Treasury weakened by Bush missteps

President Bush has been looking for a new treasury secretary for more than a year, but he has yet to find someone who wants to replace John Snow in the once-powerful Cabinet post.

The drawn-out search is uncomfortable for the White House and hammers home the view that treasury’s influence and prestige has diminished under Bush.

“This administration has weakened treasury to degree I cannot recall,” said Peter J. Wallison, the treasury general counsel during the Reagan administration and now a resident fellow at the American Enterprise Institute, a conservative think tank.

“I do not recall a time that treasury has been as … excluded from policymaking as this treasury has been up to now,” he said. “There are very, very good people there now, and they could be a major source of support for the administration.

But it is hard to find someone” to head the department “who will be just an errand boy,” he said.

The search for a replacement for Snow, who is widely viewed as loyal but little more than a spokesman for economic policy set in the White House, began when Bush started his second term in early 2005. The White House signaled it was looking for a new treasury secretary, but then backpedaled a few weeks later and asked Snow to stay.

Earlier this year, Snow made it known that he wanted to leave. New White House Chief of Staff Josh Bolton put the on-again, off-again search for a replacement into overdrive when he took charge a month ago. But he has been rebuffed by a number of Wall Street and Washington heavyweights who were offered the job.

With the clock ticking, many believe Bush may turn to an administration insider. Such a person would have the advantage of having already cleared the time-consuming background check but would not bring new blood to an administration widely criticized for recycling staff and lacking fresh perspective.

Names in the rumor mill including Deputy Secretary of State Robert Zoellick, Commerce Secretary and former Kellogg CEO Carlos M. Gutierrez, Energy Secretary and former deputy treasury secretary Samuel Bodman, and ambassador to India and former Reagan treasury official David Mulford. Others are speculating that it could be former Sen. Phil Gramm, now an investment banker, or former House Majority Leader Dick Armey _ both outspoken Texas Republicans.

Regardless of who fills the spot or if Snow remains, few expect economic policy to change.

“The last two years are going to be caretaker time. There are not going to be any bold new initiatives … and there’s no agenda left, other than making the existing tax cuts permanent,” said Daniel Mitchell, an economist at the conservative Heritage Foundation.

The White House is not expected to give a new secretary the rein to return treasury to the dominant agency it had been since Alexander Hamilton became the first treasury secretary in 1789.

With three strong personalities on economic policy _ Bolton, new Office of Management and Budget Director Rob Portman and National Economic Council Director Al Hubbard _ already close to Bush, there is little room left at his ear for the treasury secretary.

Treasury’s Web site says the secretary “is the principal economic adviser to the president and plays a critical role in policy-making.”

Many observers and some former administration officials say that has not been the case since Bush quickly soured on his first treasury secretary, the outspoken Paul O’Neill, for publicly questioning some of the administration’s economic policies.

“Treasury has lost a lot of clout within the administration ever since Paul O’Neill came in. From that point on, the president and White House paid very little attention to the Treasury Department,” said Wallison, the former Reagan Treasury official. “When I was at the Treasury Department, Donald Regan was the central figure in the formulation of President Reagan’s economic policy. That is not true today.”