Treasury Secretary Paul O'Neill discusses taxes during a news conference
He's stopped saying things like "I'm not going to make a huge case that [a tax cut] is the investment we need to make sure we don't go into a recession." That was at his confirmation hearings. The disparaging comments about stock traders and their "glowing green screens" have ceased, and he seems satisfied with his puzzling weeks-long quest to make the Treasury department a cleaner, safer place to work. (He apparently spent much of his first weeks in office working not on economics but ergonomics.) Who knows — he may even be finished penning unwanted-attention-getting three-page memos to President Bush about global warming.
And now he's selling his Alcoa stock.
Perhaps befitting a treasury secretary whose main perceived flaw was his inexperience managing the markets, the timing wasn't ideal. After vowing on March 4, with the stock at an all-time high of $39, not to sell, he's reversed course with the aluminum giant down to $34 — about what it was when he was nominated for the post Dec. 20. But the ultimate decision was, of course, a political one, and its goal was to boost the image of a highly touted FOG (friend of Greenspan) who's gotten off to a rocky start.
Yes, I can take it with me
"I didn't realize we were going to have this kind of ongoing question," he said on ABC's "This Week" Sunday. "I've decided to take this issue off the table."
After departed Treasury hero Robert Rubin set the recent standard for departmental conflict-of-interest-avoidance when he cut his financial ties to his former firm Goldman Sachs, and Dick Cheney — after a bit of hedging — did the same with his Halliburton holdings, the already iconoclastic O'Neill was starting to give his boss headaches. (Perhaps the final straw was when the Democratic National Committee's web site kicked off a "O'Neill/Alcoa Stock Tracker" last week.)
O'Neill had tried to keep the watchdogs at bay by promising to recuse himself — as per the letter of the law — from all Treasury matters pertaining to the aluminum manufacturer. But with Alcoa operating in 30 countries, with annual sales of $23 billion — and Bush, who's already under plenty of fire for his administration's coziness to Big Business, involving O'Neill in almost "every issue that the government is involved in" — it was time for O'Neill to finally clear his desk.
A fresh start?
The comparison with Rubin on divestiture is not the only one O'Neill is up against. Apart from understanding markets, Rubin had perfect pitch when it came to the political ramifications of Treasury decisions — and of course there's the matter of being the executive-branch helmsman of an unprecedented economic boom. So far, O'Neill seems a bit more tone-deaf, especially when it comes to the jittery nerves of the bond markets, and this is in a Republican administration, where the Treasury head is usually the Big Man on Campus.
O'Neill's holdings — in the neighborhood of 2.4 million shares of Alcoa stock and 3.8 million options to purchase same, as of the end of last year — will be converted into "index funds that are not subject to any question," he said. Asked when the sale would take place, O'Neill replied that "the financial people that take care of these kinds of things will pace it and figure out how to do it." Presumably he means the guys with the glowing green screens.
Presumably this will free up O'Neill to think about more mundane matters like, say, the ailing U.S. economy, the looming Japanese meltdown and the fate of his boss' tax cut on Capitol Hill.
Unless he can get Christie Whitman to switch jobs with him.