Treasury secretary’s vulnerabilities fall into the spotlight

When Treasury Secretary John Snow resigns -- whenever that may be -- President Bush will say appreciative things about his Cabinet lieutenant, but he is unlikely to mention Hoppy Kercheval.

And that will be a shame, because if there is a defining moment to sum up loyal service to a president, especially from the finance chief of the most powerful democracy in the world, it might have occurred during the re-election fury of 2004. During drive-time hours that spring, Snow did as he was told and donned headphones to share some gab about the economy with talk-radio personality Kercheval, who hosts a two-hour program for West Virginia Metro News Network.

"Good to be with you, Hoppy!" the secretary said with persuasive warmth after walking the radio jock through the nuances of West Virginia's improving employment picture and after reminding listeners that the president's tax cuts were the "oxygen" fueling the recovery.

Or perhaps Snow's good-soldier doggedness was most prominently on display when he spent precious hours in 2005 pitching Bush's doomed Social Security accounts to high school students -- not exactly a big voting bloc or a demographic contemplating retirement. "Well, the utility of talking about the subject is that the subject is awfully important," Snow told National Journal last spring. And yet, according to some conservatives, Snow's failing is that he hasn't delivered the message that the U.S. economy is cruising nicely -- thanks to George W. Bush. The Gallup Organization reports that Bush's approval rating on the economy is hovering around 40 percent, according to five surveys conducted since December. That's up from even bleaker Gallup surveys last fall.

"I'm a big fan," a Washington Republican who declined to be named said of the secretary. "He understands how Washington works. I think he's respected on the Hill. He deals with members well, and he espouses the administration's line. That's a gift, and he certainly does it much better than his predecessor -- I think he's good at it." Snow, who will be 67 in August, replaced the ousted and outspoken Paul O'Neill in 2003.

Referring to Bush's senior advisers, a former White House aide familiar with Snow and the rest of the economic team said, "I just don't think they view him as the force that they think he should be, either intellectually or as a communicator. He would have been gone two years ago if they could have found a replacement."

And therein rests the awkward circumstances that drove Snow into the headlines a year ago when "sources" whispered to journalists that he was precipitously close to Bush's hand-tooled boots. Snow never budged, and word went out that the secretary had his share of defenders, including the president and Chief of Staff Andy Card, who will leave the White House on April 14.

With Card's departure and the ascension as his successor of Goldman Sachs alum Joshua Bolten, who heads the Office of Management and Budget, Snow's perceived vulnerabilities are back in the headlights.

And it did not help that the president appeared this week to leave Snow hanging in limbo. Asked Tuesday about Snow's rumored departure, Bush reminded a reporter, "Secretary Snow is here at the table." Without looking at Snow, Bush added, "I'm glad you brought him up. He has been a valuable member of my administration, and I trust his judgment and appreciate his service."

And with that, Bush said he looked forward to Bolten's "recommendations as to how to get this White House to -- for the last two and a half years of my administration -- continue to function in an effective way."

Washington lost no time in picking apart the significance of Bush's carefully selected words -- and the verb tense: "has been a valuable member." Republican sources-with-sources-close-to-the-White House said the president is pondering a new secretary who will impress business and financial titans and who can more nimbly "sell" economic news. The White House wants Americans to feel that they are prospering under the GOP's economic policies, and its masterminds think Treasury can somehow calm financial markets' gyrations under those same policies and during an expensive war.

What is nearer the truth, according to sources close to the secretary, is that Snow wants to leave after putting in his three years, which is an average tenure for a Treasury secretary, and he has privately told the White House that he hopes for a smooth transition, on Bush's terms, when a nominee can be announced. The search is still under way. "That would be like Snow," said a former administration official. "He's a gentleman. This forced-out stuff is hogwash."

Treasury spokesman Tony Fratto declined to comment.

Snow's detractors insist that he is being pushed. "The White House staff keeps leaking stories that he needs to go, hoping that he'll get the message and do the right thing and resign," said another former administration aide.

The same former White House official who has worked closely with Bush's economic team said, "They want somebody from New York City. They are looking for Wall Street experience and a good communicator, and I think beyond that, everything else is open, and I would include Democrats in that."

The problem, this former aide added, is that Bush is looking for a loyal salesman at Treasury, while his advisers continue to run economic policy out of the West Wing through Economic Adviser Al Hubbard, who graduated from business school with the president. That scenario -- of a new Treasury secretary kowtowing to an embattled second-term White House -- is not catnip to the Wall Street executives who reportedly have been approached for signs of interest in the job or who are mentioned in the press.

The names raised by Republican sources and former White House aides are mostly speculative and come from the Bush re-election campaign's top banking and financial "Rangers" and "Pioneers." They include Stanley O'Neal, chairman and chief executive of Merrill Lynch, who is a legend in GOP circles for sending a letter to his company's executives that raised nearly $280,000 in under a month for the Bush-Cheney ticket; Henry Paulson, chairman of Goldman Sachs Group, who in previous GOP administrations worked in the Pentagon and the White House and who knows Vice President Cheney; and John Mack, who is the chairman and chief executive of Morgan Stanley.

Richard Parsons, the chief executive of Time Warner and the co-chairman of Bush's 2001 Social Security reform commission, turned down a White House entreaty, according to news reports. Paulson's colleagues told reporters that he had not been approached but said their boss had told them he wasn't interested. Mack told employees this week that he is staying put, according to a newswire. "O'Neal," one GOP source said in an interview, "would be a grand slam. He is a very impressive guy." Democrats agreed in interviews this week that O'Neal, who has been with Merrill Lynch since 1986, would be a "get" -- but said he would not consent to being a figurehead in any administration.

"They are going to have to make it more attractive," said the former Bush aide who knows the president's economic team. While no Bush Cabinet secretary has carte blanche to operate outside of West Wing supervision, "the White House could be less hands-on with someone they viewed as the kind of person they are looking for, someone with significant Wall Street and business acumen," he added.

But economists and business leaders suggest that getting a stellar secretary to succeed Snow is a challenge, and not just because Bush's team is insular or because conservatives have talked themselves into believing that a Treasury secretary's job is to somehow persuade voters that economic growth should make them feel better about their stagnant wages.

"There are elements and threads of things they want to do," said Alan D. Levenson, the chief economist for T. Rowe Price Associates, who added that if the president doesn't make an economic policy message a priority, that handicaps any Treasury secretary. "What's the plan? What are the problems? What happened to addressing poverty and the racial dimension that Bush spoke so movingly about in the wake of Hurricane Katrina?"

W. Bowman Cutter, a co-chairman of the Committee for Economic Development and a Democrat who served in the White House during President Clinton's first term, said in an interview that the current political and global climate would give any CEO pause. Cutter said a modest but nevertheless important achievement for the next Treasury secretary would be to help detoxify the partisan atmosphere in Washington so that a future president can tackle the big problems that inevitably require bipartisanship. And from that standpoint, picking someone from Wall Street may be a smart move, he said, because the financial sector may harbor the last remnants of centrism.

"If you're in the middle of a deteriorating war that's unpopular in much of the rest of the world, and the political atmosphere is as poisonous as it is, if you're Treasury secretary, you're not going to get much done."