Copyright 2000 Chicago Sun-Times, Inc.
Chicago
Sun-Times
December 25, 2000, MONDAY, Late
Sports Final Edition
SECTION: EDITORIAL; Pg. 33
LENGTH: 643 words
HEADLINE:
Why O'Neill for Treasury?
BYLINE: Robert Novak
BODY:
When it became clear that industrialist Paul
O'Neill was George W. Bush's December surprise as secretary of the Treasury,
grizzled conservative activists immediately remembered him as a doggedly liberal
civil servant battling them a quarter-century ago. But what's vastly more
disturbing about this peculiar selection by the president-elect is that the big
players in the greater arena of global finance had never heard of him.
O'Neill was on no outsider's list of possibilities for Bush's most
important Cabinet post. Financiers question whether a CEO from the old economy
truly understands the intricate market structure of the new economy. Nor is it
clear from his record that he is capable of orchestrating fiscal and monetary
policy to preserve the U.S. economy. Certainly, it will take more than the
embarrassing flattery lavished on Federal Reserve Chairman Alan Greenspan by
O'Neill in his public statement last week. Why Paul O'Neill? The easy answer is
that Vice President-elect Dick Cheney, running the transition for Bush, was
O'Neill's old colleague from Ford administration days and pushed him through
quickly with little internal debate. But this selection follows a Republican
pattern over the last 50 years of selecting unqualified successors to Alexander
Hamilton for this vital post. O'Neill by all accounts is much smarter than most
such predecessors, but at age 65 he confronts a steep learning curve.
O'Neill rose from the obscurity of the federal civil service (where his
career began during the Kennedy administration) to become associate director at
the Office of Management and Budget during the Nixon administration. By ruining
Richard Nixon's plan to eviscerate the Great Society's anti-poverty program and
establishing the independent Legal Services Corp., he won a
running battle against Nixon's political appointees. The conservative weekly
Human Events could not mention O'Neill without the adjective "liberal."
When Gerald Ford succeeded Nixon, O'Neill became OMB's deputy director
(to the horror of Human Events) and was playing with the big boys. He became a
pal of Cheney (White House chief of staff), Greenspan (chairman of the Council
of Economic Advisers) and William Seidman (economic coordinator). So awesome was
his command of governmental details that Seidman today still calls him a
"genius."
O'Neill prospered in the private sector as a masterful CEO who
drove up Alcoa's stock prices. In 1988, he wanted to be the senior George Bush's
secretary of defense and turned down the Pentagon deputy's post. He backed
President Bush's politically and economically disastrous tax increase of 1990
and lobbied for energy taxes, urging a comprehensive carbon tax on President
Clinton.
The bigger problem is whether the man from Alcoa has any notion
of global monetary deflation or what to do about it. His debut, while being
introduced last week, was not impressive. On the advice of Bush aides, the main
point he made was his friendship with Greenspan.
Following the example
set by the Clinton administration, O'Neill said he would leave monetary policy
to the Federal Reserve. But there is no law or American tradition that says the
elected representatives of the people should have nothing to do with the value
of their money. Given the widespread view that Greenspan's Fed last Tuesday
should have cut interest rates, something more than fawning admiration is needed
from the secretary of the Treasury.
"I can't imagine Paul O'Neill
figuring any of it out fast enough to do Bush any good," says consultant Jude
Wanniski. Another consultant, who disagrees with Wanniski about most everything
(and does not want to be quoted by name), agrees that O'Neill has a lot to
learn. That may not be an insurmountable barrier if he is as smart as he is
supposed to be. The question is who will do the teaching.
LOAD-DATE: December 26, 2000 
