Mr. Wall Street Goes to Washington ; President Bush Named Goldman Sachs CEO Henry Paulson Jr. Tuesday as His Pick for the Next Treasury Chief
Ron Scherer and Linda Feldmann writers of The Christian Science Monitor, The Christian Science Monitor
President Bush has lined up a Wall Street heavyweight as chief spokesman for the economy. He's Henry Paulson Jr., who has been running finance powerhouse Goldman Sachs - and as the designated next Treasury secretary, he'll have a big job ahead of him.
Despite the current strong economic statistics, he must try to lift public sentiment that polls show is distinctly negative about the economy. At the same time, he will have to convince the world's investors that they should continue to finance the swollen US budget and trade deficit. And Wall Street analysts say his extensive dealings with Chinese leaders make him one of the most qualified to persuade China to loosen control of its currency - a hot topic in Washington.
"His job between now and the election is to get out and tell everybody, I'm captain of the universe and I'm telling you everything's OK. Just trust me," says Stanley Collender, a Washington budget expert and a managing director at Qorvis Communications.
One of the toughest challenges of Mr. Bush's second term has been to eliminate the public's perception gap on the economy - the seeming disconnect between strong economic numbers and low public opinion of the state of the economy. Recent polling by Gallup shows that investor optimism remains at its lowest point since last November, and consumers' optimism about their credit situation remains low.
"This is all tied to gas prices," says Dennis Jacobe, chief economist at the Gallup Organization, based in Princeton, N.J.
Overall, the public remains pessimistic about the economy. In mid- May, 29 percent of the public rated the economy at excellent or good, down from 38 percent in mid-April, according to Gallup. Among those who viewed the economy positively, 47 percent cited job availability as the top reason. Among those who viewed it negatively, the price of fuel was the top reason at 26 percent, followed by unemployment (21 percent) and inflation (14 percent).
"What the overall economic numbers show is that there's a particularly upper- and middle-income group that continues to do very well, and the economy reflects how that better-to-do group is faring," says Mr. Jacobe. "What is happening in terms of middle- and lower-income groups isn't reflected in average economic data as much as it is in polling data."
One way Mr. Paulson can help to change the perception of the economy is to work through Wall Street. A confident Wall Street could help boost confidence on Main Street. Analysts compare him to Robert Rubin, Treasury chief under President Clinton, and also a former chairman of Goldman Sachs. Mr. Rubin often stressed that it was in America's interest to have a strong dollar. …