January 12, 2004

Paul O'Neill

I was never a fan of Paul O'Neill as a Treasury Security. He never figured out how to deploy or listen to his professional staff, both making himself infinitely less effective and leading to serious personnel losses that will damage the Treasury as an institution for decades to come. He did not do a good job at marshalling opposition to the steel tariff. He did nothing to raise the level of the administration's pronouncements on economics. He let himself get rolled at the start of the administration by not drawing a line in the sand and requiring a tax cut focused on improving incentives rather than getting money to the rich. He shared the Bush administration bias against even talking to our allies. He never learned that even his most thoughtless words were taken seriously--and that he should try hard to keep from using his big mouth to amplify Brazil's economic problems. He would rather spend time touring Africa with Bono than trying to nail down AIDs funding in the budget. He never seems to have bothered to learn about monetary policy. Such rhetorical gems as his attempt to trash Bob Rubin for going to Singapore and having a falling stock price.

I could go on...

But today we have another, much bigger reason to be un-fans of Paul O'Neill. If as much as one-fifth of what he says about Bush administration decision making is true--and I assure you that much more than one-fifth of it is--he had a duty to the country to submit his resignation from the post of Treasury Secretary and to tell the American people why no later than June 21, 2001:

Wall Street Journal: Suskind: Mr. O'Neill began to view Mr. Lindsey as a partisan for deep tax cuts rather than an honest broker.... He marched to Mr. Cheney's office. "Dick, I think we need to talk," Mr. O'Neill said. He reasoned that Mr. Cheney would understand the importance of establishing sound processes.... Mr. O'Neill said that he was concerned that Mr. Lindsey was masquerading as the honest broker and was anything but.... The need to really "run the traps" on every potential presidential move was more important for this Bush than for his father or Gerald Ford, both of whom had vast experience in the federal government. God knows, Mr. Cheney would understand that as well as anyone.... O'Neill sketched some notes for another serious talk he wanted to have with Mr. Cheney about effective process -- a way to handle decision making so that policy didn't get served half-baked and larded with political calculations. In his personal experience, the president didn't appear to have read even the short memos he sent over. During his weekly one-on-one with Mr. O'Neill, Mr. Bush sat, often for an hour, offering no response. He rarely asked questions in meetings. "The only way I can describe it is that, well, the president is like a blind man in a roomful of deaf people," Mr. O'Neill said. "There is no discernible connection."...

Mr. O'Neill thought about how to add fiber to the policy process in this White House, and about how to persuade Mr. Cheney to take the lead. "I realized it would be hard to find things we did with Nixon or Ford that would be applicable for this president," Mr. O'Neill said later. He recalled Mr. Bush's unresponsiveness in large and small meetings. "This president was so utterly different from those men."... "We need to be better about keeping politics out of the policy process. The political people are there for presentation and execution, not for creation." As before, Dick nodded. He thanked Paul, as always, "for his sharp insights."....

Mr. O'Neill and Mr. Greenspan both made the case that the largely bipartisan consensus on free trade was one of the great victories of the last decade; that the president would confuse many constituencies by flouting that consensus. Mr. O'Neill explained that tariffs would do little to offer long-term support to the U.S. steel industry. Mr. Greenspan pointed out that tariffs might actually violate certain World Trade Organization agreements. Mr. Cheney didn't show his hand. Mr. O'Neill left concerned that the meeting was largely tactical -- that the vice president had already made up his mind.... Mitch Daniels, the budget director, then blurted out, "If you can't do the right thing when you're at 85% approval, then when can you do the right thing? I think it's time to say no [to steel tariffs]." Everyone looked with surprise at Mr. Daniels, who had a way of expressing what others are thinking but won't say. His comment seemed to tip the room. Is there any point, Mr. Daniels's outburst implied, when the political team says they have enough advantage that they are satisfied with their franchise and not constantly twisting the arm of policy? Mr. O'Neill wondered about this as he broke his silence, which was so out of character it was drawing notice. "Well," he said, "certainly, there should be a high hurdle before we take this step" of imposing tariffs. Soon the meeting was a free-for-all. "I think we have a split here," Ms. Rice said. "Do we take this to the president?" This is what Mr. Cheney had been hoping to avoid -- a split. In fact, it was anything but a split. Nearly everyone seemed on one side; Mr. Cheney and Mr. Zoellick were on the other. A consensus on sound policy was colliding with a political favor. Secretary of State Colin Powell spoke. "Why are we thinking about doing this?" he asked in frustration. "I have heard good reasons today not to do it, but I haven't heard one good reason to move forward with tariffs. We can't even say this will improve our steel industry." Finally, it came back to Mr. Cheney. He mumbled that "imports are, in fact, way down from the surge. ... Our minimills are competitive," all arguments against tariffs. But then he added that whatever we do, the tariff-empowering statute says "we can review this in 18 months." In other words, if what we do now is go with tariffs, it will be political bait, and in 18 months -- after the 2002 midterm elections -- we can effect the switch. Meeting over....

Cheney had shown up at a few of the regular meetings of the economic team.... Now, the group was meeting on the vice president's turf. As the meeting in Mr. Cheney's office progressed, it became clear that the vice president was ready to weigh in on what the president should do to bolster the economy, and his standing with voters worried about the economy, as the second half of his term began. A package of tax proposals, led by a 50% cut in the individual tax on dividends, had been all but buried since Mr. O'Neill took his stand against it in early September.... Cheney mentioned them again, how altering the double taxation of dividends would provide some economic stimulus. Mr. O'Neill jumped in, arguing sharply that the government "is moving toward a fiscal crisis" and then pointing out "what rising deficits will mean to our economic and fiscal soundness." Mr. Cheney cut him off. "Reagan proved deficits don't matter," he said. Mr. O'Neill was speechless, hardly believing that Mr. Cheney -- whom he and Mr. Greenspan had known since Dick was a kid -- would say such a thing. Mr. Cheney moved to fill the void. "We won the midterms. This is our due." Mr. O'Neill left Mr. Cheney's office in a state of mild shock. Yes, he knew Mr. Lindsey believed this brazen ideology. And Mr. Rove, and others. But to hear it from the vice president seemed to stop the world turning. The inscrutable Mr. Cheney had finally shown himself...

Interesting how in this telling of the story it is Cheney who shows up as the heavy, uninterested in domestic policies that are good for the country and uninterested in running the kind of honest process that Cheney ran so well for Gerald Ford. (Of course, Cheney would probably say, "With this president, why bother running an honest policy development process? Do you think you would be doing anybody a favor giving this guy the honest options and making him choose one of them?"

Posted by DeLong at January 12, 2004 11:17 AM | TrackBack

Comments

So good to have the adults in charge isn't it.

Posted by: Alan on January 12, 2004 11:40 AM

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What the hell is the matter with you? Quit whining and be ecstatic he's actually talking now! All praise for Paul O'Neill for having the guts to say all this.

The problem with us liberals, and after reading this post I put you deeply and squarely into the group with the problem, is that though we're most often right, we have no idea -how- to be right and actually be heard by people.

You can't just sit there on your ivory pedestal and complain all the time. You have to acknowldege when finally someone on the other side does something good. If you don't you just destroy liberal credibility, as you are here, and ruin it for the rest of us who actually want something to change in this country.


Posted by: PaulO on January 12, 2004 11:42 AM

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You, Brad. Not you, Alan.

Posted by: PaulO on January 12, 2004 11:43 AM

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O'Neill picked a lousy way to cap off his career. He was in way over his head as Treasury secretary and Bush actually gave him a lot longer time to find his bearings than most others would have. Now he comes out with his backstabbing book. Well, like Brad says, if this was such a lousy and unprincipled Administration why did he hang on for 2 years to be fired instead of leaving on his own accord?

His efforts to slam the Administration are as weak as his job as Treasury secretary. There was a plan to attack Iraq? Uh, regime change was a stated US policy since 1998 and General Zinni put together a plan to attack Iraq during the Clinton Administration. Bush is an overly political, intellectual lightweight? Wow that's a novel line of attack. If he had high crimes and misdemeanors to reveal I would understand, but it all sounds like a classless case of sour grapes.

Posted by: Joe Blog on January 12, 2004 12:22 PM

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JB writes: "There was a plan to attack Iraq? Uh, regime change was a stated US policy since 1998 and General Zinni put together a plan to attack Iraq during the Clinton Administration."

It's not that they had a plan, it's that they had the intention.

Posted by: Jon H on January 12, 2004 12:36 PM

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"Well, like Brad says, if this was such a lousy and unprincipled Administration why did he hang on for 2 years to be fired instead of leaving on his own accord?"

This is the question that O'Neill must answer if his charges are going to stick. I think of it as the "Kerry Question," since a variation of it has dogged his presidential campaign. But unless and until O'Neill explains that he is a patriotic American trying to serve the country at the end of his career--and that based on his previous experience, he couldn't believe that the situation was as grave as his own eyes reported . . . until he makes THAT case, it might easily be chalked up as sour grapes.

But if he can make that case--and unearth a few skeletons no one suspects are in the closet--then he might be an effective weapon in removing the parasitic Bush Adminitration from the once-healthy body politic.

Posted by: jlw on January 12, 2004 12:46 PM

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PaulO is right. Come on, how many people in O'Neill's position have EVER stormed out of office on principle? That's an impossible standard.

At the same time O'Neill, while obviously unsuited for the Treasury job, was a principled and independent non-politician. A rare non-hack among this group. If anything, we should be grateful to have his eye-witness account. Will we ever get the same from Colin Powell?

Posted by: Dave L on January 12, 2004 12:47 PM

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Note also that Condi seems to have facilitated Cheney, such as in the meeting over the tariffs where she declared a split, when O'Neill is clear that it wasn't.

Also Sully seems to be propogating a Rovian spin-point that O'Neill might be basing his Iraq comments on dodgy documents. The smear machine is busy....

Posted by: P O'Neill on January 12, 2004 12:47 PM

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"Well, like Brad says, if this was such a lousy and unprincipled Administration why did he hang on for 2 years to be fired instead of leaving on his own accord?"

This is the question that O'Neill must answer if his charges are going to stick. I think of it as the "Kerry Question," since a variation of it has dogged his presidential campaign. But unless and until O'Neill explains that he is a patriotic American trying to serve the country at the end of his career--and that based on his previous experience, he couldn't believe that the situation was as grave as his own eyes reported . . . until he makes THAT case, it might easily be chalked up as sour grapes.

But if he can make that case--and unearth a few skeletons no one suspects are in the closet--then he might be an effective weapon in removing the parasitic Bush Adminitration from the once-healthy body politic.

Posted by: jlw on January 12, 2004 12:50 PM

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Brad,
I admire your intellectual honesty here. You have resisted the impulse to make O'Neil your new personal hero, and you've provided convenient links to your past opinions.

This week, we're going to be seeing a breathtaking display of ad hominem: O'Neil was a bad secretary, and therefore his reports from inside are false. I've heard some of this already, but I'm still waiting for an explicit denial of any of O'Neil's assertions.

Posted by: Matt on January 12, 2004 12:57 PM

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While that was an extremely impressive list of previous statements on the record where O'Neill was not living up to the job we would expect of a Treas. Sec., the first line in your quote of Suskind's article is why I saw at least some hope for O'Neill - as a counterweight to the partisan positions Lindsey was likely to advocate. Yes, I'd rather have Lawrence Summers taking on Lawrence Lindsey but I never really expected Bush to make such a wise appointment. Alas, O'Neill was not an effective counterweight on the fiscal issues - and he did not do enough to help Lindsey when Lindsey rightfully argued against the steel tariffs.

Posted by: Harold McClure on January 12, 2004 01:05 PM

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I think someone who has the foresight to retain access to 19,000 documents to support his disagreeemnts with his employer deserves a bit more benefit of the doubt with respect to when he quit his job.

I must admit I couldn't stop laughing when on 60 minutes Stahl reported "she found his portrait of the president unflattering."

To Which he replied..

“Hmmm, you really think so,” asks O’Neill, who says he isn’t joking. “Well, I’ll be darned.”

...way better on TV. This guy is a gem.

Still, anyone who thinks this is *just* backstabbing is kinda gullible.

Posted by: Michael Carroll on January 12, 2004 01:11 PM

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Reagan proved deficits don't matter according to VP Cheney. Maybe they did not cost Reagan-Bush in the polls, but the Reagan deficits certainly did increase deferred tax liabilities as well as reducing investment, long-term real GDP growth, real wage growth as well as contributing to poverty rates. Thankfully, the Democrats who wanted to reverse this had allied in the Republican party. As I recall, one was a Congresman from Wyoming named Dick Cheney. What ever happened to the principled Republican?

Posted by: Harold McClure on January 12, 2004 01:12 PM

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Watch out! Don't get trampled as the right wing Hackerati scramble to rationalize away yet another unwelcome dose of reality.

Posted by: Asymmetric Inflammation on January 12, 2004 01:23 PM

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A new headline on yahoo says that a full blown investigation is underway as to how O'Neill could have use the 19,000 secret documents. Now that Ashcraft has nothing to do on the Plame investigation, he watch him go after O'Neill. Ashcroft will declare him an enemy combatant. He'll try to throw him in Gitmo (only problem is that he should share a cell with Robert Novak). Watch how savage Bushy's Boys are with O'Neill as opposed to the whitewash of the Plame matter. Whether he should have resigned earlier is another issue. He probably did not care about the intention to invade Iraq at the time. This is pure revenge. You gotta like it.

Posted by: Cal on January 12, 2004 01:39 PM

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Yep, this is going to be the ne plus ultra of how the White House deals with those who turn against it. Expect a horse's head in O'Neill's bed some time soon.

(Don't forget, too, Brad, that O'Neill helped sink an agreement on the regulation of offshore tax havens.)

Posted by: ahem on January 12, 2004 02:29 PM

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Brad, please stop aiding and abetting Rush Limbaugh.

Posted by: truck on January 12, 2004 02:29 PM

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I agree with Brad that O'Neill was particularly unsuited to be Treasury Secretary. A CEO can call all the shots, decree policy from on high unchallenged. To take someone from that background (especially an old dog past retirement age) and expect them to battle like a young buck is asking too much.

They stroked his ego a few times to keep him on board for 2 years. The Bush administration did not want a Treasury Secretary engaged in policy. They wanted a robot with gravitas to run a make-no-waves daily grind. In the end they slapped him around and bruised his ego. It is remaniscent of a mafia operation from a bad TV script.

The Bush Administration has been all about using the vast resources of the US government as a slush fund to support the well connected and power lust schemes of the neo-cons. Mr. Cheney the I got mine world of the queen of business welfare where he got fat sucking on the government teat. It is all about using money and power to enrich friends in order to get more power. These people were so angry at Clinton because he would occasionally slap their hand when they grabbed for the cookie jar. These are very cynical leaders who view government as what is in it for them rather than a means of making the country better.

ONeill is no better than his corrupt former masters.

Posted by: bakho on January 12, 2004 02:37 PM

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bakho: yeah, but he has now given the Democrats the opportunity to gang up on Bush, rather than each other, about Iraq. Even those who supported the President can now say that Bush is a fraud and he needs to be removed from office because the country cannot trust him. Lieberman and Kerry should start yapping about how Bush should be impeached. They should stop stabbing each other and all go after Bush. Dean can get some mileage out of this. It was all a lie. Clark can has that he is the only one who is qualified to make sure that the mess Bush put us in is cleaned up the right way. This is good stuff, because it takes Bush & Co. off message for a bit. They must defend and deny. You know some of those documents are going to see the light of day. This is all the more reason for Cheney's energy task force records to be turned over. We'll see some more fun stuff there. Only good can come of this. Who cares how it came to be. O'Neill has enough money to defend himself and not lose any sleep. Heck, he may even be indemnified if the investigation goes nowhere. Brad is right: impeach Bush!!!!!!!

Posted by: Cal on January 12, 2004 03:07 PM

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Both might be right. O'Neill might have been a poor Treasury Secretary who stayed on far too long, and he also might have damaging information about Bush. I don't think that what Brad said damages O'Neill's testimony.

It strikes me as stupid and probably ill-intended to shift the issue from O'Neill's testimony to O'Neill himself. In the last few days we've seen the whole array of attacks on O'Neill trotted out: he's an embittered man who was fired for incompetence who really didn't know anything but released classified information to the public though of course everybody really already knew the classified information and it wasn't really at all damning anyway.

Presumably they'll whittle their attack to something more or less intelligible in the next few days. I'd be ashamed to seem to be helping them with their attack job. It seems to me that Brad wasn't doing that but that Joe Blog was.

Treat O'Neill you do any crook who turns states' evidence. Not a good guy, but he's squealing.

Apparently you're not allowed to say that Bush is stupid end disengaged now even if you're an ex-cabinet secretary of his and thus in a position to know. Where do these rules come from? Is there an 800 number we can call?

Juan Cole has interpreted O'Neill's testimony as evidence that Cheney is the brains of the administration. A lot of people have already guessed that.

Posted by: Zizka on January 12, 2004 05:02 PM

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Who said Bush was stupid? Bush is a snake, vindictive, mean and cunning. He needed that Hughes woman around to keep him from going overboard with the frat boy vindictiveness. Bush is like having JR Ewing in the WH.

Of course Bush was disengaged when O'Neill talked to him about the economy. We did not need O'Neill to know that. It is clearly reflected in his policy. Mr. Bush could care less whether Americans have jobs or how his policies affect the economy. He only cares if it costs him the election. Mr. Bush only cares to see that his well heeled supporters and campaign Pioneers get some. Hoorah for the cronies and the hell with everyone else.

My sense is a lot of people are tired of being suckers. This does not require anything at all from Mr. O'Neill. Besides, it is still 10 months before the election and this will blow over by then. The only real significance would be if Mr. O'Neill were speaking for moderate GOP who plan to sit on their hands to let the corrupt Mr. Bush go down to defeat rather than have their party tarred with his cronyism.

Posted by: bakho on January 12, 2004 05:38 PM

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O'Neill's problem with the Bush administration is that he is not a supply-sider. It is GOP dogma that the government can do nothing good to help the economy or to help poor people. O'Neill is lost in the liberal Nixonian GOP before the Southern strategy turned the GOP leadership over to the Southern rednecks and their determination to return to the plantation economy.

Posted by: bakho on January 12, 2004 05:45 PM

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bakho -

"Of course Bush was disengaged when O'Neill talked to him about the economy. We did not need O'Neill to know that."

-My God is it frightening how badly you miss the point: No, you and I may not need him to know that, but there's a good 53% of the country who DOES NEED TO KNOW IT.

"My sense is a lot of people are tired of being suckers. This does not require anything at all from Mr. O'Neill."

-God, another horribly dangerous comment: A huge number of people in this country don't know they're suckers, and they do need O'Neill, because whose opinion are they going to respond to more, yours or mine, or a Republican who spent two years at the highest ranks in the administration and came out disclosing lots of bad things and brought evidence with him.

Who cares how good a secretary he was, who cares what his motivations were going in or how long he stayed? What matters is that if people like us play this right, his revelations may change minds.

BIG PICTURE, PEOPLE.



Besides, it is still 10 months before the election and this will blow over by then. The only real significance would be if Mr. O'Neill were speaking for moderate GOP who plan to sit on their hands to let the corrupt Mr. Bush go down to defeat rather than have their party tarred with his cronyism.

Posted by: PaulO on January 12, 2004 07:20 PM

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bakho -

"Of course Bush was disengaged when O'Neill talked to him about the economy. We did not need O'Neill to know that."

-My God is it frightening how badly you miss the point: No, you and I may not need him to know that, but there's a good 53% of the country who DOES NEED TO KNOW IT.

"My sense is a lot of people are tired of being suckers. This does not require anything at all from Mr. O'Neill."

-God, another horribly dangerous comment: A huge number of people in this country don't know they're suckers, and they do need O'Neill, because whose opinion are they going to respond to more, yours or mine, or a Republican who spent two years at the highest ranks in the administration and came out disclosing lots of bad things and brought evidence with him.

Who cares how good a secretary he was, who cares what his motivations were going in or how long he stayed? What matters is that if people like us play this right, his revelations may change minds.

BIG PICTURE, PEOPLE.



Posted by: PaulO on January 12, 2004 07:23 PM

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I frankly don't know how good or bad O'Neill was at Treasury. He was a good loyal party man for a long time, that's clear. But let's think about a couple of things:

First, books don't get written and published overnight. What just came out means that O'Neill was talking to Suskind and preparing his document haul over a year ago. He stayed long enough to collect tons of stuff, organize it, and talk about it. That means he's really pissed.

Second, I think he speaks for the old-line corporate money that isn't oil. That is to say, what's left of responsible corporate leadership in this country. They've probably been worried for over a year now, unlike the diehard small-government conservatives who just got so much publicity for suddenly seeing deficits.

If the non-oil corporate leadership is unhappy, BushCo has a lot to lose. (That group could conceivably include his father, BTW-- the rumors have been flying in blogistan.)

Finally, if they have any brains, their witch hunt will be brief. The "secret" tag on the one document shown on TV is probably a blind that has nothing to do with real classifications, just to get the admin to do exactly what it's been doing. But they really may not have any brains after all.

If I were O'Neill, my real aim would be to try to get the northern and midwestern Republicans motivated against the neocon/religio-fascist takeover of the party. That's what this looks like, in partisan terms.

Posted by: Altoid on January 12, 2004 09:56 PM

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