- The Washington Times - Tuesday, June 27, 2006


Treasury Secretary-designate Henry Paulson pledged yesterday to review a once-secret program that allowed the government to access a massive international database of financial information to catch terrorists’ financiers.

“If confirmed, I’ll be all over it … and make sure I understand the law thoroughly,” Mr. Paulson, a 32-year veteran of Wall Street, told the Senate Finance Committee during his confirmation hearing.

Montana Sen. Max Baucus, the committee’s ranking Democrat, was upset that the Bush administration did not brief the Senate panel on the terror-tracking program, which has stirred concern among privacy advocates and some Democrats. Last week’s public disclosure of the program’s existence angered the Bush administration, which said the reports could hobble their efforts to shut down avenues for terrorist fund raising.

In response to a request by Mr. Baucus, Mr. Paulson pledged to review the program after he takes the Treasury helm.

Mr. Paulson said he would have to “get my arms around” the issue of a program that the Treasury Department has used since shortly after the September 11, 2001, terrorist attacks to track activity by suspected terrorist financiers. He said that he had not been briefed on the program, but that weighing people’s financial privacy with fighting the global war on terror is a delicate balancing act.

Mr. Paulson’s nomination is not expected to hit any major roadblocks.

The panel’s chairman, Sen. Charles E. Grassley, Iowa Republican, has said he hoped that the nomination would be approved by the full Senate by the start of the July 4 congressional recess.

Democrats and Republicans on the committee welcomed Mr. Paulson’s nomination, citing his strong credentials for the job.

If approved as expected, the 60-year-old chairman and chief executive officer of Goldman Sachs would become the third Treasury secretary since President Bush took office in January 2001.

As Treasury secretary, Mr. Paulson also promised to improve America’s global competitiveness, partly by ensuring that companies are treated fairly in trade matters and by keeping taxes down.

To help make the United States more competitive globally, Mr. Paulson said he would advocate policies that provide open and level markets for U.S. investment and for U.S. products.

He said the United States must come to grips with the long-term unfunded obligations of Social Security and Medicare, problems that he said “threaten to unfairly burden future generations.”

Shoring up these entitlement programs that will face massive strains with the wave of retiring baby boomers is a “formidable challenge,” Mr. Paulson acknowledged. But he expressed optimism that something could be accomplished to help during the remaining time in the president’s term.

As to the government’s bloated budget deficits, “like all of us, I wish the deficit was lower,” Mr. Paulson said. Although he said he would like to see spending curbed to help trim the deficit, he said the size of the budget shortfall is in the realm of historical norms. Mr. Paulson said he thought it would be “a big mistake” to raise taxes to deal with the deficit.

Mr. Bush selected Mr. Paulson to succeed John W. Snow, the former chief of railroad giant CSX Corp. Mr. Snow has run Treasury since February 2003. Beset by low job approval ratings, Mr. Bush is looking to Mr. Paulson to help energize the administration’s stalled second-term economic agenda. The nomination was part of a flurry of other changes in the president’s personnel lineup.

Mr. Paulson earned $35.06 million in salary from Goldman Sachs last year, an amount that included cash and stock options.

He will sell his holdings in the Wall Street firm to comply with government conflict-of-interest rules, the White House said last week. He owns 3.23 million shares of stock, worth more than $470 million. His total net worth is estimated at more than $700 million.

Mr. Paulson, a Christian Scientist who does not smoke or drink, showed in his response to written committee questions that his brushes with the law have been minor. He listed only one incident in which he was arrested — in 1969 when he was 23 for climbing the fence of a public swimming pool in West Lafayette, Ind., and swimming after hours.

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