Bush chooses Paulson for Treasury

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President Bush yesterday returned after a holiday weekend and picked up where he left off, building a new second-term team by nominating Goldman Sachs Chairman Henry M. Paulson to replace Treasury Secretary John W. Snow, who resigned after more than a year of speculation about his departure.

After a week of legislative victories -- with the Senate confirming his nominees to head the CIA, Office of Management and Budget (OMB) and Interior Department, as well as a contentious judicial nominee opposed by Democrats -- the president tapped the 32-year Wall Street veteran to sell the administration's economic policy.

"He has a lifetime of business experience. He has intimate knowledge of financial markets and an ability to explain economic issues in clear terms," Mr. Bush said of his nominee in an early morning Rose Garden announcement.

His path through the Senate was eased an hour later when Sen. Charles E. Schumer, New York Democrat and one of Mr. Bush's toughest critics, gave Mr. Paulson a vote of confidence.

"His experience, intelligence and deep understanding of national and global economic issues make him the best pick America could have hoped for," said Mr. Schumer, a member of the Senate Finance Committee.

Senate Minority Leader Harry Reid was less supportive, saying, "Mr. Paulson will face many challenges if he is confirmed in steering our economy towards greater prosperity for all Americans. Working families are struggling under high gas prices, rising health care costs, and skyrocketing college tuition. ... I hope Mr. Paulson will share that goal."

The Senate committee is expected to take up the nomination quickly, with a hearing possible within a few weeks.

Mr. Paulson, who also is chief executive officer at Goldman Sachs, said in the Rose Garden that the U.S. economy is "truly a marvel, but we cannot take it for granted. We must take steps to maintain our competitive edge in the world."

"I have witnessed and participated in the globalization of finance as major economies around the world have become increasingly interdependent," Mr. Paulson said. "Of course, the whole world is dependent upon the U.S. economy as a major engine of its growth. And our economy's strength is rooted in the entrepreneurial spirit and the competitive zeal of the American people, and in our free and open market."

The new job would mean a significant pay cut for Mr. Paulson, who made more than $38 million in overall compensation last year. The annual salary for Treasury Secretary is $171,900. But the nominee has a net worth estimated at a half-billion dollars and earlier this year gave $100 million in Goldman stock to a family foundation dedicated to conservation and environmental education, one of his favorite causes.

The nomination of Mr. Paulson illustrates not only the president's desire to revamp his second-term team but also the power of new White House Chief of Staff Joshua B. Bolten. When former press secretary Scott McClellan stepped down last month, Mr. Bush tapped Fox News commentator Tony Snow, a longtime friend of Mr. Bolten's.

Mr. Bolten is also a former Goldman Sachs executive who had worked with Mr. Paulson and led the effort to find a replacement. In addition, Mr. Bolten brought along his top OMB deputy when he replaced former Chief of Staff Andrew H. Card Jr.

Some observers are crediting Mr. Bolten for his immediate outreach to Republicans and Democrats on Capitol Hill in an attempt to re-establish good working relations.

"Bolten has made a lot of good moves already, and it appears to be working," said one high-level former administration official.