Trying Times for Bush's Economic Point Man ; Paul O'Neill Wants to Be Overseeing an Economic Rebound. Instead He Faces Questions about His Boss's Business Ethics

Article excerpt

A black Cadillac pulls up, a Secret Service agent pops open the rear door, and Treasury Secretary Paul F. O'Neill strides into a hotel near the White House.

The tanned, silver-haired O'Neill is here to have breakfast with a group of reporters, the start of a day spent selling President Bush's plan for dealing with corporate crime.

As soon as the former Alcoa Inc. CEO sheds his suit coat and starts talking, his keen intelligence, palpable sense of rectitude, and detailed knowledge of the corporate world are immediately evident.

Still, the 72nd Treasury secretary is an unlikely salesman. He is openly impatient with poorly prepared reporters, disdainful of Washington's sense of self-importance and partisanship, independent enough to offer implied criticism of the president, and not shy about displaying his command of all things economic and corporate.

"I do know facts. I am really good about facts," O'Neill snaps early in the breakfast.

Last week's facts were not encouraging for the Bush economic team. President Bush's speech on Wall Street failed to calm nervous investors and the Dow Jones Industrial Average closed down at 7.4 percent for the week. The University of Michigan reported consumer confidence in July had fallen to its lowest level since Sept. 11. And the Bush administration announced it expected a $165 billion federal budget deficit this year, after four years of surpluses.

Meanwhile, members of both parties in Congress scrambled to adopt reform measures tougher than the president proposed in his speech. Late in the week, House Speaker Dennis Hastert said he supported a plan drafted by Senate democrats.

It is all enough to make critics question the Bush economic team's competence.

"We've got burgeoning deficits, a sagging dollar, and a general atmosphere of corporate scandal. I don't think you'd say his team has been doing too well," says Marshall Wittman, senior fellow at the conservative Hudson Institute.

When a reporter shares that quote with him, O'Neill responds, "As long as they were at it, they should have said the economic team is responsible for the planes crashing into the towers. It happened on their watch."

Holding CEOs to a higher standard

O'Neill's view of the CEO's world is deeply moral, and he seems genuinely outraged by the conduct in corporate boardrooms. In his former life as chairman and CEO of Alcoa, the world's largest aluminum producer, O'Neill says he thought about the $23 billion concern the same way the owner of a local hardware store would feel about his business.

"It was what my life was about. I felt that I owned the responsibility for the lives that were employed there - their physical well -being and their economic improvement," he says.

That sounds like a typical speech at a Chamber of Commerce rubber- chicken dinner. Except O'Neill has a record to back up his rhetoric. He used a relentless focus on worker safety to remake the culture at a lagging Alcoa. He cut injuries to one-tenth the level typical in manufacturing. Profits soared and O'Neill became rich. In his last year at Alcoa, he made $25 million.

"You know all the reforms that are being considered now? I did all those things 13 years ago at Alcoa," he says. "Not because the government told me to do it, but because it was the right stuff to do."

Drafting a corporate-reform plan

Now O'Neill finds himself helping the Bush administration map its strategy for dealing with CEOs who, when left to own devices, did not do the right thing.

He had a key role, along with several White House staff members, in drafting Bush's corporate reform plan. The secretary also briefed reporters on Air Force One as Bush flew to New York last week. But he was not visible to those who watched the event on TV. …