The Paulson Treasury Appointment

The FT reports:

FT.com / US / White House reshuffle - Bush names Hank Paulson as new Treasury chief: By FT Reporters Published: May 30 2006 14:50 | Last updated: May 30 2006 17:09: President George W. Bush on Tuesday said he would appoint Hank Paulson, chief executive of Goldman Sachs, to take over from John Snow as US Treasury secretary, in an effort to revive flagging public confidence in the handling of the economy.... For months, speculation has been mounting that Mr Snow would be leaving the administration. Though a tireless campaigner for the president's economic agenda, Mr Snow has been seen as a marginal figure within the cabinet - more an advocate than a decision maker....

Mr Paulson is expected to be a stronger figure within the administration. He has been chairman and chief executive of Goldman Sachs since June 1998. He was paid a total of $38.8m last year, $30.1m of that in retricted stock. He has worked in government before, as a member of the White House domestic council from 1972 to 1973 and served as an assistant to the secretary of defence from 1970 to 1972....

"Paulson will make a fantastic treasury secretary but it is hard to see any economic policy of consequence being made in the remainder of the Bush term," said Mark Zandi, chief analyst at Moody's Economy.com. "The president is engulfed with the problems in Iraq and the attempts at reforming social security and the tax system have fallen flat. The only possible aspiration would be to make the first term tax cuts permanent and Paulson may have the weight to help achieve this but it is a tough battle."

"The administration may hope that he will make a more effective advocate of the administration's economic policy," he added. "But it is hard to see how any message will resonate when half the US population is suffering from low wage growth, rising fuel costs and higher debt levels."

The best line I have heard on the Paulson appointment comes from Robert Waldmann:

Brad DeLong's Semi-Daily Journal: A Reality-Based Economic Policy?: Looks like [the Bush White House is] so desperate for a treasury secretary who adds rather than removes credibility that they have resorting to scraping the top of the barrel.

Of course, Paulson won't get Rubin's Job without fighting for it...