bush slapped tariffs on imported steel he tossed principle aside, which he did.

None of this endeared him to the White House, and because everyone knows it he has forfeited his ability to speak with any authority for the administration.

That's the problem. Alcoa could buck conventional wisdom by just manufacturing more and better aluminum. But the treasury secretary can't buck conventional wisdom because it forms the world in which he must operate. And conventional wisdom wants an insider in that post.

In fact, Wall Street does need to be tended to, because there's an awful lot of money there and much of it was invested by ordinary -- and now fretful -- Americans. Washington's a political place, in case Mr. O'Neill hadn't noticed, and sardonic asides are not what's called for. Leave those to the editorial pages.

The political types at the White House finally got the message last week and ordered him to cancel a trip and to give a speech about the great work of the president and his administration. Feels better already, doesn't it?

Rah-rah, in fact, is no better than excessive jaundice, and doesn't seem to fit him, anyway. There are plenty of jobs out there that would suit Mr. O'Neill's rather admirable temperament perfectly. It's just that his current one isn't among them.

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