December 6, 2002

O'Neill's Verbal Missteps Gave Ammunition to His Critics

ASHINGTON, Dec. 6 — When he spoke to a business group in May 2001, Treasury Secretary Paul O'Neill said the safety record of nuclear power was really very good, "if you set aside Three Mile Island and Chernobyl."

The same month, in an interview with London's Financial Times, he enunciated his old-fashioned views on thrift. "Able-bodied adults should save enough on a regular basis so that they can provide for their own retirement and, for that matter, for their health and medical needs," he said.

Remarks like those caused Mr. O'Neill's detractors to laugh derisively and his supporters to wince, but they were perfectly in character. Mr. O'Neill, a former chief executive of Alcoa, said what he thought and did not always try to be tactful.

Worse, some of his utterances were ill-timed and tone deaf. His pronouncement on retirement savings, for instance, sounded almost comical, coming from a man who had amassed a fortune in private business and did not have to choose between, say, putting a new roof on the house or taking the family on a modest vacation.

But Mr. O'Neill, who turned 67 on Wednesday, is not an easy man to pigeonhole. Most notably, he was not born to the silver spoon, a point he angrily made to Senator Robert C. Byrd, Democrat from West Virginia, who had suggested that Mr. O'Neill might be out of touch with the needs of ordinary people.

"I started my life in a house without water or electricity," snapped Mr. O'Neill who grew up poor in St. Louis. "So, I don't cede to you the high moral ground of not knowing what life is like in a ditch."

Mr. O'Neill earned a bachelor's degree in economics from Fresno State College in California and a master's degree in public administration from Indiana University. He began working as a computer systems analyst at the Department of Veterans Affairs in 1961. He later moved to the Office of Management and Budget in the White House, where he worked until 1977, serving Presidents Richard M. Nixon and Gerald R. Ford.

He joined the International Paper Company in 1977, rising to the presidency by the time he left a decade later. Then he went to Alcoa, where he worked for nine years, becoming chairman and chief executive.

In his years at the aluminum manufacturer, Mr. O'Neill revised the company's inventory controls and manufacturing processes. Profits soared.

He worked out of a small office, was a familiar figure in company cafeterias and smoothed over Alcoa's fractious relations with organized labor. "This man would make a great treasury secretary in any administration, Democratic or Republican," said one labor official who worked with Mr. O'Neill.

But early in his tenure at Treasury, he touched off a furor when he said he would keep his holdings in Alcoa, which were worth more than $100 million, and would avoid decisions that might affect his personal finances.

That went over poorly, coming from an official whose decisions would affect many businesses, and in an administration just getting under way. Eventually, Mr. O'Neill saw the light and sold his holdings.

In the summer of 2001, he said what he thought of the European Union's rejection of General Electric's proposed merger with Honeywell International: "Off the wall."

Mr. O'Neill was instrumental in negotiating a White House economic stimulus package with Congress in 2001. So he raised eyebrows and hackles when he said the House of Representatives was engaging in "show business" rather than addressing serious economic issues.

Not incidentally, the House was and is controlled by the Republican Party, President Bush's party. The Republican leader in the Senate, Trent Lott of Mississippi, soon suggested that Mr. O'Neill "needs to be careful with how he says what he believes."

Mr. O'Neill was badly bruised over the Thanksgiving holiday in 2001 — literally and figuratively.

On Thanksgiving Day, he bruised his ribs playing football with his grandchildren, badly enough that he went to the hospital.

The following Sunday, he said on nationwide television that the economy was "poised for recovery" and that the outlook for Wall Street was bright.

"I think we will see a recovery in the U.S. economy beginning early next year and growing as we move through the rest of the year," he said.

Mr. O'Neill has had plenty of company in being wrong about the economy, at least in the short term. And there are millions who believe deeply that people do not go broke betting on the future of the United States.

But that is a long-range view. Politics is often full of short-range perils and considerations. So Mr. O'Neill is out of the cabinet, on the very day that employment statistics for November — a 6 percent jobless rate — cast a new gloom over the economy.