Treasury Secretary Snow - Adieu

So, Treasury Secretary John W. Snow has tendered his resignation and Goldman Sachs Chairman Henry Paulson has been nominated to replace him. "It has been a great honor to serve as the 73rd Secretary of the Treasury and I will always be grateful to you for the opportunity you gave me," the Secretary told President Bush.

The former chief executive officer of railroad behemoth CSX Corp., Snow became Treasury Secretary in February 2003 after Paul O'Neill was politely asked to leave. Snow was best know for his tireless work as a traveling salesman promoting President Bush's initiatives to cut taxes and reform social security, while repeatedly trying to convince a wary public that they were indeed doing quite well in a booming economy.

While the arrival of another Goldman Sachs executive in Washington should make many on Wall Street happy, somehow the idea of the CEO of one of the world's most profitable investment banks specializing in derivatives trading, where the average salary of its 22,000+ employees is over half a million dollars, might not go over very well on Main Street.

That is, of course, if anyone on Main Street had any idea what a Treasury Secretary does aside from affix his signature to the nation's currency and ask Congress to raise the debt limit every year or so.

As John Snow has been a popular subject of ridicule at this blog, today we look back at some of the things that he has said in the last year and some of the things said about him - he is missed already.

From Snow Job!, posted over one year ago, back when the perspective was clear but the writing was a bit unsure, comes one of the all-time best quotes from The Economist, from their now-classic story about crisis management in the Bush White House.

In theory, Mr Bush's economic team is headed by John Snow. The president was on the point of sacking his treasury secretary at the end of last year; he then pulled back-but only apparently to keep Mr Snow as a travelling salesman for his pension-reform scheme. The former railroad boss has recently visited such well-known global financial centres as San Antonio, Albuquerque and New Orleans.

There are two growing suspicions about Mr Bush's approach to economic policy... The first is that he sees it mainly as a question of salesmanship... The second suspicion is that loyalty is more important than knowledge.

Thankfully, there have been no crises to manage lately.

A few months later in June, aside former Fed Chairman Alan Greenspan answering questions in front a Senate panel in If There's a Crisis..., the contrast in styles was clear. That is, clearly painful to watch.

Speaking of real gems, Treasury Secretary Snow was also present for this segment of the hearing. Come next January, he' going to be the government's highest profile guy on the U.S. economy - that's a scary thought. It took the panel about a half hour to ask Snow his first question, and they probably regretted doing so - on a few occasions, when the CSPAN cameras panned back to the committee table while Snow spoke, Senators could be seen rolling their eyes.

The contrast of alternatively listening to Snow and Greenspan was fairly remarkable - Snow sounds like he's still giving his social security stump speech, picking a few phrases and just repeating them over and over. Can you imagine what former Treasury Secretary Robert Rubin must think when he hears Snow talk?

Can you imagine how easy it's going be for Henry Paulson to look good following Secretary Snow?

By August, his incessant repetition of economic talking points was wearing on many of us and in Trade and Transportation Jobs it began to show. He was referred to here as "the President's number one pitchman/carnival barker" after reading comments like this one about a jobs report.

Combined with several recent reports indicating steady non-inflationary increases in economic activity, this shows that the fundamentals of our economy are strong and that we are continuing on a positive path of growth and prosperity.

Then things turned a little silly in September as a highly placed source at the Treasury Department leaked this memo outlining Snow's Reconstruction Plan for the Gulf Coast.

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After constant prodding last fall from both conservative legislators and Wall Street economists that the White House get someone out there to tell the American people how good they have it, how swell the economy is, and how people should just be grateful for their good fortune, we heard more of what has defined John Snow's term as Treasury Secretary.

In Fool Me Twice, we heard pure, unadulterated, on-message, cheer-leading.

As we look back at our economy's strong performance over the last year, Americans have a great deal to be proud of and every reason to be optimistic about the future. More Americans are working than ever before – with nearly 4.5 million jobs created since May of 2003 – the economy has been expanding steadily by more than 3% for 10 consecutive quarters; and household wealth--the value of people's savings and homes--is at an all-time high.
...
We have every reason to believe that our path of growth and job creation will continue. We are looking forward to continued robust growth in payrolls and, as headline inflation recedes, real wage growth. I'd also expect to see continued GDP growth in the range of what we've seen over the past couple of years.

The value of real estate as the major contributor to continuing household wealth at all-time highs looks a bit tenuous at the moment, especially now that everyone's in debt up to their eyeballs and receding inflation and continued GDP growth at recent levels both look like they will disappoint. But, in fairness, the time-frame was not specified - maybe he was just talking about January 2006.

Later that month, after reading Paul O'Neill's book The Price of Loyalty, a newfound respect developed for Secretary Snow. Well, 'respect' probably isn't the right word - it was more like a new 'understanding'. These comments were offered in Paul O'Neill and John Snow.

About three years ago, when asked by the Bush administration if he wanted the job of Treasury Secretary, Mr. Snow must have rightly figured, "Well, if it's not me they'll find someone else to just parrot what the inner circle wants, and history will blame Bush and Greenspan for this mess anyway, so why not be Treasury Secretary for a few years and allow all my descendents to talk about me like I was another Alexander Hamilton".

By the time April rolled around and a new Chief of Staff had taken charge at the White House, it was clear that the former railroad chief was going to be sent packing. It was time to reflect on the Treasury Secretary's legacy. In The Snow Jobs Will Be Missed, it's clear that he was already being missed, sort of.

John T. Snow will be missed - there are few around who so brazenly push forward with clear and concise repetition of the message du jour, namely, that everything is just swell with the economy.

In these comments on last month's jobs report, we are once again presented with the kind of public relations do-goodery that his predecessor Paul O'Neil sorely lacked, and which will be hard for his successor to duplicate:

"Today's employment report showing 211,000 new jobs in March is clear-cut evidence that the President's economic policies are working.

Since the President's Jobs and Growth Act took effect, we have seen 5.2 million new jobs. This really speaks to the strength of the U.S. economy, with more Americans working than at any time in our history. Moreover, they have more money in their pockets.

The American economy is clearly moving in the right direction, and I am confident that we will remain on a good path.

Lower tax rates, especially on investment, lie at the heart of this strong expansion. The record is clear; now Congress needs to act to extend the President's tax relief and make it permanent."

The President's economic policies are clearly working, as evidenced by the 5.2 million jobs that have been created in recent years - the fact that about half of these new jobs are for granite countertop installers and mortgage loan processors is unimportant.

Loyal up to the very end, Secretary Snow had these words to say yesterday - something for us all to remember him by.

That surge in government receipts, along with the strict control on spending that you've advocated, are putting us on a path to not only meet your deficit reduction target, but to do so ahead of schedule.

Kind of like inflation, where if you exclude everything that's rising in price there is very little inflation, the repeated talk of an improving budget deficit that excludes more and more spending that exceeds revenue - this will be one of Secretary Snow's enduring legacies.

Adieu.