Wall Streets enforcer

Bush’s first treasury secretary, Paul O’Neill, was fired for not toeing the administration line.

The second, John Snow, toed the line too closely. As Peter Baker and Paul Blustein reported in the Washington Post, “Although Snow’s loyalty is appreciated at the White House, he has followed his assigned script so closely that even some boosters concede he had sometimes come across as an ineffective salesman for the administration’s policies.” Snow has just been axed.

Bush has nominated Henry Paulson to be his third treasury secretary. His job will be to make sure that Washington toes Wall Street’s line.

Paulson had an early Washington career in the Nixon administration, where he worked for the Watergate criminal John Ehrlichman. He moved to Wall Street, rising to become head of the Wall Street investment house Goldman Sachs, and amassed a personal fortune of $700 million.

Edmund L. Andrews and Jim Rutenberg explain in The New York Times why Bush picked Paulson. Republicans were looking for someone to add credibility, someone “more prominent who could do a better job of communicating the economy’s strength and could reassure voters of the administration’s economic competence.”

That will be a tough job. Administration spokespeople can, and do, distort the truth or tell outright lies about the economy. But ordinary people are feeling the truth … in their paychecks: Most workers have barely kept up with inflation, or have lost ground, since Bush took office … in their mortgage payments: Homeowners with adjustable rate mortgages are seeing payments soar as higher interest rates kick in … in a growing meanness: The Republican Congress allowed unemployment benefits of $104 a week to run out for 80,000 Katrina survivors … in growing insecurity: Seeing what is happening at GM/Delphi and the airlines, workers everywhere are asking, “Am I next?” … in looking for jobs: Within days of Paulson’s nomination, the Bureau of Labor Statistics announced that, for the second straight month, new jobs were not enough to keep up with the growth in the working-age population … and of course, at the gas pump.

It is no wonder that two-thirds of respondents disapprove of Bush’s handling of the economy.

Paulson is unlikely to be openly critical of administration economic policies, especially before the November elections. But his nomination highlights a serious threat to working people.

A number of reports emphasize that Paulson was reluctant to take the job, and was allegedly promised real input into administration policy. And, according to Landon Thomas in The New York Times, “Mr. Paulson has strong views on economic policies that support balanced budgets, which may not match up with the Bush administration policies that have contributed to historic budget deficits.” Even some Democrats who are critical of Bush’s budget deficits are supporting his nomination.

Those deficits come primarily from the war in Iraq and other military spending on the one hand, and huge tax cuts targeted to the wealthiest individuals and corporations on the other. Wall Street has done very well by these policies. (Paulson’s personal benefits from the Bush tax cuts are probably in the millions of dollars per year.)

But Wall Street is concerned about the budget deficit, which threatens their long-term profits. Instead of seeing a rollback of the tax cuts and an end to the war, we are likely to see increased attacks on every form of socially useful government spending. Look for renewed attacks on Social Security and Medicare, on Medicaid, on education, mass transportation and housing. Programs that help low-income families will be targeted.

When Paulson moves from Wall Street to Washington, his job title will be Secretary of the Treasury. But his job description will be “Wall Street’s enforcer.” He will be leading these attacks, all in the name of balanced budgets and fiscal discipline.

This makes the November elections of vital importance. If the Republicans keep their majority, the discussion in Congress will be “How deeply should we cut every popular program while we keep cutting taxes for the rich?” If the Democrats win control, they will still be under tremendous pressure from Wall Street. But there will be a more open discussion and a broader range of possibilities. It will be possible to raise the demand: “No cutbacks. Tax the rich and the corporations. Make them pay for the mess they have made.”