Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Tuesday, June 06, 2006

Stan Collender Has Advice for Hank Paulson

Stan Collender has advice for Treasury Secretary nominee Hank Paulson:

Treasury secretaries have little ability to make an immediate impact. This will be especially true in your case.... The House and Senate already adopted their own versions of a FY07 budget resolution; asking them to vote again would be politically naïve and infuriate many congressional Republicans who are already extremely angry with the White House. Asking Congress to consider a new budget also would be seen as an admission by the White House that its original plan was somehow inappropriate or incorrect. As you know, this is an administration that does not like to admit that it made a mistake....

Assuming the reports are correct and you have worked out an agreement with the White House to be involved in policymaking, you will eventually [have] influence.... The problem... is that [until]... Election Day this November, everything you will be asked to do will have a short-term perspective.... The White House will be asking... the Treasury secretary to be part of its campaign effort.... [Y]our main job will be to convince everyone in the United States they’re better off economically.

This will not be an easy task.... Focus solely on official statistics and you will likely have the same problem your predecessor at Treasury did sounding credible. That’s what made Treasury Secretary John Snow sound like a cheerleader.... That made it exceptionally difficult for Snow to represent the administration on issues on which the Treasury secretary had to be taken seriously. By the time he resigned, his official messages... were both largely ignored and treated with derision....

Rubin had something you will not have: credibility... a solid reputation as one of the president’s closest advisers and as someone who could be trusted... an “honest broker.”... He did not speak publicly that often so that, when he did speak, he was listened to carefully. You will not have any of these luxuries.... [Y]our need to campaign for the president over the next five months will mean you will... be seen as being far more political....

Here are three things you should consider to deal with this predicament: First, you absolutely need to limit the spin. For example, saying the deficit is falling precipitously because it is way below the forecast made in the president’s budget may sound good on the campaign trail, but it will also irrevocably establish your credentials as a hack. Second, use good numbers... if you tell Congress a debt ceiling increase is needed by October 1, be certain that the deadline you are imposing is real. Third... start thinking about the long-term; that is, in problems and issues that will arise after George W. Bush leaves office in January 2009.... [D]emonstrating a real interest in things that will blow up in the future will make you a real asset for the country who will quickly become indispensable to the president.

It's a problem. Paulson is coming in too late for the 2007 budget cycle. The 2009 budget cycle will be--because of the presidential campaign--a placeholder. He only has one budget where he can materially affect priorities.

It's a problem.

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