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Bush taps Snow to head Treasury

President Bush introduces John Snow as his nominee for Treasury secretary, replacing Paul O'Neill, who resigned last week.
President Bush introduces John Snow as his nominee for Treasury secretary, replacing Paul O'Neill, who resigned last week.
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On the surface at least, John Snow’s career has followed a path remarkably similar to that of Paul O’Neill, the man he is about to replace as Treasury secretary. Many in the financial community consider that a clear sign that President Bush, in shaking up his economic team, is more interested in changing the messenger than the message.

Like O'Neill at the time of his appointment two years ago, Snow is a wealthy, 60-something chief executive of a huge industrial concern whose last significant government service was in the 1970s.

While O’Neill came to Washington with a reputation as a business wizard who successfully turned around aluminum giant Alcoa Inc., Snow brings a mixed record from his nearly 15 years as the head of CSX Corp., a railroad and freight transportation company. But with his background as a government relations expert in one of the nation’s most heavily regulated industries, Snow is considered to be a smooth operator on Capitol Hill who will project a more dynamic public image than the cerebral and often blunt O’Neill.

“I think the big difference is just the personality type,” said Greg Valliere, chief strategist for Schwab Washington Research Group. “While O’Neill was more reserved, this guy is very outgoing. And he has friends on Capitol Hill, which is another difference between him and O’Neill, who had almost no support at the end.”

O’Neill was abruptly dismissed by President Bush on Friday along with Larry Lindsey, the top economic adviser at the White House.

In addition to his experience as an industrialist, Snow’s resume includes a Ph.D. in economics, a law degree and a background as a college professor. In nominating him Monday, Bush praised him for excelling “as a business leader, an expert on economic policy, an academic and as a public servant.”

Snow credited Bush and his administration with shepherding the economy through a recession that was “one of the shortest and shallowest in modern economic history.”

“Yet I strongly share your view that we cannot be satisfied until everyone, every single person who is unemployed and seeking a job, has an opportunity to work,” Snow said at a brief public appearance.

Snow has been active in Republican politics, backing the presidential bid of Arizona Sen. John McCain before throwing his support behind Bush, and as a business lobbyist. But he is not considered to be an ideologue, making him a strong choice for the job of selling Bush’s new economic plan to Congress, Wall Street and the American public.

With the economy growing anemically and unemployment up sharply last month to 6 percent, the stakes have risen dramatically for an administration that has been preoccupied with the war on terrorism and finds itself increasingly vulnerable to criticism for its failure to get a handle on the economy.

Details of a plan to revive the economy with another round of tax cuts already have been leaked to the press, indicating that Snow likely will have little role in crafting the plan that will be proposed to the Republican-controlled Congress early next year. Instead he will be more of a cheerleader for the Bush plan, along with Stephen Friedman, the Wall Street executive who is expected to be named shortly to replace Lindsey.

“The stimulus package has pretty much been decided,” Valliere said. “These guys are not going to be that involved in policy formulation.”

Kim Wallace, a Lehman Bros. political analyst, said the appointment of Snow represents “a message of continuity” from an administration looking for a fresh spokesman on economic issues.

“He’s going to be more private and more quiet about any disagreement he has with the president,” Wallace said of Snow. He added that Wall Street would be pleased with the appointment of Friedman, a former top executive at Goldman Sachs, whom, he said, is widely trusted.

While Snow has a strong resume as an industrialist it certainly is not unblemished. After being nominated by Bush on Monday he resigned his membership in Augusta National Golf Club, the elite host of the Masters Tournament, which has come under harsh criticism recently for its refusal to admit women.

And Citizens for Tax Justice, which advocates a progressive overhaul of the nation’s tax system, criticized Snow on Monday as a “corporate freeloader,” saying CSX has paid no federal income taxes in three of the past four years and has gotten a net $164 million in tax rebates despite posting $934 million in profits.

Snow has a record as a “hawk” who opposes excessive federal budget deficits, but his company’s record on taxes proves his anti-deficit position is nothing more than “empty rhetoric,” said Robert McIntyre, director of the tax group. A spokesman for CSX was not available for comment.

Snow and Friedman likely will be promoting a plan that will include accelerated depreciation on corporate investments, reduced taxation on stock dividends and a possible increase in the child-tax credit. But not everyone is convinced an aggressive stimulus plan is needed or can make a timely difference.

“By the time (tax cuts) get decided, voted into law, implemented, and the private sector can react to them, the conditions that argued for stimulus have passed,” said Don Straszheim of Straszheim Global Advisors. And a large fiscal stimulus package now will make it more difficult to enact meaningful tax reform later, he said.

Wall Street analysts were uncertain what Snow’s appointment might mean for the U.S. dollar. O’Neill frequently was criticized for roiling global currency markets through his failure to clearly articulate U.S. policy.

Valliere noted that Snow is a member of the Business Roundtable, a group that generally advocates a weaker dollar as way to boost U.S. exports.