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O'neill: Playbook For A Problem Solver

President Bush's new Treasury Secretary is an independent thinker with a pragmatic bent. Paul H. O'Neill has real-world experience in applying New Economy solutions to an Old Economy manufacturing company, an analytic frame of mind that is comfortable with complex data, a nonideological view of the role of government in economic growth, and a previous tour of Washington duty in the Ford Administration where he bonded with Alan Greenspan, Dick Cheney, and Donald Rumsfeld. This is the power O'Neill can bring to bear; he will need it if he is to succeed.

The most important job ahead is coordinating policy with Federal Chairman Greenspan. O'Neill said in his Senate testimony that monetary policy was the quickest way to battle an economic slowdown, and he was right. Fiscal policy takes time, and large fiscal stimulation narrows the room for monetary action. Greenspan has implied that how much he can cut interest rates depends, in part, on the size and timing of the Bush tax cut. Indeed, the chairman prefers using the budget surplus to pay down the federal debt. O'Neill must bridge the White House and the Fed on this. He should be a force for moderation, pushing to trim back the $1.7 billion tax-cut proposal enough to give the Fed room to act.