- The Washington Times - Friday, December 22, 2000

Wednesday, Paul O'Neill was handed one of the toughest jobs in the incoming Bush administration: selling a $1.3 trillion tax cut to a divided Congress. As incoming treasury secretary, Mr. O'Neill will have to urge lawmakers to tighten their fiscal belts, an exercise they are loathe to undertake even under normal conditions. Given the bitterness that prevails today on Capitol Hill, the task will be all the more difficult.

But Mr. O'Neill will be aided by an appropriate economic scenario. The current budget surplus speaks for itself. Washington can afford to implement a tax cut, and if it fails to do so, legislators will surely make claims to the surplus until it disappears.

The numbers prove that Congress will find a way to spend the money it receives. This fiscal year, Congress spent 7 percent more than the year before, in a period with almost no inflation, noted Stephen Moore, president of the Club for Growth. Legislators spent $50 billion more than what the 1997 balanced budget bill envisioned and $15 billion more than what President Bill Clinton had asked for.

President-elect Bush said this week that he will stick by his original tax plan, under which he would cut marginal income tax rates to 10-15-25-33 percent from the current 15-28-31-36-39.6 percent. Mr. Bush is correct in standing his ground, but he will most likely have to alter some points of the plan along the way.

The question remains, though: Is Mr. O'Neill the man to push the plan? Certainly, the incoming Treasury chief rises from relative obscurity. His name wasn't floated as a possible candidate until this week.

But he has developed some key personal relationships over the years. He worked alongside Vice President-elect Dick Cheney and Federal Reserve Chairman Alan Greenspan during Gerald Ford's administration in the 1970s. From 1974-1977, he served as deputy director of the Office of Management and Budget. Indeed, it is likely Mr. O'Neill's friendship with Mr. Greenspan and his reputation as a team player made him Mr. Bush's choice. Mr. O'Neill worked as both Alcoa Inc.'s chairman and chief executive officer for more than 10 years. In May 1999, he stepped down as chief executive officer, and he will retire as chairman on Jan. 1.

Mr. O'Neill has voiced clear support for Mr. Bush's vision for the economy. However, he has generated most attention for a position he took in 1992, in support of a tax on gasoline. It remains to be seen whether Mr. O'Neill still believes in that. If he does, he will be at odds with both the president-elect and the Fed chairman who have identified rising energy prices as one of the main risks to the country's future economic well-being.

Like Mr. Greenspan, Mr. O'Neill believes paying down the national debt should be an overriding priority. In this, too, he will have to bow to the president-elect, insofar as Mr. O'Neill's main task will be to promote Mr. Bush's tax cut and serve as the administration's liaison with the Federal Reserve. The responsibility of crafting tax policy will rest primarily on the president and his advisers.

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