The nomination of Henry Paulson

The conservative base of the GOP is in a surly mood, angry at President Bush and assorted members of Congress over immigration and border issues, disappointed with runaway spending, and frustrated over the continuing carnage in Iraq. So it is unsurprising that President Bush's nomination of Henry Paulson to be Secretary of the Treasury has already provoked furious opposition among some conservatives.

Will Paulson nomination become another flashpoint, as Harriet Miers was, with the base demanding withdrawal? The early signs suggest the answer is no, though certain questions will have to be answered.

Human Events Online has been out in front of the opposition to the nomination, pointing out that prior to 2000 Paulson donated money to Democrats including the widely—detested Chuck Schumer. Paulson's support for the Kyoto Protocols and his role in the Nature Conservancy, including shepherding a substantial corporate donation from Goldman Sachs, has led Steve Milloy to write that Paulson 'has demonstrated little respect for private property rights' and to question 'ethically, and perhaps legally, questionable business practices.'

No doubt the Nature Conservancy and the specific donation cited by Milloy will be the proper subject of questioning during confirmation hearings. It should be noted that the Nature Conservancy purchases land for conservation, eschewing the approach of regulatory seizure via governmental limitations on development. And Goldman Sachs may well have a business interest in promoting the trading of carbon credits under the Kyoto regime. Paulson will have the opportunity to explain himself to the Senate and the nation on these matters.

Paulson does bring some substantial assets to the job. He occupied the same office as Robert Rubin as head of Goldman Sachs with great success, and now will be seen as having the potential to duplicate Rubin's record at Treasury, sparking a stock market revival and pushing for spending controls. Great financiers, since the days when J.P. Morgan rescued America from a Wall Street panic, and continuing through to Bernard Baruch and others, have long had the ability to win praise for managing the economy.

Paulson has had a close involvement with China, and serves on the advisory board of a business school there (he is a Harvard MBA himself, like the President), and has traveled there extensively, with many contacts in influential positions. As trade issues and China's massive purchases of federal debt are increasingly relevant to federal finances, Paulson's China background and connections may be particularly helpful 

Paulson has a reputation as a deficit hawk, and his counsel in achieving a balanced budget may be particularly welcome at this moment of financial uncertainty over inflation and continuing worry over the need for federal borrowing. His recent political donations have been true to the GOP.

Perhaps most importantly, Paulson has a reputation as an extraordinary salesman. As a young investment banker in Chicago, he worked tirelessly to win big important clients for Goldman Sachs, and achieved enough success to propel a career vector to the top of his firm, widely regarded as the most astute on Wall Street. President Bush has gotten little credit for the excellent performance of the economy, and a new Treasury Secretary may help him and the GOP win some respect, while extending the good performance and reassuring Wall Street that fiscal policy is in good hands.

White House Chief of Staff Josh Bolten is a Goldman Sachs veteran, and it is reasonable to speculate that his role in approaching and persuading Paulson to accept the nomination was very prominent. That a man as successful as Paulson is willing to give up the leadership of the most successful firm on Wall Street in favor of public service is an implicit compliment to President Bush, as the New York Sun notes this morning:

Our own view is that Mr. Paulson's decision to accept the nomination — after months of insisting publicly that he was not interested — says something remarkable about America and the Bush administration. As chief executive of Goldman Sachs, Mr. Paulson was the top guy at the top bank in the top city in all of capitalism. He earned more than $38 million last year. Yet, at age 60, he's stepping down to join the final two years or so of the Bush administration, going to work for a president with approval ratings in the mid—30s who has, by many accounts, so far not made the Treasury Department particularly central to policymaking.

In brief remarks yesterday, Mr. Paulson sounded the right note. "Our economy's strength is rooted in the entrepreneurial spirit and the competitive zeal of the American people, and in our free and open market," he said. The Treasury Department can play an important role not only in economic policy but also in the financial aspects of the war on Islamist terrorists. If confirmed, if Mr. Paulson does as good a job leading the Treasury as he did leading Goldman Sachs, he'll be an asset to the administration and to the country.

I look forward to the confirmation hearings, with great hope for this nomination. Let the  appropriate questions be asked and answered, and let advise and consent responsibilities be wisely discharged. 

Thomas Lifson     5 31 06

The conservative base of the GOP is in a surly mood, angry at President Bush and assorted members of Congress over immigration and border issues, disappointed with runaway spending, and frustrated over the continuing carnage in Iraq. So it is unsurprising that President Bush's nomination of Henry Paulson to be Secretary of the Treasury has already provoked furious opposition among some conservatives.

Will Paulson nomination become another flashpoint, as Harriet Miers was, with the base demanding withdrawal? The early signs suggest the answer is no, though certain questions will have to be answered.

Human Events Online has been out in front of the opposition to the nomination, pointing out that prior to 2000 Paulson donated money to Democrats including the widely—detested Chuck Schumer. Paulson's support for the Kyoto Protocols and his role in the Nature Conservancy, including shepherding a substantial corporate donation from Goldman Sachs, has led Steve Milloy to write that Paulson 'has demonstrated little respect for private property rights' and to question 'ethically, and perhaps legally, questionable business practices.'

No doubt the Nature Conservancy and the specific donation cited by Milloy will be the proper subject of questioning during confirmation hearings. It should be noted that the Nature Conservancy purchases land for conservation, eschewing the approach of regulatory seizure via governmental limitations on development. And Goldman Sachs may well have a business interest in promoting the trading of carbon credits under the Kyoto regime. Paulson will have the opportunity to explain himself to the Senate and the nation on these matters.

Paulson does bring some substantial assets to the job. He occupied the same office as Robert Rubin as head of Goldman Sachs with great success, and now will be seen as having the potential to duplicate Rubin's record at Treasury, sparking a stock market revival and pushing for spending controls. Great financiers, since the days when J.P. Morgan rescued America from a Wall Street panic, and continuing through to Bernard Baruch and others, have long had the ability to win praise for managing the economy.

Paulson has had a close involvement with China, and serves on the advisory board of a business school there (he is a Harvard MBA himself, like the President), and has traveled there extensively, with many contacts in influential positions. As trade issues and China's massive purchases of federal debt are increasingly relevant to federal finances, Paulson's China background and connections may be particularly helpful 

Paulson has a reputation as a deficit hawk, and his counsel in achieving a balanced budget may be particularly welcome at this moment of financial uncertainty over inflation and continuing worry over the need for federal borrowing. His recent political donations have been true to the GOP.

Perhaps most importantly, Paulson has a reputation as an extraordinary salesman. As a young investment banker in Chicago, he worked tirelessly to win big important clients for Goldman Sachs, and achieved enough success to propel a career vector to the top of his firm, widely regarded as the most astute on Wall Street. President Bush has gotten little credit for the excellent performance of the economy, and a new Treasury Secretary may help him and the GOP win some respect, while extending the good performance and reassuring Wall Street that fiscal policy is in good hands.

White House Chief of Staff Josh Bolten is a Goldman Sachs veteran, and it is reasonable to speculate that his role in approaching and persuading Paulson to accept the nomination was very prominent. That a man as successful as Paulson is willing to give up the leadership of the most successful firm on Wall Street in favor of public service is an implicit compliment to President Bush, as the New York Sun notes this morning:

Our own view is that Mr. Paulson's decision to accept the nomination — after months of insisting publicly that he was not interested — says something remarkable about America and the Bush administration. As chief executive of Goldman Sachs, Mr. Paulson was the top guy at the top bank in the top city in all of capitalism. He earned more than $38 million last year. Yet, at age 60, he's stepping down to join the final two years or so of the Bush administration, going to work for a president with approval ratings in the mid—30s who has, by many accounts, so far not made the Treasury Department particularly central to policymaking.

In brief remarks yesterday, Mr. Paulson sounded the right note. "Our economy's strength is rooted in the entrepreneurial spirit and the competitive zeal of the American people, and in our free and open market," he said. The Treasury Department can play an important role not only in economic policy but also in the financial aspects of the war on Islamist terrorists. If confirmed, if Mr. Paulson does as good a job leading the Treasury as he did leading Goldman Sachs, he'll be an asset to the administration and to the country.

I look forward to the confirmation hearings, with great hope for this nomination. Let the  appropriate questions be asked and answered, and let advise and consent responsibilities be wisely discharged. 

Thomas Lifson     5 31 06