Railway Exec Is Chosen for Treasury Post

President Bush said Monday that he would nominate the chairman and chief executive of CSX Corp., John W. Snow, as Treasury secretary, putting a corporate leader in charge of the struggling economy as the administration turns its attention toward the 2004 elections.

Snow, a veteran of the Ford administration, brings to the secretary’s high-ceilinged corner office overlooking the White House a resume that crosses an academic’s economic knowledge with the reality of a quarter of a century in the business world at CSX, a transportation holding company that grew out of the Chesapeake & Ohio railroad system.

As early as today, Bush is expected to name a second key economic aide by selecting Stephen Friedman, a former co-chairman of investment firm Goldman Sachs to succeed Lawrence B. Lindsey as chairman of the National Economic Council, a White House advisory group.

Lindsey and Treasury Secretary Paul H. O’Neill were dismissed Friday, submitting their resignations as the White House hurried to spur economic growth before entering the early phases of Bush’s anticipated 2004 reelection campaign.

With the administration working to gain traction on political and fiscal fronts, the selection of Snow brought a muted response. Republicans praised it as an opportunity to advance Bush’s economic agenda; Democrats said the agenda itself needed change; the financial community appeared disappointed that a more dramatic shift from O’Neill, a former corporate executive who had also worked for President Ford, had not been found.

The central question is, will Snow be able to restore the confidence of investors skittish about their future on Wall Street and of workers wondering whether they will have jobs on Main Street?

“John Snow will be a key advisor on the economy and a key advocate for my administration’s agenda for growth, new jobs and wider and more international trade,” Bush said.

The president said the economy was facing the challenge of persistent unemployment -- the government reported Friday that November’s jobless rate was 6%, equaling an eight-year high -- while personal debt was making it difficult for some to save for retirement and “investor confidence needs to be strengthened in practical ways.”

Signaling his continued drive for new tax cuts, Bush noted that “many Americans have very little money left over after taxes.”

He said he would propose “specific steps to increase the momentum of our economic recovery, and the Treasury secretary will be at the center of this effort.”

At the same time, Bush said, inflation is under control, mortgage rates are at historic lows, and the 5.6% increase in productivity over the last four quarters was the greatest over a similar period since 1973.

“This economy is strong, and we can make it stronger,” the president said.

One of the key roles of the Treasury secretary, that of chief economic advisor to the president, has eroded over the last two decades as advisory boards, councils and White House staff members have all chimed in. The secretary is also the most prominent public face of administration economic policy.

O’Neill began sailing through rough waters almost as soon as he took office. Not only did he encounter a sudden recession, but his penchant for frank commentary concerning the economy and the strength of the dollar helped exaggerate Wall Street’s inherent skittishness and annoyed the president and the White House political staff alike.

Snow, 63, stood two steps to Bush’s right and two steps behind him as the president announced his intentions. When it was his turn, Snow spoke calmly, in a deep voice.

He pledged to combat unemployment by working “to strengthen the current economic recovery and create an environment where millions of job creators -- those small businesses and partnerships and medium-size businesses and large businesses -- and investors, all across America, will grow and prosper.”

The announcement was low-key.

White House aides had set aside about 30 seats for senior administration officials in the auditorium of the Executive Office Building, but half remained empty.

“There’s no question John is a cheerleader and a quarterback and a captain,” said Paul W. MacAvoy, a professor at Yale University School of Management.

“He can pull a disparate team together and deal with Congress and Wall Street and the government agencies and the whole budget process,” as well as taxes, interest rates and exchange rates, said MacAvoy, who is well acquainted with the job’s demands from his service during the Ford administration on the Council of Economic Advisors.

“He has to get all that straight and sell it.”

The first issue for Snow, after winning Senate confirmation, is gaining support in Congress, the financial community and the country as a whole for Bush’s next economic prescriptions.

The administration is said by Bush aides and others to be nearing the unveiling of an economic stimulus package, built on much the same tax-cut approach Bush has taken to try to rejuvenate the economy over the last two years.

As chairman and chief executive of Richmond, Va.-based CSX Corp. since 1991, Snow -- who grew up in Toledo, Ohio, and received a doctorate in economics from the University of Virginia -- directed its absorption of Conrail, creating a massive cargo rail network throughout the eastern U.S.

A former economics and law professor who served as a deputy undersecretary of Transportation in 1975 and 1976, he helped develop policy that, the White House said Monday, led to the economic deregulation of a wide swath of U.S. transportation, including the rail, trucking and aviation industries. He also was administrator of the National Highway Traffic Safety Administration in 1976.

And as co-chairman of the commission on public trust and private enterprise at the Conference Board, an influential business policy group, he has wrestled with the stinging problems posed recently by questions of integrity and the corporate boardroom.

The Center for Responsive Politics, which tracks campaign contributions, said that Snow was one of the biggest supporters of Sen. John McCain when the Arizona Republican sought the presidential nomination in 2000.

The White House, meanwhile, announced that Snow was resigning his membership in the Georgia’s Augusta National golf club, which excludes women as members and is the home to the Masters golf tournament.

On Wall Street, troubled by the year’s corporate scandals, Snow’s efforts to tackle corporate integrity issues drew favor, and his demeanor was cast as a welcome shift from O’Neill.

“Jack is steadfast in his commitment to sound business practices and corporate governance reform,” said Richard E. Grasso, chairman of the New York Stock Exchange.

“The fact that he has spent some time in Washington working inside the policy apparatus will serve him well as Treasury secretary,” said Kim Wallace, chief political analyst for Lehman Bros. “The fact that he is more circumspect in his language, both public and private, will serve the president better than the previous Treasury secretary.”

In Washington, responses targeted policy and politics.

Sen. Trent Lott (R-Miss.), the incoming majority leader, said he looked forward to working with Snow on a “new jobs growth package that will improve America’s economic security.”

Seeking a policy aimed at boosting the economic standing of those in the most need, Senate Democratic leader Tom Daschle of South Dakota said, “It isn’t the names, but the plan that is of concern to us. Trickle-down economics doesn’t work.”

Snow got word of his selection Friday, shortly after O’Neill’s departure was announced.

Snow was scheduled to speak Monday to MacAvoy’s class of graduate students at Yale, but called to cancel, telling his host he had a fever.

“Potomac fever?” was the retort from MacAvoy on the telephone.

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Times staff writers Robert Patrick, Warren Vieth and Nick Anderson contributed to this report.