The Rittenhouse Review

A Philadelphia Journal of Politics, Finance, Ethics, and Culture

Friday, August 02, 2002  

Treasury Secretary Playing Out of His League

We never thought Paul O’Neill was a particularly good choice to head the Treasury Department and with each passing week we find our initial instincts vindicated. In fact, we believe the time has come for Secretary O’Neill to resign.

The Washington Post weighed in with a smart editorial on this topic on Thursday, August 1, entitled “Mr. O’Neill’s Gaffes.” Although the Post did not suggest O’Neill resign nor did it call for the White House to replace him, the editors may as well have done so, given the tone of their remarks, not one of which we can disagree with.

“On Fox News last Sunday, Treasury Secretary Paul O’Neill declared that, by the president’s designation, he is the administration’s chief spokesman on the economy. It is not a role at which he excels,” the editors wrote, in a masterful understatement.

“In the very same program, Mr. O’Neill made comments that contributed to a fall of more than 5 percent in the value of Brazil’s currency the next day and triggered a formal protest from Brazil’s government,” the editors continued. “This was Mr. O’Neill’s second gaffe on Brazil in the space of five weeks. At the end of June, the treasury chief said he opposed fresh International Monetary Fund loans to Brazil because its problems were ‘political.’”

Treasury Secretary Paul O’Neill

Then, after having upset the Brazilians, their neighbors, and the currency markets, O’Neill did virtually the same thing again. “After that remark, the Treasury issued a regretful statement expressing confidence in Brazil’s economic management. But the episode did not prevent Mr. O’Neill from jumping into more hot water last weekend,” write the Post editors. “Referring to Argentina and Uruguay as well as Brazil, the secretary said the challenge for these governments is to make sure that financial assistance ‘doesn’t just go out of the country to Swiss bank accounts.’”

It’s quite possible that Secretary O’Neill, who did an admirable job while at Alcoa Inc., simply lacks the diplomatic skills required for his position. But as the Post points out, the secretary apparently is clueless as to the significance of his position and the seriousness with which his remarks are viewed worldwide.

“[P]erhaps Mr. O’Neill hasn’t gotten used to the idea that, as Treasury secretary, his comments can move markets,” the editorial reads. “‘I’m constantly amazed that anybody cares what I do,’ he said the other day. If he’s not careful he’ll be out of a job, in which case his amazement will be ended.”

We have no reason to expect Secretary O’Neill to exercise discretion in his public remarks in the days, weeks, or months ahead. As a result, we believe his days in the administration are numbered, an idea with which we are well pleased.

Our nominee for his replacement?

Former Treasury Secretary Robert Rubin.

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