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Railroad Chief To Replace O'Neill At US Treasury

by Mike Godfrey,, New York

10 December 2002

It became clear on Monday that John Snow, chief executive of railroad holding company CSX Corp, would be invited to become the next US Treasury Secretary to replace Paul O'Neill, who resigned on Friday. Mr. Snow is also a veteran of the Ford administration, serving in several senior jobs in the Transportation Department in the 1970s and heading the National Highway Traffic Safety Administration for a year. After becoming chief executive of CSX, Mr. Snow remained active in the Washington lobbying fraternity. 63 years old, John Snow has been a champion of balanced budgets as a chairman of the influential Business Roundtable and has recently pushed for reforms of corporate governance.

To replace White House economic adviser Lawrence Lindsey, the President is expected to choose Stephen Friedman, a colleague of former Treasury Secretary Robert Rubin at investment bank Goldman Sachs. Mr. Friedman is now a senior principal of Marsh & McLennan's private equity group.

Although the economy has done badly since George W Bush took office in January, 2001, he is not yet blamed for that. But recent signs of uncertainty and policy wobble have led to the sacking of O'Neill and Lindsey to make way for two men, who, if less brilliant than the outgoing pair, will be better team players.

The administration hopes that Stephen Friedman will provide a Wall Street link that has been notably lacking until now, and that he will be better at consensus-building than was Mr Lindsey. Both men will be expected to champion an administration line on the tax-cutting package in preparation, rather than ploughing their own furrows, as the previous pair were wont to do. Paul O'Neill's oft-reported belief that tax cuts were not so much needed as tax reform was his eventual undoing.

The final straw for the White House was a Financial Times interview given by Mr. O'Neill in late November in which he implied that the result of tax-reform proposals might even increase revenue - anathema to White House tax-cutters. Mr Lindsey's final crime was his recent interview with the Wall Street Journal in which he estimated that a war with Iraq could cost $200bn. War? What war?

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