U.S treasury's O'Neill problem - United States Department of the Treasury, Paul O'Neill - Brief Article

International Economy, The, Nov-Dec, 2001

U.S. Treasury Undersecretary for International Affairs John Taylor and Undersecretary for Domestic Policy Peter Fisher both have a problem. No, it is not a lack of competence as the former Stanford economist and New York Federal Reserve official respectively are considered true heavyweights in their fields. Their problem is that both the international policy world and most of Capitol Hill believe, rightly or wrongly, that Treasury Secretary Paul O'Neill's days are numbered (see left). Though such speculation is indeed unfair to the former Alcoa executive, the betting is that O'Neill will not last through the mid-term elections in November of next year. The charge: The Treasury chief continues to feel uncomfortable in a role requiring real theatrical skills when dealing with jittery global financial markets. To close outside observers, he doesn't seem to enjoy the politics involved with the job.

That has left Undersecretary John Taylor in a bit of a bind with his colleagues making up the so-called G7 deputies group. Many Europeans within the group are long-time admirers of the former Stanford professor and believe his current analysis of the world economy and various policy options are first-rate. They would be ready to follow the U.S. official's policy lead in a way not seen since the days of former President Bush's international Treasury official David Mulford were it not for the fear that Taylor's boss could be gone at any time. "John's first-rate, but the mystery is Paul O'Neill," a European official told TIE. "We're afraid that if we go down some road defined by the United States, O'Neill will either retire or abruptly change the positions which he has been wont to do." The good news for Taylor is that he is so much admired at the top levels of the Bush White House that his position is seen as separate and distinct from that of the Treasury Secretary no matter what happens in the coming year.

Domestic Undersecretary Peter Fisher's position is more complicated. If simply because of his technical competence, Fisher is considered one of the more talented individuals to join the Treasury in decades. Some White House aides criticize the Treasury official, a nominal Democrat, for being too much a regulator and not enough of a financial innovator. But the fact is that Wall Street's dramatically swift return to business after the September 11th terrorist attack could not have been accomplished without Fisher's hands-on involvement in New York in the days after the Twin Towers tragedy.

Fisher also faces increasing backroom criticism from a number of influential House Republicans. Many see the Treasury official as aloof and detached from their concerns, causing one Washington-based former government official (and Fisher admirer) to warn: "Peter had better do something about his relations on the Hill." While such advice is no doubt valuable, TIE suspects that the attacks against Fisher reflect in a curious way a kind of substitute for soothing the House GOP's frustration with Treasury Secretary O'Neill who launched a broadside against the initial House-passed emergency stimulus package (the Treasury chief labeled it "show business"). In other words, it's easier to kick the affable, self-effacing, apolitical Fisher than to attack his boss whose temper and penchant for uncontrollable outbursts are legendary.