WASHINGTON—President Bush looked to Wall Street for a new Treasury Secretary on Tuesday, nominating Goldman Sachs Chairman Henry Paulson for the government's top economic job.
If confirmed by the Senate, Paulson will replace John Snow, who'd been expected to leave for months. The nomination broke Bush's pattern of relying on captains of industry for economic advice and sent a reassuring signal to financial markets.
Paulson, who goes by "Hank," is arguably the most influential executive on Wall Street, the market's equivalent of a rock star. Associates said he'd initially rebuffed Bush's overtures, but had changed his mind after winning assurances that he'd have an influential role in shaping economic policy.
"The American economy is powerful, productive and prosperous, and I look forward to working with Hank to keep it that way," Bush said in announcing his choice. "Hank will be my principal adviser on the broad range of domestic and international economic issues that affect the well-being of all Americans."
The job of treasury secretary is traditionally one of the most powerful in government, touching on tax collection, federal spending, the financial markets, international trade and, in recent years, efforts to cut off terrorism financing. The secretary also serves as the president's chief spokesman on economic issues, a role that often influences financial markets.
Republicans and Democrats were united in their praise for the nomination. Sen. Charles Schumer, D-N.Y., a member of the Senate Finance Committee, called it "the best pick America could have hoped for."
House Majority Leader John Boehner of Ohio said Paulson "is unrivaled in terms of experience and knowledge of the American economy."
Although Paulson is expected to win Senate approval with little difficulty, Democrats signaled that they'd use his confirmation to highlight troubling aspects of the nation's outwardly strong economy.
The economy grew at annual rate of 5.3 percent during the first three months of this year—the fastest in more than two years—but rising energy prices have cast a shadow on the good news.
"We need to work together to make middle-class life more affordable. I hope Mr. Paulson will share that goal," Senate Democratic leader Harry Reid of Nevada said.
Paulson, 60, has a reputation as a driven, highly competitive chief executive who can terrify and inspire employees. A 2002 Business Week profile said some Goldman Sachs workers avoided riding in elevators with him to escape his probing questions.
"If you are in the Treasury (Department), don't plan on getting a lot of sleep for the next few years because Hank will have you doing a lot of things. He's not a guy who engages in down time," said Robert D. Hormats, the vice chairman of Goldman Sachs (International) in New York.
Paulson made about $31 million last year in salary, stock and other compensation as chairman of the investment bank. He's also the investment giant's biggest individual stockholder, with company stock currently valued at more than $100.8 million.
Born on a farm outside Chicago, Paulson is a Christian Scientist who neither smokes nor drinks alcohol. He's an avid conservationist who escapes the pressure of Wall Street by fly-fishing and bird-watching. He's also the chairman of the Nature Conservancy, an international organization that seeks to preserve natural areas for animals and plants.
Some speculated that Paulson would prod Bush to be more aggressive in reducing auto emissions and dealing with global warming.
"His commitment to environmental causes, such as fighting global warming and excess auto emissions, is legendary," said Sen. Judd Gregg, R-N.H., the chairman of the Senate Budget Committee.
Others said Paulson's environmental work made him a bad choice to head the Treasury Department. A handful of free-market groups objected in April when rumors circulated that he was under consideration for the job.
Other critics have questioned the Nature Conservancy's use of federal tax breaks and its ties to for-profit businesses. The conservancy changed some of its business practices after a series of articles about it by The Washington Post in 2003.
"No conservative administration should consider appointing anyone who works for the Nature Conservancy to any position, and certainly not to one carrying the high responsibilities of treasury secretary," said Myron Ebell, a spokesman for the Competitive Enterprise Institute, a free-enterprise group that generally opposes government action to combat global warming. "We hope that President Bush will come to see the mistake he's made."
Paulson said his goal was to help the United States maintain its "competitive edge" in the global economy that he'd helped create through his work at Goldman Sachs.
"The whole world is dependent upon the U.S. economy as the major engine of its growth," he said. "It is truly a marvel, but we cannot take it for granted."
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(c) 2006, Knight Ridder/Tribune Information Services.
PHOTOS (from KRT Photo Service, 202-383-6099): HENRY PAULSON
GRAPHIC (from KRT Graphics, 202-383-6064): 20060530 TREASURY bio
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