A Smooth Operator in Nominee

In John W. Snow, President Bush has found a smooth corporate fixer as his new Treasury secretary -- in sharp contrast to the market-rattling gadfly that the president’s original choice, Paul H. O’Neill, turned out to be.

The 63-year-old chairman of railroad holding company CSX Corp. wasted no time in showing off his smoothness Monday by virtually parroting the president in endorsing a “pro-growth, pro-jobs agenda” -- read “tax cuts” -- that O’Neill spent the last several months disparaging.

Bush found something else as well in Snow: membership in a little-noticed fraternity that’s hungry to prove once and for all that it can lead and that has provided much of the current administration’s top talent -- the inner circle of the Ford White House.

Snow was, among other things, a deputy Transportation secretary in the Ford administration. If confirmed, he will join such other Ford alumni as Vice President Dick Cheney (the former president’s chief of staff), Defense Secretary Donald H. Rumsfeld (who held the same position in the previous administration) and Federal Reserve Chairman Alan Greenspan (Ford’s chief economic advisor).

“Our people didn’t get the credit” they deserved, the former president said in a telephone interview Monday. “The problem was we did a hell of a job turning around the economy, and still I lost the election to Jimmy Carter.”

Snow served in the Ford administration, as did O’Neill, who was the former president’s deputy budget director. The fact that Bush drew from the same pool in picking O’Neill’s successor, as he did in choosing his just-dismissed Treasury secretary, suggested to many Monday that the president has little interest in changing economic directions or even methods, just in getting a better salesman.

Besides their similar Washington lineage, both men ran big, old-economy companies -- in O’Neill’s case, aluminum giant Alcoa. Both made their names wrestling their firms into the modern age. Both were active in public affairs. Snow once headed the Business Roundtable, the premier voice for corporate America. O’Neill was active in civic affairs in his adopted hometown of Pittsburgh.

“Their backgrounds look an awful lot alike,” said William Niskanen, chairman of the libertarian Cato Institute here. Niskanen said the similarity makes him worry that the president’s only aim in replacing O’Neill is to rid himself of the former’s abrasiveness in favor of “someone who can market whatever [Bush political advisor] Karl Rove comes up with.”

In fairness, Snow is much more than a salesman. He has a law degree from George Washington University and a doctorate in economics from the University of Virginia. He was one of the earliest advocates of railroad and airline deregulation. When many of the Ford administration’s railroad proposals died with the end of that presidency, he pursued them as a railroad executive.

As head of the National Highway Traffic Safety Administration, he helped devise compromises on such politically thorny issues as airbags and auto fuel efficiency, according to his boss at the time, Ford Transportation Secretary William T. Coleman Jr.

“He is a very bright guy. He brought new ideas to you every day and would pursue them,” Coleman said.

“He was loyal; once we worked out a position, he would never go back up on [Capitol] Hill and try to go beyond me,” Coleman said.

Among the lessons from his first Washington stint that may serve Snow especially well in the coming months are how to cope with economic trouble and narrow political margins.

This is where Snow’s salesmanship -- his talent to bridge differences -- could prove crucial. That talent was on vivid display Monday in two instances.

One of the deepest fissures in the Republican Party is between supply-siders, who think that cutting taxes and regulations will cure what ails the economy, and the deficit hawks, who fear that deficits and the unfunded liabilities of programs like Social Security will sink the country.

In short order after the announcement that he had been tapped for the top Treasury job, leading advocates of each camp claimed Snow as one of their own.

“The real issue is funding Social Security and Medicare. I think John will see that,” said Peter G. Peterson, chairman of the Blackstone Group, a New York private investment bank and one of the nation’s persistent deficit hawks. Peterson said Snow joined him in lobbying the Clinton administration to erase the federal deficit.

“He’s a guy who believes in growth,” countered Ted Forstmann, a senior partner with Forstmann Little & Co., another New York investment firm. “He’ll be an articulate spokesman for a pro-growth agenda no matter what Pete Peterson says.”

Separately, business leaders and Bush cited among Snow’s strengths his reputation as a leader in the fight for new corporate governance standards to prevent another Enron scandal. But shareholder activists say that Snow abused the very rules he endorses as CSX chairman.

Snow earned $2.1 million in cash in 2001, plus $7.1 million in restricted stock awards, almost $118,000 in premiums from company-paid life insurance and more than $320,000 in “above market” interest on deferred compensation.

He signed a new employment contract last year that assures him of a variety of benefits, including use of private aircraft, after he retires or even resigns for a variety of reasons. Among the reasons: “resignation ... so that the executive may fulfill an appointment to public office.”

In addition, activists charged that CSX’s board forgave a variety of loans the company made to Snow at a time when several board members may have been receiving favorable treatment from the company in purchasing vacation homes at a CSX development in Florida.

“This guy has a problem with compensation and loan forgiveness,” said William B. Patterson, director of the AFL-CIO’s office of investment.

Patterson’s charges are unlikely to block Snow’s confirmation as Treasury secretary. But they could raise questions about his corporate-governance bona fides.

If he gets the Treasury post, he would have to give up the business perks and would likely have to sell or put in blind trust any significant investments while he is in office.