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Officials: Bush taps Snow for Treasury

CSX Chairman John W. Snow in a 1996 photo
CSX Chairman John W. Snow in a 1996 photo

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WASHINGTON (CNN) -- Bush administration officials said Monday that John W. Snow is the president's choice to replace Paul H. O'Neill as treasury secretary.

Snow has been chairman, president and chief executive officer of CSX Corp., a freight and transportation conglomerate based in Richmond, Virginia, since 1991.

Snow, a 63-year-old Ohio native, served in the U.S. Department of Transportation during the Nixon and Ford administrations, including as assistant secretary for governmental affairs from 1974 to 1975 and as deputy undersecretary from 1975 to 76.

He was administrator of the National Highway Traffic Safety Administration in 1976-77.

Trained as an economist and a lawyer, he is also former chairman of the Business Roundtable, an association of chief executive officers of leading corporations. He was an assistant professor of economics at the University of Maryland in the 1960s. From 1977 to the present, he has worked in a variety of positions at CSX.

O'Neill and Lawrence Lindsey, Bush's former top economic adviser, resigned Friday under pressure from the White House as the nation's economy continues to falter.

A senior administration official said Saturday that Stephen Friedman, a former Goldman Sachs chairman, is the top choice to replace Lindsey.

Friedman is the former chairman and partner of Goldman Sachs, according to the worldwide investment company's Web site. He was co-chairman of the company with former Treasury Secretary Bob Rubin.

White House Chief of Staff Andrew Card called O'Neill and Lindsey on Thursday and gave them a message from the president: Turn in your resignations tomorrow.

Treasury Secretary Paul O'Neill, left, and economic adviser Larry Lindsey
Treasury Secretary Paul O'Neill, left, and economic adviser Larry Lindsey

Card's move led to the abrupt resignation announcements by both men Friday morning, according to administration officials. The officials said that once the president decided O'Neill and Lindsey must go he tapped Card to make the fateful phone calls.

"President Bush thought about what his economic team should look like after midterm elections and decided that changes had to be made," a senior administration official said.

Bush, a loyalist especially to those in his inner circle, is said to have been particularly frustrated by O'Neill's outspoken and vocal criticism of economic policy decisions that the White House promoted.

The president did not like that O'Neill was so "reticent about Mr. Bush's call for the need for a growth package, that O'Neill was dubious about the benefit the tax cut would have on the economy and had said so publicly," the official said.

"People didn't know where he [O'Neill] stood until you read it in the newspaper."

The departure of Lindsey was just "collateral damage" in the shakeup, the official said.

The resignations, which came within an hour of each other, coincided with the release of a report showing 6 percent unemployment in November, matching April's rate, the highest since August 1994.

U.S. Sen. Patrick Leahy, D-Vermont, said he doesn't want to see O'Neill used as a scapegoat for a White House "policy of squander."

"They have squandered the surpluses ... the public's trust in corporate accountability and in the markets and the opportunities to use the surpluses to protect and strengthen Medicare and Social Security and homeland defense," Leahy said.

"Secretary O'Neill is not the problem; the administration's policies are," he said.

There is no fixed date for O'Neill's departure, but it will occur "sometime in the next few weeks," a Treasury Department statement said Friday.

O'Neill, 67, was sworn in as the 72nd treasury secretary on January 20, 2001.

He joined the Office of Management and Budget in 1967 and was deputy director from 1974 to 1977, according to the Treasury Department Web site.

From 1987 to 1999, O'Neill was chairman and CEO of Alcoa. He retired as chairman at the end of 2000 to join Bush's Cabinet.

Lindsey, a former associate professor of economics at Harvard University, was a Federal Reserve Board member from 1991 to 1997. He also was a special assistant to Bush's father from 1989 to 1991.

Lindsey was the architect of Bush's $1.3 trillion tax reduction plan, written during his presidential campaign.

CNN's Frank Buckley, Tim McCaughan, John King, Suzanne Malveaux and Megan Shattuck contributed to this report.

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