Treasury Secretary Henry Paulson’s handling of the financial crisis represents the last major manifestation of the Bush School of federal management: He asserts that he is The Decider, and he thinks he’s doing a heckuva job.
Paulson’s inflated view of his own effectiveness was evident in the op-ed he just published in the New York Times, in which he declares: “I am very proud of the decisive actions by the Treasury Department, the Federal Reserve and the F.D.I.C. to stabilize our financial system.” The Decider also bragged of “decisive action” in his testimony today before the House Financial Services Committee.
All this self-congratulation is no more effective than the efforts of former FEMA Director Michael Brown to rewrite the history of his performance in the aftermath of Hurricane Katrina. Paulson’s track record in the Big Bailout has been roundly criticized for inconsistency, ineffectiveness and lack of transparency. (A generally positive profile of Paulson in today’s Washington Post is an anomaly that is unlikely to change many minds.)
The problem is that Paulson, who has two months left in office, seems to think he is not only the Decider but the Dictator. Although Congress inserted oversight provisions in the bailout legislation, Treasury has dragged its feet in implementing them, and Paulson acts as if he had gotten approval for his original three-page proposal that would have given him total carte blanche.
Paulson’s hauteur was on display in today’s hearing. Despite a lot of hostile questioning, he continued to assert, in effect, that his judgment—including the decision to switch from asset purchases to capital infusions as well as his resistance to using any of the bailout money to help homeowners avoid foreclosure or to aid businesses outside the financial sector—is all that counts. Paulson seems to regard the need to testify as an annoyance, and he apparently sees his job as shooting down the ideas of members of Congress rather than taking their guidance.
The handling of the financial crisis and the bailout will go down in history as the last of a long string of Bush Administration fiascoes. Fortunately, Paulson will soon return to the private sector, where he can do as much deciding as he wants without putting the country at risk.
Note: I want to put in a plug for a newly published report I wrote in my other capacity as the research director of Good Jobs First. Called Skimming the Sales Tax, it documents the ways in which giant retailers such as Wal-Mart are allowed to divert more than $1 billion of revenue each year into their own coffers.