Every few weeks in Washington it seems the White House is trying to quash another rumor that Treasury Secretary Paul O'Neill will soon get the boot. The rumored grounds for firing vary: He's out of touch with Wall Street. He's not paying attention to the economy because he's too busy traveling overseas. But, mostly, it's that he's just too honest for the Beltway.
When O'Neill is asked a question--brace yourself!--he says what's on his mind even if it contradicts the president or jostles the markets. "O'Neill is in the Rumsfeld mode of saying what he thinks," one administration official explains.
O'Neill latest incident of truth-telling was over the weekend on those peculiar Washington creatures "the Sunday shows." These long-format interviews test the mettle of administration officials every week. If they can answer the thorough questioning of a Tim Russert or Cokie Roberts without committing too much news, they pass. The shows are so important to the White House's message that there is a staffer whose primary job is to prep officials for appearances and to negotiate who goes on (if it were only up to the networks, Condoleezza Rice would never go to church).
Last Sunday, it was O'Neill's turn to make the rounds. Pundits had been assailing him for being out of the country too much during the stock market tizzy and the corporate-reform discussions. The interviewer on Fox News asked the secretary about his upcoming trip to Latin America, which he had postponed in order to attend to domestic issues. Would he be going to beleaguered Argentina and Brazil with further offers of IMF aid? "No, no, no," he said dismissively. He implied that aid would be contingent on those countries cracking down on corruption. "They need to put in place policies that will assure that-as assistance money comes-that it does some good and it doesn't just go out of the country to Swiss bank accounts," he said.
The Brazilian foreign minister called in the U.S. ambassador to Brazil to complain about O'Neill's "profound ill will." The secretary's comments further undermined the local currency, which has been losing value to the dollar all year, and the already shaky Brazilian stock market. Press Secretary Ari Fleischer had to unruffle feathers yesterday, saying from the podium: "The president and this administration have great confidence in Brazil and its economic team. Brazil has demonstrated its ability to use international monetary assistance effectively."
O'Neill has said a lot of things in the last 18 months that have gotten him into trouble. When he first took office his off-the-cuff remarks about privatizing Fannie Mae set off beepers and cell phones all over the city. He had to meet with the head of the quasi-government agency to make amends. He still hasn't learned that his words carry weight.
The Brazil incident is the first time his comments have earned a formal protest from a foreign minister. Yet foreign aid has often been squandered in Latin American and elsewhere-if not by overt stealing then by mismanagement. Some economists now think that foreign aid has done more harm than good by propping up bad regimes. O'Neill was right-he's just tactless. "He's always called the 'blunt-spoken Paul O'Neill.' Sometimes I think Blunt Spoken is his first name," says a Treasury spokesperson.
This administration likes to celebrate blunt talk. But O'Neill can be too blunt even for the president at times. During what was supposed to be an off-the-record meeting-which didn't stay off the record-at the Council on Foreign Relations, O'Neill disagreed with the administration's political decision to impose tariffs to protect the steel industry. His on-the-record comments have at times also caused a stir. During Senate testimony he once said that he'd rather spend money chasing terrorists than Americans who violate the travel ban to Cuba. The administration had to clean up after him again and reaffirm its support for the Cuban embargo.
O'Neill is a political naif. "I'm constantly amazed that anybody cares what I do," O'Neill said last week amid criticism that he was traveling too much. These are amazing words to come out of any politician's mouth. But O'Neill has a political tin ear-a charge leveled even by the conservative Wall Street Journal editorial page.
Unlike his predecessor, Robert Rubin, O'Neill has few connections to or feel for Wall Street. But he is the only member of the Bush administration that has true credibility with Corporate America. He has proven to be vital in pushing for tough corporate reform. As the former head of the aluminum giant Alcoa, he was widely credited with running a tight and honest ship. He even put workers' safety ahead of the bottom line. The only blight on his record as secretary was that he was slow to divest his Alcoa stock, on which he made a healthy profit. His square, Midwestern sensibility is a good antidote to all the slick dealing being exposed. Looks like his job is safe for now.
