Don't Play That Card, Mr. President

After the Katrina and Miers debacles, one might think President Bush would realize the folly of placing unqualified political cronies in high-profile positions. But if the rumors about Andy Card replacing John Snow as Treasury Secretary turn out to be true (Card's recent denials notwithstanding) it's going to be deja vu all over again.

Under this administration, Treasury has been emasculated; the input and influence of competent career officials has waned, and the department has turned into little more than a John Snow-led cheerleading squad. That's been masked by the relative stability of the global financial markets since 9/11. But due in large measure to the fiscal and monetary policies the U.S. has pursued over the past few years, that stability is likely to end before Bush's second term does. Outside of 9/11 (and to a lesser degree, the accounting scandals of 2002) the last crisis was the tech stock crash in 2000---almost six years ago. We're overdue. If and when we get another dislocation---and it could take many different forms---the two most important people in Washington are the Treasury Secretary and the head of the Federal Reserve. Beginning early next year, the latter will be Ben Bernanke, a lifelong ivory tower academic with a wonderful history of published articles and fellowships but not one bit of actual experience in the financial markets. As a side note, it's true that Alan Greenspan similarly had no experience in the guts of Wall Street (he was a private economist for decades before becoming head of the Fed in 1987) but during most of his tenure he's been teamed with Treasury heads from strong financial backgrounds, including Nicholas Brady and Robert Rubin. Under President Bush, we've had Paul O'Neill and John Snow---highly respected corporate executives to be sure, but lacking in Wall Street credibility. The tag team of Bernanke and Card would be dangerously short on Street cred. Importantly, just as the Treasury Secretary can ameliorate crises a la Robert Rubin during the 1990's, he can exacerbate them as well. James Baker's ill-timed comments about the dollar were a contributing factor in the stock market crash of 1987. Is anyone ready to argue that Andy Card is a savvier player in global financial markets than James Baker?

Andy Card running Treasury would raise other issues. In the wake of Paul O'Neill and John Snow, it would strengthen the perception that Republicans have ceded the standard of excellence in important economic posts to Democrats. With all the support that Republicans enjoy in the financial community, is this the best they can do? Someone like John Mack would have made a wonderful Treasury head before he rejoined Morgan Stanley earlier this year. That caliber of experience is out there; part of being a leader is convincing it to come to Washington to serve. Yet one of the tragedies of the Bush administration is the way it has made the prospect of public service far less attractive for competent private sector citizens. That's what clumsy, failed cronyism does. When good people like Harriet Miers are placed in untenable situations and dragged through the mud (and pals like Michael Brown also turn into high-profile train wrecks, albeit for different reasons) other good people don't see much upside in going to Washington. By all accounts, Andy Card is highly competent, extremely loyal, and a good person---exactly the type who should not be asked to do a crucial job for which he's not qualified.

Unless you think this administration won't give Social Security reform one last shot before leaving office, there's something else to consider. The Secretary of the Treasury is the managing trustee of the Social Security program. Obviously, it's not necessary to spend time explaining the variety of ways another push for private accounts would be easier with a longtime political and family confidant overseeing things on the inside. I'm still in favor of some type of reform, but after the past few years I have little confidence in the ability of this bunch to pull off something so important and complex.

One last point: during the past few years, more than a few grizzled veterans of Wall Street have puzzled over what they see as strangely and propitiously timed bursts of buying interest in the stock market. Appointing a loyal crony to run Treasury would do nothing to dispel such speculation.

The major issue, though, is market credibility. If we do indeed get hit with some sort of financial crisis during the remaining years of this administration, the president's inevitable reaction would be just as likely to set off panic as inspire confidence: "You're doing a heckuva job, Andy."