WASHINGTON -- George W. Bush's inner circle had been braced for weeks for Paul O'Neill's kiss-and-tell book, and so was not surprised when he attacked the president he served. From the Bush administration's first day, O'Neill as secretary of the Treasury proved nothing but trouble. He was Dick Cheney's big mistake.
O'Neill never would have been considered for the Bush Cabinet had it not been for Vice President Cheney, his colleague in government dating back to the Nixon administration's first year. Cheney realized immediately that O'Neill at the Treasury was no team player but a disruptive influence opposing the president's plans while poisoning morale in his own department. O'Neill, as protagonist in "The Price of Loyalty" by journalist Ron Suskind, repays his patron, the vice president, by describing him as a sinister force.
It was predictable. O'Neill, a career bureaucrat who left government for private business and wealth as Alcoa's CEO, entered the Treasury fully committed against much of George W. Bush's campaign platform. He had argued for higher taxes dating back to the first President Bush and passionately pressed for radical action against global warming.
During 12 years in Pittsburgh running Alcoa, O'Neill had no contact whatever with the Republican Party. The single telephone call ever placed to him by Sen. Rick Santorum, the Pittsburgh area's prime Republican, was not returned. The problem with Republicans at the Treasury over the last 35 years has been that few had anything to do with politics. Bill Clinton's first two holders of that portfolio, Sen. Lloyd Bentsen and the celebrated Robert Rubin, were Democratic activists.
Arthur Laffer, the pioneer supply-side economist who had worked closely with O'Neill at the Office of Management and Budget (OMB), telephoned a Bush transition official with a warning. While O'Neill is extraordinarily smart and a master of bureaucratic maneuver, said Laffer, he is undependable, has no frame of reference and promises vast trouble ahead.
Cheney, a close friend of Laffer, was aware of this assessment. Why, then, did Cheney press O'Neill on an unsuspecting Bush? Cheney, O'Neill and Donald Rumsfeld had worked together in both the Nixon and Ford administrations. But Cheney was also being too clever by half. Alan Greenspan, another colleague of Ford days, was O'Neill's friend. Cheney hoped the Treasury secretary might deter Federal Reserve Chairman Greenspan from inflicting the same damage on the new President Bush that helped defeat his father for re-election. In fact, Greenspan joined O'Neill in undermining Bush tax policies.
For nearly two years, O'Neill was a loose cannon in a regimented administration -- retained that long because Bush does not like to fire anybody he appoints. After the 2002 elections when I had been told that O'Neill soon would "resign," he was still traveling the globe and declaring the need for tax increases.
Having turned over thousands of documents to Suskind, O'Neill finds himself bewildered that the book became an anti-Bush screed. Whether Suskind's detailed accounts of White House meetings come from documents, O'Neill's notes or interviews with O'Neill is unclear. But participants who are no longer in the government told me Suskind had many things wrong, especially Bush portrayed in one meeting as worried about his last tax cut favoring the rich.
Has anything been learned from Cheney's big mistake? While a contrarian seated at the table may be useful, it should not be the secretary of the Treasury. O'Neill's successor, railroad magnate John Snow, is a non-contrarian loyalist but appears to have disappeared from sight. If Bush is re-elected, he needs a voice at the Treasury to address and support him on tax, Social Security and Medicare reform. Paul O'Neill's reappearance on the Washington stage demonstrates how badly he failed in that role.