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Why Treasury's Next Chief Won't Be A CEO

A year ago, administration hard-liners tried to force out Treasury Secretary John W. Snow by leaking reports of his imminent ouster to the media. The rap: The former business chieftain was too pragmatic -- and deficit-obsessed -- to play a starring role on a supply-side squad. Unfortunately for them, the plotters forgot to tell President Bush, who rallied behind Snow. The ex-CEO of CSX (CSX) got to stay on, helping to lead the ill-fated push for Social Security private accounts. Now, the talk is that Snow, 66, will voluntarily depart not long after he tidies up a last bit of outstanding business -- handing his boss the Nov.1 recommendations of a bipartisan commission that's weighing tax-reform options.

It's clear from the internal chatter that the next chief is almost certainly going to be cut from a different bolt of pinstripes than the two CEOs who have held the top Treasury job. Former Alcoa (AA) boss Paul H. O'Neill, an outspoken maverick, was dumped in 2002. Snow, a genial traveling salesman for Team Bush, has endured sniping from critics who think he falls short as a key policymaker. White House insiders say the President is inclined to junk the industrialist model in choosing his next Treasury chief.

In most of his second-term appointments, Bush has shown an inclination to reward trusted insiders with key jobs. Among them are Secretary of State Condoleezza Rice, Attorney General Alberto R. Gonzales, Education Secretary Margaret Spellings, and now Supreme Court nominee Harriet E. Miers. Two low-profile loyalists fit the bill to succeed Snow: Budget Director Joshua B. Bolten, a former Goldman Sachs (GS) executive whom insiders say is not happy with his job, and Chief of Staff Andrew H. Card Jr., Transportation Secretary under the first President Bush. "The President is comfortable with these guys," says one adviser.

One drawback to Card: His nomination could upset the currency markets because he was an advocate for a weaker dollar when he lobbied for the automobile industry in the mid-1990s.

Bolten's downside? He shuns the limelight and might not be at ease in the role of chief economic spokesman. Besides, Bush may prefer to have him just down the hall as his next chief of staff.

If he wants a policy wonk with a track record of loyalty, the logical choice is R. Glenn Hubbard, dean of Columbia Business School and a BusinessWeek columnist. Hubbard, who served as White House chief economist in the first term, was the architect of Bush's plan to slash taxes on dividends and capital gains. He's also in the running to be chairman of the Federal Reserve when Alan Greenspan steps down next year.

A Wall Streeter at Treasury also could help fill the void left by Greenspan. Two financial industry veterans in the mix are Goldman Sachs CEO Henry M. Paulson Jr. and Merrill Lynch (MER) CEO Stan O'Neal. But the smart money -- inside and outside the Administration -- is betting that confronted with these choices, Bush will forgo the big name in lights and opt for the comfort of a lieutenant he can trust.

As a conservative GOP congressman from Southern California, Christopher Cox blasted the Chinese government for trampling on its people's political freedom. Now, as the new chairman of the Securities & Exchange Commission, Cox will press Beijing to safeguard a different kind of freedom -- the kind that could foster the growth of its nascent capital markets.

In a mid-October visit to China, his first trip abroad as SEC chief, Cox promises to preach the gospel of disclosure, transparency, and good corporate governance. "There is a relationship between the freedom of information and transparent capital markets," says Cox. "Frictionless markets require information as a lubricant." He intends to prod Chinese regulators to adopt international financial reporting standards and help combat securities fraud in global markets. And Wall Streeters hope he'll address Beijing's insistence on a controlling interest in financial joint ventures.

The Senate Appropriations Committee claims to have trimmed President Bush's Pentagon spending request for 2006 by $7 billion. In reality lawmakers shifted some of the spending to a supplemental bill for the Iraq War. That's not the only accounting sleight-of-hand. The committee moved $10 billion in future retiree health benefits costs from the Pentagon to the Treasury Dept. The nonpartisan Congressional Budget Office blew the whistle on the gambit, leaving the committee $10 billion over the mandated defense spending cap of $439 billion.

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