Nomination expected to boost power of Treasury

With the nomination of Hank Paulson, one of the best-regarded bankers on Wall Street, to the job of Treasury secretary, officials are predicting a ?gravitational pull? towards his department on issues ranging from China policy to trade and President George W. Bush?s stalled competitiveness agenda.

That effect is already taking place at the White House around the person most responsible, after Mr Bush, for bringing Mr Paulson to the White House: Josh Bolten. Since he became White House chief of staff last month, there has been a steady but quiet shift of authority in Mr Bolten?s direction.

Mr Bolten, who was given responsibility by Mr Bush to lead a long overdue White House shake-up, wielded his power quickly. First he put pressure on Scott McClellan, White House press secretary, to stand down. A week later Karl Rove, the president?s chief political strategist, was stripped of his oversight of domestic policy, and his responsibilities were handed to Mr Bolten?s close aide, Joel Kaplan.

Now, a month on, Mr Bolten has helped to reshape the Treasury. Assuming Mr Paulson is confirmed, Mr Bolten will have helped to install not just a formidable, independent figure at the Treasury, but also, an old colleague who will be a potential ally in future policy debates. ?Everyone will look to Hank on every major economic initiative,? said a former senior administration official.

As a former Goldman Sachs banker from 1994 to 1999, Mr Bolten took the lead in the courtship of Mr Paulson ? a change from the leading role played by Vice-President Dick Cheney in the recruitment of Mr Bush?s first two Treasury secretaries, Paul O?Neill and John Snow.

?[Mr Cheney?s] role was minimal. If he had any role at all, it was as part of a chorus, along with Don Evans [former commerce secretary],? said a former senior administration official. ?This was a very tight loop. Karl Rove was not involved.?

Mr Bolten first approached Mr Paulson over the Treasury job in February, before he became chief of staff, the official said. They had about half a dozen conversations in the last few months, but Mr Bolten also dealt with an intermediary, John Rogers, a Goldman Sachs vice-president and close aide to Mr Paulson who is expected to follow him to Washington.

In taking the job, Mr Paulson became the second high-profile outsider to join the administration as part of the White House shake-up. He follows Tony Snow, who left a successful and lucrative career at Fox News to become the White House spokesman. Here again, Mr Bolten played the lead role in persuading an old friend to take the post.

?They didn?t have a real chief of staff in the first six years of the administration,? says Vin Weber, a Republican strategist with close ties to the White House. ?Andrew Card had a less direct relationship with the president than four other people: Karl Rove, Condi Rice, Dick Cheney and Karen Hughes.?

Mr Weber said: ?Bolten has recreated a more traditional White House structure, with direct authority in different areas. Now you have a chief of staff who does want strong independent figures. These are two of the most critical posts for the Republican party ? the spokesman and adviser on the economy ? and they have been filled by strong people.?

Even so, in bringing in outsiders, Mr Bush has had to compromise. Both Mr Paulson and Mr Snow sought guarantees about having a more direct role in policy debates, and playing a more expansive role than their predecessors.

Copyright The Financial Times Limited 2016. All rights reserved. You may share using our article tools. Please don't cut articles from and redistribute by email or post to the web.

More on this topic

Suggestions below based on US Politics & Policy

Obama’s gambit threatens ties with east Europe

President Barack Obama’s decision to abandon US plans to site a missile defence shield in Europe may go some way to improving relations between America and Russia. But the risk to Thursday’s move is that it will further undermine the uneasy relationship between Washington and the nations of central and eastern Europe.