Bush Taps Goldman Sachs Exec for Latest Treasury Secretary

On Friday, media were reporting that US Treasury Secretary John Snow might step down in mid-to-late June. Now, we learn that Snow has resigned and President Bush is appointing Goldman Sachs Chief Henry Paulson (60) to be the 74th official and the third in this Administration. Paulson last worked in politics in the Nixon Administration.

Larry Markinson notes that Goldman Sachs "executives have given nearly $23 million in campaign contributions since the 1990 election cycle." Slightly more than half of that money went to Democrats, but most of the Paulsons' $461,840 went to Republicans. [Note - most of his went to Rs and hers to Ds.]

Robert Reich, former Labor Secretary and current Berkley professor at the Goldman School of Public Policy, has a few words of caution (and a wish of luck) for Paulson:

He has his work cut out for him. The dollar is sliding. The deficit is growing. The economy is cooling. Wall Street may give two cheers to have one of their own at the helm at Treasury, but I don't really think the Street gives two hoots. Paulson's nomination doesn't alter the economic fundamentals. Bush continues to spend like there's no tomorrow, while cutting taxes (mostly on the rich). Global capital markets don't care who's Secretary of Treasury. They see huge U.S. government expenditures and even bigger coming up (read baby boomers start retiring and get Social Security and Medicare) without revenues to support them, and they recognize that the nation's IOU (the dollar) is therefore going to be worth less and less. (tip)

Greg Mankiw agrees: "The government budget is on an unsustainable path."

What to do about the path is the proverbial 64-dollar question, one left to "policy" (which all too often means politicians, unfortunately). What we know, without question, is that total debt is growing at an unsustainable rate. But no politician worth his salt wants to talk about it. Ostrich impersonation is the rage inside the Beltway.

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