Wealthy Frenchman

Friday, June 02, 2006

Secretary, Protect Yourself


To: Henry Paulson, Treasury secretary-designate So you decided to take the job, after all. It's no surprise that they wanted you. As the joke that's making the rounds puts it, they're so desperate they're scraping the top of the barrel. But most of us are surprised that you accepted.

No doubt you received assurances that like Robert Rubin, but unlike your predecessors in this administration, you'll get to be a real Treasury secretary. And you probably believe that those assurances can be trusted, if only because the Bush people currently need you a lot more than you need them.

But Paul O'Neill, who received tremendous acclaim from the news media when he was appointed Treasury secretary, must have believed the same thing. The fact is that you'll be treated well as long as you are perceived as someone who adds credibility with people outside the administration, and not a moment longer. Yet I'm sure you're already under pressure to say things that will fatally undermine your credibility.

Before we get to the specifics, you need to disabuse yourself of any illusion that this administration rewards loyalty. Nobody was more loyal than Larry Lindsey, President Bush's first top economist. Yet when Mr. Lindsey blurted out an inconvenient truth -- that the Iraq war was likely to cost a fair amount of money (although we now know that his estimate was only a small fraction of the true cost) -- he was fired.

And not just fired; he was fired in as insulting a fashion as possible, including snide remarks about his personal appearance. (White House aides made a point of telling reporters that Mr. Bush complained about Mr. Lindsey's failure to exercise.)

So what are you being asked to do that will undermine your credibility? Right now, I'd guess, you're being pressed to support the administration's illusions about how the economy is doing.

Americans are very unhappy with the state of the economy. According to Gallup, only 4 percent of the public considers the economy ''excellent,'' and only 25 percent considers it ''good.'' And there's good reason for this unhappiness. Although profits and C.E.O. compensation have soared, most workers are significantly worse off than they were a year ago.

The official line, however, is that it's a great economy, but that Americans for some reason aren't hearing the good news (just like they aren't hearing the good news from Iraq). Mr. Bush -- who, by the way, isn't the affable guy you may have thought you met -- doesn't seem as if he realizes that the economy isn't all that good; in his public appearances he seems peeved that he isn't getting credit for a great economy. And he expects you to explain to working Americans that the trouble they're having paying their bills is just a figment of their imagination.

Moreover, if past experience is any guide, you won't be pressured just to spin on the administration's behalf, you'll be pressured to lie.

Look at what happened to Edward Lazear, the chairman of the president's Council of Economic Advisers. Last month Mr. Lazear and another member of the council published an op-ed article in The Wall Street Journal containing this astonishing assertion: ''The president's tax cuts have made the tax code more progressive, which also narrows the difference in take-home earnings.''

Now, you can play games with the meaning of the word ''progressive,'' but by any measure the Bush tax cuts have made differences in after-tax earnings wider, not narrower. And just like that, any credibility that Mr. Lazear, a well-regarded academic without a prior reputation as a political hack, may have brought to the job was gone.

What will they ask you to lie about? Maybe you'll be asked to declare that we're on track toward a balanced budget. Or maybe you'll be asked to lie about environmental policy. Some of the administration's right-wing supporters opposed your selection because you are known as a supporter of action against global warming, so the political types might want you to throw them a bone by endorsing the administration's failure to do anything about the threat.

Right now, you're being flattered. You have a natural urge to be a team player. But if you play the game your new bosses want you to play, your credibility with the public will evaporate in no time at all. And when you're no longer useful to your new friends, you'll be tossed aside.


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