Snow Will Remain at Treasury, Tackle Tax Changes, Officials Say
U.S. Treasury Secretary John Snow, who visited 23 states to promote George W. Bush’s economic agenda and help him win re-election, will remain in the president’s cabinet at least through the middle of next year, administration officials said.
Snow, 65, will stay to help Bush fulfill a campaign pledge to simplify the 3,000-page tax code, said the officials, who asked not to be named. He will likely leave by the end of 2005, they said.
Keeping Snow on for now would reward the former chief executive of railroad company CSX Corp. for his loyalty and hand him the policy influence he’s lacked since succeeding Paul O’Neill in February 2003, said Stephen Moore, president of the Club for Growth.
“Snow’s major mission has been to get tax cuts enacted and promote the economy to the public,” said Moore, a Republican whose Washington-based group advocates lower taxes. “With that mission accomplished, tax reform will give him a much higher profile in a second term.”
Snow told reporters Oct. 28 in Wilkes-Barre, Pennsylvania, that he would stay if asked. “I’m honored to be part of the president’s cabinet and to serve in his administration,” he said.
`Needless Paperwork’
Treasury spokesman Rob Nichols declined to comment yesterday on Snow’s position. “He serves at the pleasure of the president and any discussion of his future would be part of a private discussion with the president,” Nichols said.
Bush considered personnel moves over the weekend at Camp David, a presidential retreat in Maryland, White House spokesman Scott McClellan said. Andrew Card, the president’s chief of staff, accepted the president’s request to remain in his position, McClellan said yesterday. The Wall Street Journal reported on Nov. 5 that Card was being considered to replace Snow. McClellan declined to comment specifically on Snow.
Brian Roseboro, Treasury’s undersecretary for domestic finance, said yesterday he will resign Dec. 31, becoming the first senior Treasury official to announce he won’t serve in Bush’s second term.
According to a plan released by the White House on Sept. 2, the Treasury secretary is to oversee a bipartisan panel of tax experts who will recommend changes. The panel is to be named by year’s end.
“We need to simplify the code to make it fair and encourage a strong economy,” Snow said in a Sept. 30 interview. “The president has said he wants to make this a key priority.”
Sales Tax?
Bush said at a press conference Nov. 4 he wants any changes to be “revenue-neutral” for the government. Neither he nor Snow has spelled out specific proposals.
Options include switching to a flat income tax or a national sales tax and abolishing the Internal Revenue Service, House Speaker Dennis Hastert wrote in a book published in August. At a campaign “town meeting” in August, Bush called the sales tax an “interesting” idea. He said at a later press conference that a sales tax wasn’t under consideration.
Asked on NBC’s “Meet the Press” two days ago whether a flat tax and national sales tax “would be on the table,” Bush senior adviser Karl Rove said “the president wants to look at all options.”
Snow, who holds a Ph.D. in economics, sat on the National Commission on Economic Growth and Tax Reform in the mid-1990s. That panel, chaired by former New York Congressman Jack Kemp, advocated a simpler tax system. “John is very interested in tax policy,” said Bruce Bartlett, a former Treasury economist who also sat on the committee and is now a Washington-based senior fellow for the National Center for Policy Analysis in Dallas.
Traveling Secretary
Congress last overhauled the tax code in 1986, when Republican Ronald Reagan was president. Negotiations with lawmakers overseen by Treasury secretaries Donald Regan and James Baker resulted in lower marginal income tax rates and the closing of more than $500 billion in loopholes and shelters.
Snow has served as Bush’s chief economic spokesman, lobbying Congress to pass last year’s $335 billion tax cut and traversing the nation to hail the administration’s economic record ahead of the election. While he claimed no political intent, Snow’s journeys took him mostly to so-called battleground states, including eight trips to Ohio, which tipped the election to Bush.
Of the 23 states Snow visited since January, 17 were identified by both the Bush campaign and that of his Democratic opponent, Senator John Kerry, as states either candidate had a chance to win. Among them were Florida and Pennsylvania, which Snow visited at least five times each.
Democratic Congresswoman Carol Maloney of New York last month asked the U.S. Government Accountability Office to investigate whether Snow misused government resources in making the taxpayer-funded trips.
Not Like Hoover
Snow said his travel was job-related and vital for learning how consumers and business leaders view the economy. “I’m not part of the campaign,” he said in an Oct. 27 interview on Iowa’s WMT-AM radio. “People who hold these economic policy positions, it’s important to get out and hear from taxpayers, from small businesses and people who are creating jobs and I’m not going to stop doing it because there’s an election on.”
Snow drew criticism from Democrats last month after an Ohio newspaper reported that he told a private Republican dinner it was a “myth” that Bush will be the first president since Herbert Hoover to end his term with fewer jobs than when he started. Democratic presidential candidate Kerry charged Snow with “callous disregard” for workers who’d lost their jobs.
Following O’Neill
“I regret that recent remarks of mine have been misconstrued by critics of the administration,” Snow said in a statement Oct. 13. “In my comments, I was responding to criticisms of the president’s economic policies and unfounded comparisons that are being made. Those charges are simply not credible.”
The economy added 337,000 payroll jobs in October, almost twice the number forecast, the Labor Department reported Nov. 5. That brought to 1.98 million the number of jobs created this year, in line with a prediction Snow made in October 2003 that at the time was criticized as optimistic. Bush needs another 371,000 jobs before the end of his first term in January to escape the first-since-Hoover stigma.
Snow became Treasury secretary after O’Neill was fired for opposing Bush’s tax cuts and alienating members of Congress. Snow learned from his predecessor’s mistakes and earned the respect of lawmakers and the administration when lobbying to get the 2003 phase of Bush’s tax cut program passed, said Dick Armey, a Texas Republican who retired last year as House Majority Leader.
`Diminished’ Role
“O’Neill didn’t have diplomatic skills and people just didn’t like to work with him,” Armey said. “John Snow, though, has good relations with lots of people.”
The desire to stick close to the White House’s line means Snow has been more of a “cheerleader” than policy maker, which undermines his stature, said Douglas Lee, president of Economics From Washington, a research firm in Potomac, Maryland.
“You’d have thought by now there would have been some new economic initiatives put forth, but there haven’t been any from Secretary Snow,” Lee said. “Instead he’s worked to support policies already in place.”
Snow lacks the influence of predecessors Regan, Baker and Robert Rubin, who was Democrat Bill Clinton’s Treasury secretary from 1995 to 1999, said Richard Rahn, a former chief economist at the pro-business U.S. Chamber of Commerce in Washington.
“The role of the Treasury has diminished,” said Rahn, a senior fellow at the Discovery Institute, a Seattle-based research group. “We’re not seeing much in the way of policy- making or even anyone there who could weigh in on it.”
China Peg
Snow and Bush probably will continue the U.S. policy of espousing a “strong dollar” set by markets, even as the dollar has fallen 14 percent on Snow’s watch against a basket of foreign currencies, said Michael Woolfolk, senior currency strategist at the Bank of New York. That drop is the biggest for any Treasury chief since a 34 percent decline under Baker in the mid-1980s.
The dollar fell to a record low against the euro yesterday. James McCormick, London-based head of currency strategy at Lehman Brothers Holdings Inc., told clients on Nov. 5 that regardless of what the administration says about the “strong dollar” it is `likely to continue its policy of benign neglect” and allow the currency to drop to help shrink the record U.S. current account deficit.
The Treasury Department faces other challenges, including urging Congress to make Bush’s $1.85 trillion in tax cuts permanent, shoring up Social Security, pushing for greater regulation of mortgage finance companies Fannie Mae and Freddie Mac, and continuing efforts to get China to loosen the value of its currency, pegged since 1995 at 8.3 to the dollar.
Abroad Again
Snow last month became the first Treasury chief in 20 years not to go abroad in a 12-month period. He said the U.S.’s hosting of the annual meetings of the Group of Seven industrial nations allowed him to stay in touch with his foreign counterparts. He plans to travel next week to Ireland, the U.K., Poland and Germany, the department said in a statement yesterday.
He also will advise Bush on who should fill leadership vacancies at the Federal Reserve and World Bank. Fed Chairman Alan Greenspan’s non-renewable term as governor expires in January 2006 and World Bank President James Wolfensohn’s term ends next June.