Snow pledges to bolster recovery
12/10/2002WASHINGTON - John William Snow, 63, a balding, no-nonsense Washington insider responsible for making some of the nation's trains run on time, was tapped by President Bush yesterday to be his senior economics official as Treasury secretary.
Mr. Snow could face some tough questioning on Capitol Hill during confirmation hearings next month but is likely to be confirmed by a Senate that will be under control of Republicans.
A Toledo native and 1962 graduate of the University of Toledo, Mr. Snow is chief executive officer of CSX Corp. and chairman of the Business Roundtable, a powerful group of business leaders.
The White House quickly said Mr. Snow will resign his membership in the male-only Augusta National Golf Club, and Mr. Bush stressed his belief that Mr. Snow is an ethical CEO.
Both points were designed to wave off two hot-button issues before they got fanned into a fire that could hurt the nominee. The country club, which sponsors the prestigious Masters golf tournament, is under heavy criticism for refusing to admit women, and the public is wary of business leaders because of the recent corporate scandals.
Mr. Snow is a buttoned-down CEO: He fired two of his top officers in 2000 after a federal agency found problems with track safety at the largest railroad in the eastern United States, which he oversees.
And he knows how to play politics in Washington. A quarter of a century ago in the Ford administration he was deputy undersecretary of the Department of Transportation and administrator of the National Highway Traffic Safety Administration.
Mr. Snow has a doctorate in economics from the University of Virginia and a law degree from George Washington University Law School.
He lives in Richmond, Va. - only 96 miles from Washington - has helped raise money for the Kennedy Center and is a member of the elite Chevy Chase Club and Metropolitan Club.
He is an Episcopalian and a multimillionaire. According to papers at the Securities and Exchange Commission, last year he was paid a $1.2 million salary, a $1 million bonus, and stock options worth $8 million. Leading the Business Roundtable is considered a mark of business and political savvy, an icon of the establishment.
Unlike Paul O'Neill, the Treasury secretary who abruptly resigned Friday after being pressured to do so by Vice President Cheney, who originally offered him the job, Mr. Snow has good relations with key members of Congress and with Mr. Cheney. Less than two hours after Mr. Bush announced his nomination, Mr. Snow had made 20 calls to members of Congress.
Morris Reid, managing director of Westin Rinehart, a business and political consulting firm in Washington, said Mr. Snow has “a solid reputation'' as chairman of the Business Roundtable, a “stellar” reputation on Wall Street, and is “the right man for President Bush.''
Whether he is the right man to boost the economy, Mr. Reid said, remains to be seen. He said he was surprised that Mr. Bush put a business leader in at Treasury. Wall Street expert Stephen Friedman will replace Mr. Bush's chief economic adviser, Lawrence Lindsey. Mr. Friedman helped run Goldman Sachs & Co., the same firm that Robert Rubin, former President Clinton's respected Treasury secretary, came from.
Wall Street did not like Mr. O'Neill and lobbied hard for a Wall Street expert at Treasury.
Nevertheless, Wall Street gave Mr. Snow a hard welcome, ending the day down more than 2 percent with NASDAQ off by nearly 4 percent.
Sen. Charles Grassley (R., Iowa), incoming chairman of the Senate Finance Committee, said on CNN that Mr. Snow is bold, which was demonstrated when he moved quickly to buy CSX's rival Conrail, although the deal caused chaos at CSX, sparking lower stock prices and complaints by shipping firms. Eventually, CSX and Southern Norfolk split the $10 billion deal.
Senator Grassley said, “I think Mr. Bush feels he needs a spokesperson who is willing to make bold moves.''
The major complaint with Mr. O'Neill, who was credited with turning Pittsburgh-based Alcoa into a more stable, profitable corporation, was that he was considered a weak messenger for Mr. Bush's economic agenda: wider, deeper tax cuts.
After pushing Congress to enact Mr. Bush's plan for $1.35 trillion worth of tax cuts over 10 years, Mr. O'Neill is not convinced a second round of broad cuts is a good idea.
Mr. Snow vigorously supports more tax cuts, and Mr. Bush next month is expected to announce an “economic stimulus'' package of $300 billion in more tax cuts over the next decade. The idea is to cut taxes on stock dividends, to encourage market speculation, and give business more tax incentives to expand and buy new equipment.
Mr. Bush stressed that Mr. Snow is no recent convert to ethics and “has a deep, long-standing commitment to ethical corporate governance.''
Mr. Bush said Mr. Snow would be a “superb'' member of his cabinet. Although the President had asked Mr. Cheney to have Mr. O'Neill and Mr. Lindsey leave, Mr. Bush said, “Paul and Larry are two of the most fine, honorable, decent men I've ever served with. They can be proud for all they have done for their country.''
Immediately showcasing himself as a team player, Mr. Snow said, “Thanks to your leadership and this administration's stewardship of the economy during a tough time, the recession was one of the shortest and shallowest in modern economic history.''
Mr. Snow said he understands that “we cannot be satisfied until everyone - every single person who is unemployed and seeking a job - has an opportunity to work. I pledge to you to use all my talents, my power, my energy, and my ability to strengthen the current economic recovery and create an environment where millions of job-creators - those small businesses and partnerships and medium-sized businesses and large businesses - and investors, all across America, will grow and prosper.''
Finally, he said, “I also understand the importance of working closely with other countries to build and maintain a prosperous, growing, and stable global economy as we successfully prosecute the war on terror.''
But The Economist magazine displayed skepticism yesterday in its editorial, which said, “Unusually among senior businessmen, [Mr. Snow] favors treating stock options as an expense on company balance sheets. His management style is said to be consensual. However, Mr. Snow's own business record is mixed. Unlike Mr. O'Neill, who was credited with having turned around Alcoa, an aluminum company, before joining the administration, Mr. Snow's CSX is not a shining example of corporate efficiency. Its acquisition of part of Conrail, a rival, has not proceeded smoothly. And it has the worst operating ratios among North American rail companies.''
Mr. Bush said he hopes the new GOP-controlled Senate that convenes next month will move quickly to confirm Mr. Snow so he can get to work to promote the administration's policies.
Democrats are likely to ask Mr. Snow about a speech he made in 1992 when he said, “The American political system, at the national level, is not working.
“There is no greater example of the system's inability to address basic issues than the federal deficit.''
With deficits back again, Senate Democratic leader Tom Daschle (D., S.D.), who thinks another round of tax cuts is irresponsible, will probably see that Mr. Snow is asked to explain why a deficit was bad in 1992 but not now.