Grasping Reality on TypePad, by Brad DeLong

Getting Robert Rubin's Job

One final set of thoughts on the enigma wrapped inside a mystery that is Paul O'Neill:

In the New York Times this morning, Andres Martinez writes that when Paul O'Neill went to Washington, what he really wanted to have was Robert Rubin's job:

Andres Martinez: ... Mr. O'Neill would have really liked having Mr. Rubin's job. Of course, Mr. O'Neill thought he was getting Mr. Rubin's job when George Bush appointed him Treasury secretary, but in fact he was only assuming the title. Mr. Rubin's job, as described in his book, "In an Uncertain World: Tough Choices From Wall Street to Washington," was to analyze an often mystifying world, alongside Alan Greenspan and an insatiably curious president, and to shape domestic and global economic policy accordingly.

Mr. O'Neill, who had been a budget wiz in the Nixon and Ford administrations and a successful chief executive at Alcoa, was able to sift through economic data to his heart's content with his old pal, Mr. Greenspan. But he soon discovered that this was merely an academic undertaking. In addition to the damage that Mr. O'Neill did to himself with his erratic public statements, he was serving in an administration that was not eager to have facts get in the way of policies set by a "praetorian guard" of ideologues surrounding the president.

Mr. O'Neill can't tell you what it feels like to steer the world economy. For that, read Mr. Rubin's book. Mr. O'Neill's is a woeful tale of what it feels like to sit in the office once occupied by Alexander Hamilton and be subservient to people like Karl Rove and Karen Hughes.

"We need to be better about keeping politics out of the policy process," Mr. O'Neill told Dick Cheney, his old friend from the Ford administration who had recommended him for the job early on. In this tale, the Treasury secretary repeatedly implores the vice president to foster a more open and rigorous policy-making process in the White House, but to no avail. These scenes are reminiscent of a spy thriller in which the protagonist warns the head of counterintelligence that there is an enemy mole in their midst, only to discover that his confidant is actually the mole.

Long after the reader has figured it out, Mr. O'Neill finally realizes that Mr. Cheney is the leader of the inner circle, which keeps facts--whether about global warming, the deficit, steel tariffs or Iraq--from getting in the way of policy...

When I started Ron Suskind's The Price of Loyalty, I thought it would raise my--low--opinion of Paul O'Neill's fitness to be a twenty-first century Treasury Secretary. But it lowered it instead. You see, Paul O'Neill never tried to get Bob Rubin's job. He never took any of the steps needed to get Robert Rubin's job.

What do I mean? Well, IMHO, this is the way you get Robert Rubin's job. this is what you do (with all days relative to inauguration day):

1. Day -35: Read, slowly, cover-to-cover, Samuel Kernell and Samuel L. Popkin, ed., (1988) Chief of Staff: Twenty-Five Years of Managing the Presidency (La Jolla: University of San Diego Press: 0520063384).
2. Day -34: When Bush and Cheney offer you the job of Treasury Secretary, say that you are incredibly flattered, but that you need to consult with your wife, and you need to make sure that you can take the job under conditions that will make you an asset rather than a liability to the President.
3. Day -33: Call Dick Cheney. Tell him that you will take the job, but that it has to be under conditions in which you can be an asset to the president. Specifically: (i) the Treasury is the central department in so much of the business of government that the Treasury Secretary must attend the daily White House senior staff meeting; (ii) the Assistant to the President for Economic Policy must function as an honest broker--rather than as a Henry Kissinger-like figure--and if the Assistant to the President for Economic Policy cannot so function, then the Treasury Secretary needs to do what George Shultz did and take over the chair of the National Economic Council (or whatever it's called); (iii) there needs to be unanimous agreement on the economic policy priorities of the administration; (iv) there will be lots of things that the Base wants that are not good policy and that will create problems three, five, seven years down the road, and there needs to be explicit recognition that the priority is not coddling the Base but developing good policies to create a successful presidency; and (v) that if you are to make use of the Treasury career staff, you need to be able to pick your own team of subordinates.
4. Day -33: If Cheney agrees to (i) through (v), write a one-page memo to Bush accepting the job, specifying (i) through (v), and expressing your extraordinary enthusiasm for working for him and in his administration. If Cheney does not agree, go back to Pittsburg.
5. Day -33: If your conditions are accepted, call Larry Summers and ask if you can spend two days--quietly, mutely--shadowing him to see just how the job works the way he does it.
6. Day -32: Shadow Summers.
7. Day -31: Shadow Summers.
8. Day -24: Spend half a day getting to know Karen Hughes. Make the point that good policies in the first year will create, by the fourth year, a powerful and successful record of accomplishment that can be a big boost to the reelection campaign. Make the point that Base-pandering policies the first year may well have backfired by early 2004.
9. Day -21: Spend a full day getting to know the President-Elect's speechwriters. Make sure that they know that they can call on you for help and advice, and make sure that they know that you know that they have extraordinary power to shape the administration's substantive policy agenda.
10. Day -17: Spend a full day getting to know the ex-Clinton and ex-Bush I senior Treasury staff--Rubin, Newman, et cetera.
11. Day -14: Hire a very good Assistant Secretary of the Treasury for Public Affairs. Tell them that their chief job is to tell you--every single hour, on the hour--five things: (i) you are now Treasury Secretary, and your words move markets, be careful; (ii) every reporter in Washington gains status by catching you saying something unexpected, be careful; (iii) you can have on-the-record talks with reporters only if you have a previously-vetted set of talking points, and only if you stick to those talking points and say nothing else; (iv) you can have off-the-record talks with reporters in which any quotes or ascriptions of opinion have to be negotiated with the Assistant Secretary of the Treasury for Public Affairs afterwards; (v) you can have no other interactions of any kind with members of the press.
12. Day -14: Hire a very good Assistant Secretary of the Treasury for Congressional Affairs. Tell them that their chief job is to tell you--every single hour, on the hour--that unscripted exchanges with Congressmen and Senators are to be reserved for your and their private offices, and that hearings are times to stay on-message and on talking points.
13. Day -12: Decide on a common communications strategy with Alan Greenspan. Begin giving regular press conferences with Greenspan, talking about what a good economic policy would be and what the Bush administration hopes to accomplish.
14. Day -10: Spend a full day getting to know the chairs and the ranking members of the Senate Banking and Finance committees.
15. Day -9: Spend a full day getting know the chairs and the ranking members of the House Banking and Finance committees.
16. Day -7: Host a meeting of the Republican economic policy Great and Good--Shultz, Baker, Brady, Boskin, Feldstein, Sprinkel, Darman, et cetera--and set out the five principles for Bush II administration economic policy: (i) fulfill the President-Elect's promise of tax cuts; (ii) run a Republican government--a small government, a prudent government, an effective government, an efficient government--(iii) maintain budget surpluses; (iv) reform entitlement spending to deal with the long-run problems of the retirement of the baby-boom generation and the growing cost and power of medical technology; (v) pursue free trade.
17. Day -3: Spend the full day before your hearings with the White House Public Affairs and Congressional Relations staff to be, making sure that they are on your message and you are on their message.
18. Day 0: Inauguration Day
19. Day +1: Attend the morning White House senior staff meeting. Try to gain control of the Main Treasury building. There are 1000 people working there, 300 of whom are there principally because they like the job security, and 700 of whom are there principally because they want to make the country a better place. Tell as many people as you can that you are there to be their salesman to the White House and Congress, and that they are there to do research and analysis to make Bush administration economic policy the best economic policy the country has ever seen.
20. Day +2: Attend the morning White House senior staff meeting. Talk to the CEA-chair designate and the OMB head-designate. Make sure they understand that CEA, OMB, and Treasury need to work together--and that their respective staffs need to view each other as allies to be cooperated with rather than adversaries to be opposed.
21. Day +3: Go to Andrew Card's office and tell him that Larry Lindsey is not working out as chair of the NEC. Tell him that unless things improve a lot, you will be taking over as chair of NEC meetings in a month.
22. Day +4: Ask the president what advice he has as you attempt to put into practice the five priorities of Bush administration economic policy: (i) fulfill the President-Elect's promise of tax cuts; (ii) run a Republican government--a small government, a prudent government, an effective government, an efficient government--(iii) maintain budget surpluses; (iv) reform entitlement spending to deal with the long-run problems of the retirement of the baby-boom generation and the growing cost and power of medical technology; (v) pursue free trade.
23. Day +14: Start heading over to Capitol Hill will Alan Greenspan and White House Legislative Affairs on a regular basis to get Congressional input on and begin lobbying for the White House tax cut package.
24. Day +28: Begin chairing NEC meetings. Issue a press release stating that Assistant to the President for Economic Policy Larry Lindsey will now spend more time rallying support for the President's economic policies and less time on the boring details of policy development.
25. Day +84: Pass a tax cut bill that guarantees the continuation of budget surpluses no matter what. Announce that entitlement reform is the next big item on the agenda.

Yet O'Neill didn't establish a unified, public position with Greenspan on what a good tax cut bill would look like. He didn't show up at the 7:30 AM White House senior staff meetings and say gain an idea of what the pulse was of those who saw George W. Bush all the time. He didn't make Larry Lindsey scared enough of him to play the role of an honest broker, and he didn't elbow Lindsey aside and take over the role of economic policy coordinator himself. He never talked to the speechwriters personally. He didn't convince the White House Political Affairs people that they needed to help create a record of policy accomplishment that would produce a good situation in 2004 rather than to flatter the Base.

But these are all things you need to do--if, that is, you want to have Robert Rubin's job, and aren't satisfied with being an empty suit with White House mess privileges.

You fight, or you quit. Threatening once or twice to quit may be the best way to fight. You find allies, and you caucus with them. Even though Larry Lindsey is not playing "honest broker," there still is a very powerful quadrumvirate for a rational economic policy at the start of the administration: Greenspan, O'Neill, Daniels, and Hubbard. And there are the 1,000 people who work in Main Treasury who work for you, and who can be set to work making phone calls, quizzing their opposite numbers in other agencies, talking to the press, and doing other things to leverage your influence over politics and policy.

Moreover, O'Neill had another powerful network at his disposal: Rumsfeld, Cheney, and O'Neill were (are?) friends, with powerful memories of working side-by-side in the Ford administration. Yet O'Neill did not strengthen those ties either--did not corner Rumsfeld and Cheney, ask them what was going on, and refuse to let them out of the room until they gave a satisfactory answer. Indeed, I am sure that Cheney and Rumsfeld are deeply disappointed in O'Neill: he was supposed to keep domestic policy on track, just as Rumsfeld was supposed to manage security policy and Cheney manage George W. Bush and the political operation. Remember, Cheney wanted O'Neill in the administration, and wanted him very badly.

O'Neill did none of the things that he needed to do in order to get Robert Rubin's job. Why not is unclear. He did suffer from CEO disease--that is, after a decade of everyone who works for ALCOA telling him that he is a genius and that every one of his words is pure gold, he did believe it and could not readjust. He sent his deputy to ask if O'Neill could attend the 7:30 White House senior staff meeting, but apparently thought it beneath his dignity to ask himself (or to just show up).

Paul O'Neill, Unplugged, or What Would Alexander Hamilton Have Done?

By ANDRES MARTINEZ

Read Robert Rubin's recently released memoir and "The Price of Loyalty," Ron Suskind's new book on Paul O'Neill's time in the Bush administration, and a few things become apparent. The first is that Mr. O'Neill would have really liked having Mr. Rubin's job.

Of course, Mr. O'Neill thought he was getting Mr. Rubin's job when George Bush appointed him Treasury secretary, but in fact he was only assuming the title. Mr. Rubin's job, as described in his book, "In an Uncertain World: Tough Choices From Wall Street to Washington," was to analyze an often mystifying world, alongside Alan Greenspan and an insatiably curious president, and to shape domestic and global economic policy accordingly.

Mr. O'Neill, who had been a budget wiz in the Nixon and Ford administrations and a successful chief executive at Alcoa, was able to sift through economic data to his heart's content with his old pal, Mr. Greenspan. But he soon discovered that this was merely an academic undertaking. In addition to the damage that Mr. O'Neill did to himself with his erratic public statements, he was serving in an administration that was not eager to have facts get in the way of policies set by a "praetorian guard" of ideologues surrounding the president.

Mr. O'Neill can't tell you what it feels like to steer the world economy. For that, read Mr. Rubin's book. Mr. O'Neill's is a woeful tale of what it feels like to sit in the office once occupied by Alexander Hamilton and be subservient to people like Karl Rove and Karen Hughes.

"We need to be better about keeping politics out of the policy process," Mr. O'Neill told Dick Cheney, his old friend from the Ford administration who had recommended him for the job early on. In this tale, the Treasury secretary repeatedly implores the vice president to foster a more open and rigorous policy-making process in the White House, but to no avail. These scenes are reminiscent of a spy thriller in which the protagonist warns the head of counterintelligence that there is an enemy mole in their midst, only to discover that his confidant is actually the mole.

Long after the reader has figured it out, Mr. O'Neill finally realizes that Mr. Cheney is the leader of the inner circle, which keeps facts--whether about global warming, the deficit, steel tariffs or Iraq--from getting in the way of policy.

Mr. O'Neill did manage, for a time, to head off talk of a tax cut on dividends. But when the issue comes up once more right after the midterm elections, and Mr. O'Neill again notes that the country cannot afford it, Mr. Cheney cuts him off: "Reagan proved deficits don't matter. We won the midterms. This is our due."

To his credit, President Bush, who is depicted as having a hard time following the discussion, wonders at the same meeting whether he hasn't already given wealthy people enough of a break. That's when Mr. Rove chimes in that the president ought to "stick to principle."

Mr. O'Neill came to feel that he, Christie Whitman and Colin Powell were essentially hired for cover by a president who had pledged to govern from the center, but really had no intention of doing so.

Mr. O'Neill was a Nixonian Republican caught up in a Reaganite restoration. He had admired how President Bush's father, when faced with a dire fiscal outlook, had reneged on his "no new taxes" pledge. And while some Democratic liberals had viewed President Bill Clinton's fiscal discipline as a betrayal, for the likes of Mr. O'Neill it represented the triumph of Republican values.

The new Treasury secretary and Mr. Greenspan shared concerns that even the bulk of the first round of tax cuts in 2001 could prove unaffordable if projected $5.6 trillion surpluses over the next decade turned out to be a mirage (as they did). That's why Mr. O'Neill, whose presidentially conferred nickname was downgraded over time from "Pablo" to the "Big O," tried to get Mr. Bush to agree to condition the phasing in of these cuts on the availability of surpluses.

He failed. "I won't negotiate with myself," the president told his Treasury secretary, as if responsible economic stewardship was a compromise too far.

The White House is upset that a departed cabinet member has provided such an intimate and devastating portrait of presidential decision-making--in an election year, no less. But Mr. O'Neill, who comes across as somewhat naive and politically tone-deaf in this thick stew of self-justification and insider revelation, also feels betrayed by a White House that discouraged any serious policy debates.

Whether it's Mr. Cheney's energy task force, the supposedly independent commission on Social Security reform or the president's ridiculously scripted Waco economic summit meeting in the summer of 2002, the Treasury secretary continually registered his deep shock at what he rightly considered shoddy, if not dishonest, decision-making.

"When you have people with a strong ideological position and you only hear from one side, you can pretty much predict the outcome," he says of the energy task force. Too often, the fix was in, as when steel tariffs were imposed, and when Mr. O'Neill's post-Enron efforts to make chief executives more accountable for their companies' misbehavior were thwarted by White House concerns about "the base."

When Mr. Cheney finally called to fire his old friend in November 2002, the O'Neill account quotes him as saying, "We'd really like to do this in an amicable and gracious way."

It was clearly too late to start down that road.