The O’Neill Death Watch, Part 6

An ongoing series on the occupational travails of the treasury secretary.

The next ten days will be a period of maximum danger (as we wartime hacks like to say) for treasury secretary Paul O’Neill. With many reporters and editors on vacation for the Christmas-New Year’s stretch, news organizations operating on skeletal staffs will fill columns and air time with second-rate feature stories that have lain on the shelf for months. Embarrassing news like the Bush administration dumping its maladroit treasury secretary is almost guaranteed to get downplayed. Even if it isn’t, readers and viewers will be too busy celebrating the holidays to pay much mind. Bush won’t see an opportunity like this again until the last two weeks of August, and that’s probably too long to wait.

O’Neill’s latest humiliation is the openly-scornful Wall Street Journal’s observation, in a Page One Dec. 21 news story by Shailagh Murray and John D. McKinnon, that Congress’ failure to pass a stimulus bill before the Christmas recess

was another black mark for the secretary, who in October staked his reputation on the passage of a stimulus bill. If a package didn’t become law by year’s end, he said at the time, “then I guess as the point person, I’d say I failed.” In the interview Thursday, Mr. O’Neill said: “The president believes that we should have this stimulus bill. … If somebody wants to pin the rap on somebody that this didn’t happen, I’m willing to accept accountability for the fact that it didn’t succeed.”

It’s amazing that O’Neill managed to maneuver himself into this losing position, given that previously he’d angered conservative House Republicans by pointing out, correctly, that the stimulus bill was loaded up with unjustifiable special-interest breaks for industry. (To read Chatterbox’s unheeded advice about how O’Neill might have turned this to his advantage, click here.) Although the Republicans are now trying to demonize Senate majority leader Tom Daschle for blocking the stimulus bill (click here to read Jonathan Chait’s cogent explanation of why this won’t fly), the growing consensus, as expressed in both the Murray-McKinnon leader and in a separate Journal survey of economists on Page 2, is that the failure to pass a stimulus bill would at this point be no great loss. That’s because the economy looks like it’s already poised for recovery: Interest rates are down, oil is cheap, and the bond market is rallying. If the economy does indeed bounce back this winter, that will make O’Neill, who’s been saying all along that the doom-and-gloomers were wrong, look good. But the vindication will probably come too late to save O’Neill his job. If the economy does not bounce back quickly—and there’s a hard-to-dismiss case, made by John Cassidy in the Dec. 17 New Yorker, that it won’t, because of underlying problems like increased debt, a declining savings rate, and excess manufacturing capacity—then that will make O’Neill look very bad indeed. But he can take some comfort in the likelihood that he probably won’t be in Washington to receive the brickbats.

(Click here, here, here, here, and here to read previous installments.)