Three Big Questions For Paulson to Tackle As Treasury Secretary
Now that he has been confirmed by the Senate, Henry M. "Hank" Paulson Jr. moves into the U.S. Treasury with higher expectations for his performance than anyone since -- well, since Paul O'Neill.
Résumés aren't everything. Despite a perfect mix of government and corporate experience and old ties to Vice President Dick Cheney, Mr. O'Neill was done in by an abrasive personality and an unyielding White House grip on policy. Mr. Paulson believes he can do better, and also believes he'll have more clout than current secretary John Snow, who became a traveling salesman for policies made by others.
Mr. Paulson knows a lot about running an investment bank, ousting a New York Stock Exchange chief, doing business in China and watching birds. But as Sen. Kent Conrad (D., N.D.) put it at Mr. Paulson's confirmation hearing this week: "The trick ... when you come to this town with a good reputation is to keep it, and it's not always easy to do."
CAPITAL EXCHANGE
Send comments on this week's column to
capital@wsj.com. David responds to readers' letters about last week's column on Avi Kremer below in Capital Exchange.Given the erosion of the Treasury's clout, the partisanship that blocks compromise and the ticking clock on the Bush presidency, Mr. Paulson faces (at least) three big questions.
Can he square the deficit circle?
President Bush is at risk of leaving the government's long-term fiscal health worse than he found it, the result of an insistence on tax cuts, an expansion of Medicare, an inability to restrain spending on benefits and a post-Sept. 11 surge in defense spending. Mr. Paulson gets that.
If he is to accomplish anything, he needs to persuade the president that a strategy of (a) pressing to make Bush tax cuts permanent and (b) attacking annual appropriated spending, other than defense and homeland security, won't achieve the desired end. Mr. Paulson didn't deviate from the Bush line at this week's hearing. "I think it would be a big mistake to increase taxes," he said.
But the political reality is that a Republican president can hope to restrain spending on Social Security, Medicare and Medicaid only if he can bring some Democrats along. And the only way to bring Democrats along is to put taxes on the table -- maybe not increasing tax rates, but raising revenues by simplifying the tax code, closing loopholes, targeting corporate subsidies, broadening the tax base or whatever brings in more money.
Can he steer anything through Congress?
Even if Mr. Paulson gets more negotiating flexibility than his predecessors, there's Congress. Republicans are rebellious; Democrats eager to deny Mr. Bush any victory.
Business executives turned Treasury secretaries are often vexed by the peculiarities of Congress. Mr. Paulson has only a few months to figure out the game. Unless he -- and the new White House chief of staff Josh Bolten and budget director (and Hill veteran) Rob Portman -- strike soon after the November elections, chances of making progress on a long-term deficit fix are slim.
After ticking off a list of issues that made one wonder why he took the job, Mr. Paulson acknowledged: "It would be quite naive to say that these could be addressed and solved in a 2?-year period." But unless he thought he had a shot, why take the job?
Can he find the right words to cushion the dollar's fall?
It isn't clear (to me, anyhow) why the Treasury secretary's words matter so much to currency markets, but they do. Another Goldman Sachs veteran who came to Treasury, Robert Rubin, showed how to use rhetoric to steer the dollar away from the cliff while avoiding adding noise to the market. "I had to be consistent and highly disciplined in not only what I said, but precisely how I said it," Mr. Rubin wrote in his memoirs. "Affecting exchange rates unintentionally would make me look undisciplined and unsophisticated. My credibility ... could be especially critical if at some subsequent time we had a weak dollar and faced the possibility of a dollar crisis."
With so many economists anticipating a downward drift in the dollar as the global economy turns, Mr. Paulson will need to choose his mantra carefully. Swearing mindless fealty to "a strong dollar" in the current economic climate could undermine his credibility. Appearing to favor a weak dollar could start an unwelcome avalanche. And the megaphone he has been handed is far more powerful than he probably realizes.
Of course, luck helps, and there's an early sign he may be lucky. No senator asked Mr. Paulson (net worth: north of $700 million) to defend repeal of the estate tax.
鲍尔森面临三大难题
亨利?鲍尔森(Henry Paulson)已经得到参议院的认可，即将出任美国财政部长，外界对他的期待可能超过了保罗?奥尼尔(Paul ONeill)以来的任何一位财政部长。
履历并不能代表一切。尽管有著政府与企业双重工作经历的完美组合，以及同副总统迪克?切尼(Dick Cheney)的旧交，但奥尼尔仍然由于他直率的性格和白宫紧握政策大权不放的特点而疲于奔命。鲍尔森相信他能够做得更好，也相信他对政策的影响力将高于现任财政部长约翰?斯诺(John Snow)。斯诺在任职期间几乎沦为了其他人所制定政策的巡回推销员。
鲍尔森在许多领域都是行家里手，如管理投资银行、在中国经商，甚至如何将纽约证交所主席赶下台。他同时也是鸟类观赏专家。但正如民主党参议员肯特?康拉德(Kent Conrad)在本周鲍尔森的提名听证会上所述：来到这个岗位上，保持过去的荣誉是个棘手的问题，要做到这点，并不容易。
鉴于财政部长影响力的下降、难以达成妥协的两党对立，以及总统布什(Bush)的任期一天天减少，鲍尔森将（至少）面临三个主要问题。
他能够填平赤字黑洞吗？
美国政府的长期财政状况可能比布什目前看到的还要糟，这主要是由于持续减税、扩大美国老年保健医疗制度(Medicare)、不能控制福利支出，以及911事件后国防开支的飙升等因素造成的，鲍尔森也深知这一点。
如果他想完成任何事情，都需要说服总统：施加压力长期执行减税政策、攻击年度拨款而无视国防和国土安全支出这两项策略并不会得到满意的结果。而在本周的听证会上，鲍尔森并未偏离布什的立场。他说，我认为加税将是一个大错误。
但目前的政治现实是，一位共和党的总统只有在能够得到部分民主党人支持的情况下才会控制住在社会保障、Medicare和联邦医疗保险(Medicaid)方面的支出。而获得民主党人支持的唯一途径就是公开讨论税率问题──不见得是加税，而是通过简化税收规定、填补漏洞、加强公司补贴管理、扩大税收基数等各种手段增加收入。
他能通过国会这关、掌握决策的主动权吗？
即使鲍尔森比前任获得更多的话语权，也仍将面临国会的刁难。共和党人都难以对付；而民主党人则希望阻止布什取得任何一场胜利。
出任财政部长的企业领导人常常会对国会的怪癖大为恼怒。鲍尔森只有几个月的时间熟悉这种游戏规则。除非他──以及白宫办公厅新任主任乔什?博尔顿(Josh Bolten)和白宫预算办公室主任罗伯特?波特曼(Rob Portman)──在11月份中期选举后不久就能有所突破，否则在降低长期赤字方面取得进展的可能性不大。
在列出了一系列问题让人怀疑他为何要担任这个职务后，鲍尔森承认：认为这些问题能在两年半的时间里得到解决的想法是非常天真的。但除非他认为手中已有金刚钻，否则为何要揽下这个瓷器活呢？
他能找到适当的措辞缓和美元的跌势吗？
我不清楚财政部长的讲话为何会对外汇市场产生如此大的影响，但事实就是如此。另一位曾担任财政部长的前高盛(Goldman Sachs)高管罗伯特?鲁宾(Robert Rubin)解释了如何利用口头干预阻止美元的大幅下跌，同时避免给市场带来混乱。他在回忆录中写道，我不得不前后一致，不但要高度约束我应该说什么，还要准确把握应该怎么表达。无意中影响汇率会让我看起来过于随意，不够老练。如果出现美元走软，甚至面临爆发美元危机的风险时，我的信誉就显得至关重要了。
由于众多经济学家预计美元将随著全球经济的变化而走低，鲍尔森将需要仔细斟酌他的措辞。在目前的经济环境下随口说出坚持“强势美元”可能会损害他的信誉。倾向于弱势美元可能引发不受欢迎的美元暴跌。他手中的扩音器可能远比他意识到的更加强劲。
当然，有时运气也很重要，初步看来，鲍尔森可能就很幸运。没有参议员要求拥有7亿美元财富的鲍尔森对废除遗产税做出辩护。
