WASHINGTON – President Bush moved on two fronts yesterday to demonstrate his concern about the flagging economy: nominating John W. Snow, chairman of railway conglomerate CSX Corp., as his Treasury secretary and promising a new package of tax breaks and other incentives to spur more vigorous business activity.
”John Snow has excelled as a business leader, an expert on economic policy, an academic, and as a public servant. He’ll be a superb member of my Cabinet,” Bush said at a brief White House ceremony. ”I’ll be proposing specific steps to increase the momentum of our economic recovery. And the Treasury secretary will be at the center of this effort.”
If confirmed by the Senate, Snow will replace outspoken Treasury chief Paul O’Neill, who, along with White House economic adviser Lawrence Lindsey, was abruptly forced to resign Friday. Bush and other administration officials had lost confidence in the duo’s ability to sell the White House tax-cutting agenda to the financial community and to Congress, a crucial task as the White House prepares for the 2004 election.
Concerned at the slow pace of the economic recovery, administration officials have been pulling together a plan for hundreds of billions in new tax breaks for investors, businesses, and consumers. Possibilities include proposals to address the double taxation of stock dividends, expand business tax breaks for purchasing new buildings and equipment, and moving up some personal income tax cuts already scheduled to take effect in future years under Bush’s $1.6 trillion tax cut law.
Snow, 63, is in a good position to sell that plan, given his close ties to the Bush administration, business leaders, and Federal Reserve Board chairman Alan Greenspan. An attorney who holds a doctorate in economics, he was deputy undersecretary of transportation during the Ford administration and has served as chairman of the Business Roundtable, an influential group of chief executives of the nation’s top companies.
Snow has been chief executive and chairman of Richmond-based CSX Corp. since 1989. The firm, which runs one of the largest rail networks in the eastern half of the United States, and other transportation-related services, has been a major source of campaign donations to the Republican Party. Snow has been an advocate of more rigorous financial reporting for executives.
”This is an important moment for the economy,” Snow told Bush at the White House. ”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. 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.”
The White House attempted to quickly quash one potential source of controversy, announcing Snow planned to resign his membership in the males-only Augusta National Golf Club. Women’s groups have been pressing for Augusta, host of the prestigious Master’s tournament, to expand its membership.
Bush was said to be close to naming Stephen Friedman, a former co-chairman of Goldman, Sachs & Co., to replace Lindsey, business sources said. But conservatives were upset about the choice. In a newspaper column that will run today, former Republican vice presidential candidate Jack Kemp said he was concerned that Friedman was a ”deficit hawk” who might not strongly push the White House’s aggressive tax policies. Others complained that Friedman had provided campaign contributions to Democrats, including New York Senator Charles Schumer.
”The criticism one hears comes largely from Friedman’s participation in the Concord Coalition … and the term `deficit hawk,”’ said Grover Norquist, head of the conservative Americans for Tax Reform.
”But it’s a little bit like getting mad at somebody for being in a club that doesn’t let women in. I think he joined the club to play golf, not to make a statement on women,” Norquist said.
He said that Friedman has privately assured the White House that he is ”a low-tax, spending restraint, progrowth guy who views it that’s the way to eliminate deficits.”
Lawmakers and business officials welcomed Snow’s selection as a pragmatic, if not dramatic, choice. While O’Neill was viewed by many as dismissive of Congress, Snow yesterday began calling lawmakers – including top Republicans and Democrats on the House and Senate tax-writing committees – to seek their input and answer any questions they might have.
The Senate Finance Committee is expected to hold confirmation hearings early next month, which Democrats would like to turn into a forum not just about Snow’s personal qualifications, but the economy’s performance under the Bush administration.
”I think it is encouraging that the president is reaching out to people of experience” said Senate Minority Leader Tom Daschle, a South Dakota Democrat. ”But it isn’t the names, but the plan that is of concern to us … Trickle-down economics doesn’t work.”
During the November campaign Daschle, former Vice President Al Gore, and others tried to make the economy a dividing line, pointing to the sharp stock market decline, the loss of 1.5 million jobs and growing deficits since Bush took office. But Democrats failed to make much headway, mainly because of steep intraparty divisions over their own economic platform.
The White House is hoping to form a coalition with moderate Democrats that will enable it to quickly move on new tax cuts. Democrats are hoping to keep their membership together by offering an alternative stimulus plan, focused on consumer and middle-class tax breaks such as a rebate of Social Security payroll taxes.
Snow will be in the middle in terms of selling the tax policy. What is unknown at this point is whether he would like to reshape the White House plan, and Snow’s views of a variety of topics including debt relief to developing nations, trade policy, and other issues. Manufacturers were already pressing the new nominee to move away from the White House’s stated position of a strong dollar, which they say has hurt US exports.
”The challenge now is to the Bush administration and Congress to work together on aggressive trade policies to help level the playing field for our exporters by bringing the dollar into equilibrium with market forces,” said Jerry Jasinowski, president of the National Association of Manufacturers.
Snow has a varied enough resume to where there was something to interest lobbyists and lawmakers from a variety of perspectives. For example, he was part of a business task force calling for tighter ethical standards for corporate executives. Budget hawks like the fact that Snow, as chairman of the Business Roundtable, advocated fiscal responsibility.
Conservatives pointed to his support for a complete overhaul of the tax code. Snow was a member of a 1996 task force, headed by Kemp, that called for a flat tax, making federal payroll taxes fully deductible for workers, and requiring a two-thirds supermajority in Congress to increase tax rates.
”We’re delighted with Mr. Snow … it’s hard to be better from a tax perspective,” said Chris Kinnan, director of public affairs for Citizens for a Sound Economy, a conservative group that advocates tax and spending cuts. Snow was a board member for the group.
Given the new attention to corporate ethics, Snow is nearly certain to face some grilling from the Finance Committee about his CSX compensation package, which was worth $18.1 million last year, according to Bloomberg News. Of that total, about $2.2 million was salary and bonus, while most of the rest came in stock as part of a contract extension to take Snow through his retirement in 2004.
Sue Kirchhoff can be reached at email@example.com.
This story ran on page C1 of the Boston Globe on 12/10/2002.
© Copyright 2002 Globe Newspaper Company.