Senate Holds Confirmation Hearing For Treasury Nominee Henry Paulson
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Treasury Secretary nominee Henry M. Paulson Jr. testifies during his confirmation hearing to replace the current treasury secretary, John Snow.
updated 6/27/2006 1:10:37 PM ET 2006-06-27T17:10:37

Treasury Secretary-designate Henry Paulson pledged Tuesday to review a once secret program that allowed the government to access a massive international data base of financial information to catch terrorists financiers.

"If confirmed, I'll be all over it ... and make sure I understand the law thoroughly," Paulson, a 32-year veteran of Wall Street, told the Senate Finance Committee Tuesday, during his confirmation hearing which touched on a wide range of topics.

Sen. Max Baucus, D-Mont., was upset that the administration did not brief the Senate Finance Committee on the terror-tracking program, which has stirred some concern among privacy advocates and some Democrats.

In response to a request by Baucus, Paulson pledged to personally review the program after he takes the Treasury helm.

Paulson said that he would have to "get my arms around" the issue of a program that the Treasury Department has used to track activity by suspected terrorist financiers. He said he had not been briefed on the program, but said that weighing people's financial privacy with fighting the global war on terror is a delicate balancing act.

Paulson's nomination is not expected to hit any major roadblocks.

The panel's chairman, Sen. Chuck Grassley, R-Iowa, has said he hoped the nomination would be approved by the full Senate by the start of the July 4 congressional recess.

Democrats and Republicans on the Senate committee welcomed Paulson's nomination, citing his strong credentials for the job.

If approved as expected, the 60-year-old chairman-chief executive officer of Goldman Sachs would become Bush's third Treasury secretary since the president took office in January 2001.

Plans and promises
As Treasury secretary, Paulson also promised to improve America's global competitiveness, in part by ensuring that companies are treated fairly in trade matters and by keeping taxes down.

To help make the United States more competitive on the global playing field, Paulson said he would work to advocate policies that provide open and level markets for U.S. investment and for U.S. products.

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Paulson said the United States must come to grips with the long-term unfunded obligations of Social Security and Medicare, problems that "threaten to unfairly burden future generations."

Shoring up these entitlement programs that will face massive strains with the wave of retiring baby boomers is a "formidable challenge," Paulson acknowledged. But he expressed optimism that something could be accomplished to help this during the remaining time in the president's term.

Deficit dilemma
As to the government's bloated budget deficits, "like all of us, I wish the deficit was lower," Paulson said. While he said he would like to see spending curbed to help trim the deficit, he said the size of the budget shortfall is in the realm of historical norms. Paulson said he thought it would be "a big mistake" to raise taxes to deal with the deficit.

Bush selected Paulson to succeed John Snow, the former chief of CSX Corp., the big railroad company. Snow has run Treasury since February 2003. Beset by low job approval ratings, Bush is looking to Paulson to help energize the administration's stalled second-term economic agenda. The nomination was part of a flurry of other changes in the president's personnel lineup.

Sen. Chuck Schumer, D-N.Y., introduced Paulson to the panel, calling him a "straight shooter" and asked that the Senate confirm him promptly. Paulson praised his wife, Wendy, who sat behind him.

Personal finances
A millionaire many times over, Paulson earned $35.06 million in salary from Goldman Sachs last year, an amount that included cash and stock options.

Paulson will sell his holdings in the Wall Street firm to comply with government conflict-of-interest rules, the White House said last week. He owns 3.23 million shares of stock, worth more than $470 million. His total net worth is estimated to be above $700 million.

China and interest rates
As the president's top economic salesman, Paulson among other things will have to confront increasing trade tensions with China.

A seasoned player in the Chinese market who has taken 70 trips there, Paulson said he would push harder to get Beijing to overhaul its currency system. Critics contend that system is contributing to the United States' swollen trade deficits and the loss of U.S. factory jobs.

"We need to encourage them to move quicker," Paulson said.

On another issue, Sen. Jim Bunning, R-Ky., expressed fear that the Federal Reserve, which is expected to boost interest rates on Thursday, will push up rates too high and hurt the economy.

When asked to weigh in on that, Paulson said he has high regard for Fed chief Ben Bernanke. "So I have strong confidence that he is going to do what is right to maintain price stability consistent with long-term growth."

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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