Goldman CEO Gets Top US Treasury Job

by Mike Godfrey, Tax-News.com, Washington

31 May 2006

Henry Paulson, Chairman and Chief Executive Officer of the Goldman Sachs Group, has been nominated by President Bush to succeed John Snow as US Treasury Secretary after the latter recently tendered his resignation.

While yesterday's announcement was the first official notification that Snow would be departing the Treasury, it had been known for some time that he was keen to step down from the Treasury's top job in order to return to private life.

Snow took over at the Treasury in February 2003 from Paul O'Neill and during this time he oversaw some of the most substantial changes to the US tax code since the Reagan administration, most notably in the tax cuts of 2003 when taxes on dividends and capital gains were cut to 15%, a move thought crucial by the administration to reinvigorate investment in the US. He cited the passage of the 2003 tax cuts in particular as one of the highlights of his tenure at the Treasury.

With the economy apparently growing at a healthy clip and tax revenues having increased above expectations, pushing down the federal deficit, Snow said that now was the ideal time to leave.

"The American economy today is growing and expanding at a rate well above the rest of the industrialized world. Businesses are investing, productivity growth is strong, and millions of new jobs have been created with rising wages. The foundation for continued prosperity is well in place," he commented at a White House press conference yesterday.

Snow has also been considering the options for more fundamental root-and-branch tax reform put forward by the presidential tax panel, which reported its recommendations last November, and he would have been due to present to President Bush his favoured course for reform. A change of hands on the Treasury tiller may delay this process, but with mid-term elections due this year most observers have already come to the conclusion that tax reform has been shelved until 2007 anyway.

An early favorite to succeed Snow at the Treasury was Don Evans, former Commerce Secretary and a long time friend of Bush, especially after he reportedly spent the weekend with the President. However, Bush drew a line under the speculation yesterday when he announced that Henry 'Hank' Paulson had got the job.

Bush paid tribute to Snow's work at a White House press conference yesterday morning.

"John answered the call to public service in a time of uncertainty for our economy, and under his leadership, we have seen a broad and vigorous economic resurgence. He's been a steady advocate for small business entrepreneurs and working families, and he's helped deliver jobs and opportunity for the American people. I appreciate his years of service to our country."

According to Bush, Paulson's extensive experience and knowledge of the financial markets makes him the ideal candidate to follow on from Snow.

"He has a lifetime of business experience; he has an intimate knowledge of financial markets and an ability to explain economic issues in clear terms," Bush observed.

He went on to add that: "One of Hank's most important responsibilities will be to build on this success by working with Congress to maintain a pro-growth, low-tax environment."

Snow will reportedly remain in his post in the short-term in order to effect an "orderly transition" for his successor.

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