The President has nominated Hank Paulson, CEO of Goldman Sachs, to replace John Snow as Secretary of the Treasury. In what seems to be a surprise (via Greg Mankiw) to some, Paulson agreed to be nominated. The Wall Street Journal compiled a number of quotes from Paulson over the past 6 years that indicate congruence with the Bush administration's economic policies on taxes and trade.
There are a number of things that caught my attention in the news stories. Among them:
1) Let's hear it for the home team.
Paulson is a member of Dartmouth's Class of 1960. Newly confirmed OMB Director Rob Portman is Class of 1978. I direct a Public Policy Center here--it's great to have alumni who are willing to devote themselves to public policy for some part of their professional careers and who achieve prominence. Nothing motivates students as much as an example. Consider Paulson's statement about his experience right out of business school:
When I graduated from business school in 1970, I was fortunate to begin my career in Washington -- first in the Pentagon, and later in the White House as a liaison to the Treasury and Commerce Departments. For a young man in his early 20's, it was a wonderful experience being assigned to the team that analyzed the ailing Lockheed Corp. for then Deputy Secretary of Defense David Packard, and then meeting with Cabinet officers and reporting to the President on tax policy issues. -- Investment Dealers Digest, May 22, 2000
Working in the public sector is not just good -- it's good for you.
2) Who says you need to major in Economics?
Paulson majored in English Literature. The lack of an economics degree at the undergraduate level did not seem to encumber his admission to Harvard Business School or his subsequent success on Wall Street. (This reminded me of the experience of Tim Geithner, President of the New York Federal Reserve Bank and Dartmouth Class of 1983, who majored in Government and Asian Studies.) The message to students: use your time as an undergraduate to study what interests you. The rest will take care of itself.
3) File this under "You've got to be kidding me ..."
The Washington Post story linked above contains this statement:
Bush then fanned speculation that he would tap his close friend, former commerce secretary Donald L. Evans, by taking Evans with him to Camp David for the Memorial Day weekend.
Let's hope it was a small fan, not waved particularly vigorously.
4) The Job Description
The story continues with:
But with Paulson on board, Bush believes he will have a messenger with great credibility on Wall Street who can help first deliver the message that the economy is fundamentally strong despite public misgivings and second push through a refreshed economic agenda in 2007 if Republicans hold onto both houses of Congress in the fall midterm elections.
So the Treasury Secretary is a "messenger?" More of the same later in the article:
Yet while White House officials respected Snow, they believed he was not always the most effective spokesman for their policies.
Bush aides have been enormously frustrated that the economy is growing strongly -- gross domestic product was up 5.3 percent in the first quarter -- and yet polls show that the public gives the president no credit.
Maybe because they know that it partially compensates for the 1.7 percent growth rate in the fourth quarter of 2005? Messaging to Capitol Hill or the public is a nice talent to have, but the soundness of the economic agenda is the Treasury Secretary's main responsibility. As Brad DeLong put it:
Henry Paulson is not somebody who is going to passively watch economic policy made by political operatives in the White House. This could be very good news[.]
In the absence of strong appointments at Treasury, OMB, and CEA, this is what would happen to economic policy in any administration. Paulson looks like a sound appointment all around. Let's hope it contributes to solid economic policy in the years to come.