Editorials

Henry Paulson: A Terrific Choice For Treasury

The same way that even a broken clock tells the correct time twice a day, George W. Bush occasionally makes a good decision. His appointment of Henry Paulson as Treasury Secretary is one such decision, and may do more to salvage the Bush Presidency than a roomful of Karl Roves. Mr. Paulson is a tough-minded, experienced financial leader who understands the vital role that the U.S. plays in global markets and the importance of free trade in the 21st century.

Mr. Paulson is hardly an obscure figure: As chairman and chief executive of Goldman Sachs, he has a reputation for toughness and common sense. Indeed, his street smarts and preference for balanced budgets puts him somewhat at odds with the foolhardy Bush administration ideologues who have racked up outsized budget deficits. Like many of the Bush crowd, he is wealthy—worth an estimated $700 million—but he and his wife Wendy belong to no country clubs, and they prefer to vacation on the modest Illinois farm where Mr. Paulson grew up. As chairman of the board of the Nature Conservancy, his passion for the environment also distinguishes him from the White House. Under his watch, Goldman became the first Wall Street firm to acknowledge the issue of global warming, as well as purchasing thousands of acres of rain forest in Chile to protect the region from logging. To date, George Bush’s economic policies have consistently slighted the environment in favor of industry. It’s hard to imagine Mr. Paulson letting that misguided approach stand.

Of course, to become chairman of Goldman Sachs, one needs more than just an abiding affection for wildlife. It takes a kind of ruthless determination. Mr. Paulson’s rise at Goldman is well-documented: Educated at Dartmouth, where he played football, and Harvard Business School, he went to work as a young man in the Nixon White House on John Ehrlichman’s staff. After four years he went to Goldman, working as a junior investment banker in the Chicago office, where he made a name for himself as someone who could bring in significant clients. By 1998 he was co–chief executive with Jon Corzine, who is now governor of New Jersey. Having won the top spot, Mr. Paulson took Goldman public, created a great deal of wealth for the firm’s partners and pushed it to expand into foreign markets, traveling to China more than 70 times and making Goldman the most recognized name in Beijing’s burgeoning business community.

Can this talented and driven realist succeed in the Bush White House? The ball is in Mr. Bush’s court. If he chooses to genuinely empower Mr. Paulson and let him set policy, the dividends for the country, and for this embattled President, could be rich indeed.

Playing the Race Card

David Yassky is an ambitious and effective City Council member from Brooklyn who’d like to earn a promotion to the U.S. House of Representatives. He has his eye on the seat that is being vacated this year by Major Owens, a longtime incumbent.

Mr. Yassky’s candidacy has created a huge controversy in city politics. Democratic politicians are furious with him and have suggested that he has no right to offer himself as a successor to Mr. Owens.

You’d think Mr. Yassky was some kind of radical. Well, in a way, he is: He believes race should have no bearing on the merits of his candidacy. He believes it shouldn’t matter that he’s a white guy who wants to succeed an African-American Congressman. But the power brokers in Brooklyn think this is all that matters, and they’re worried that Mr. Yassky will win the Democratic nomination and hence the election, because the black vote will be split among several black candidates.

Mr. Yassky’s color-blind position is, of course, heresy to the false multiculturalists and pseudo–diversity lovers who populate the Democratic Party in New York. Because the district in question is 61 percent African-American, city political insiders believe only an African-American should hold the seat. The seat has some nostalgic value too, for it was the seat once held by Shirley Chisholm, the first African-American woman elected to the House.

Is it any wonder why the Democratic Party has a hard time winning over white middle-class voters? They see what ought to be evident to anybody not blinded by ideology: If a bunch of white politicians tried to block the election of a black candidate, they’d be accused of racism. So why is it O.K. for black politicians to openly plot against a white candidate?

Besides, what does this kind of thinking say about American democracy? After all, more than 20 percent of the district is white, and 12 percent is Hispanic. Why must the 11th Congressional District be African-American? Can’t a white politician represent the interests of people who are not white? Can’t a Latino politician represent a broader constituency?

The Voting Rights Act of 1965 has been interpreted to allow Congress to draw majority-minority districts, thus ensuring the election of African-Americans and Latinos. But there’s nothing in the law that says “whites only” or “blacks only.” And that’s how it ought to be.

The $5 Billion Surplus: Don’t Blow It

With fiscal monitors crowing over the city’s $5.4 billion budget surplus for the fiscal year ending June 30, it’s no wonder than an array of union representatives, nonprofit groups and arts organizations squeezed into the City Council chamber last week to lobby for a piece of the pie. As worthy as many of their causes were, such as increased financing for child welfare and landmarks preservation, now is not the time to dip into the booming city treasury or to reward voters with generous tax cuts. The city’s budget director, Mark Page, is right to caution against exuberance. As he forecast last week, the city may be facing annual budget deficits of more than $3 billion beginning in the second half of 2007.

A surge of spending and a round of tax cuts would no doubt be politically appealing and would put Mayor Michael Bloomberg in good standing with a large portion of the population. But it would be fiscally reckless, leaving the city acutely vulnerable to the tough times that lie ahead. No doubt the City Council, whose members are not exactly known for fiscal prudence or sober judgment, will be agitating to spend away the surplus in a grubby frenzy of pork-barrel politicking. One trusts that Council Speaker Christine Quinn, who has distinguished herself as being above the usual Council shenanigans, will continue to put the brakes on her esteemed colleagues.

How can Mr. Page be so sure that the city is heading for multibillion-dollar deficits? It’s simple: Pension costs, insurance premiums and retiree benefits for city employees are ballooning at rates that outpace revenues. These are fixed costs; there’s nothing much to be done about them. Mr. Page is not alone in his prediction: The Independent Budget Office expects deficits between $2.5 billion and $2.9 billion over the next three years. A slowdown on Wall Street or a pause in the real-estate market would add further pressure on the city treasury. The Bush administration’s recent, reckless 40 percent cut in New York’s anti-terror funding is another reason to shore up the city’s coffers.

Mr. Page is showing himself to be a wise and thoughtful budget director. The Bloomberg administration deserves praise for recognizing that good times do not last and should be used to reduce the pain of hard times ahead.

Editorials