Friday, June 02, 2006

 

The 'Deputy President'

Look, we usually leave the blogging on national economic issues to others, but we think there has not been - and maybe we have just missed it - enough discussion of the significance of the former Goldman Sachs CEO Henry Paulson to be secretary of the Treasury.

Here's our take, and let it be our closing thought for the weekend: The financial community has finally said enough is enough. As much as they like the GOP philosophy, they realize the economy has gotten extremely distorted with record deficits, war costs that are growing uncontrollably, trading partners that are increasingly at odds with American policies, etc. In short, Paulson ascendency to the Treasury post is no less than the bankers deciding its time to take the keys to the American financial machinery away from the deliquents in the White House.

Although it's steeped in his own perverted world view, we find the Lawrence Kudlow column (subscription required) in Thursday's Wall Street Journal to be a remarkable acknowledgement that Paulson is no ordinary "appointment:"
In the Rose Garden this week, President Bush said Mr. Paulson "has an intimate knowledge of financial markets and an ability to explain economic issues in clear terms." Wall Street would agree. But more importantly, the president said that "As Treasury secretary, Hank will be my principal adviser on the broad range of domestic and international economic issues that affect the well-being of all Americans."

There's a change going on here, probably a big one. Under the new Josh Bolten-run White House, Mr. Paulson is essentially being appointed deputy president for economic policy -- a mandate not given to his two predecessors. This is a bigger shakeup than meets the eye.

Up to this point of the Bush presidency, economic policy has emanated from the West Wing. The spokesmen at Treasury and OMB have been designated as communicators to sell that policy. My hunch is that the Henry Paulson appointment marks a power shift in policy making.

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