The White House vs Henry Paulson
George Bush speechwriter Matt Latimer has an astonishing tale of what the economic crisis looked like from inside the White House — and it’s a must-read, even if GQ does force you to click the “next” button ten times in a row to read it.
Latimer starts off by describing Hank Paulson as “pretty much a nonperson at the White House”, and it goes downhill from there:
Pundits on TV started asking why the president wasn’t saying more and what he was going to do. The answers were: We had nothing to say and no one had any idea.
The central event in the narrative is a speech that Bush gave on the economy, trying to push the abortive first version of TARP:
The president directed us to try to put elements of his proposal back into the text. He wanted to explain what he was seeking and to defend it. He especially wanted Americans to know that his plan would likely see a return on the taxpayers’ investment. Under his proposal, he said, the federal government would buy troubled mortgages on the cheap and then resell them at a higher price when the market for them stabilized.
“We’re buying low and selling high,” he kept saying.
The problem was that his proposal didn’t work like that. One of the president’s staff members anxiously pulled a few of us aside. “The president is misunderstanding this proposal,” he warned. “He has the wrong idea in his head.” As it turned out, the plan wasn’t to buy low and sell high. In some cases, in fact, Secretary Paulson wanted to pay more than the securities were likely worth in order to put more money into the markets as soon as possible. This was not how the president’s proposal had been advertised to the public or the Congress. It wasn’t that the president didn’t understand what his administration wanted to do. It was that the treasury secretary didn’t seem to know, changed his mind, had misled the president, or some combination of the three.
Clearly Paulson didn’t much care about currying favor in the White House:
We wrote speeches nearly every time the stock market flipped. Meanwhile, the White House seemed to have ceded all of its authority on economic matters to the secretive secretary of the treasury. The president was clearly frustrated with this. I was told that at one Oval Office meeting, he got very animated and exclaimed to Paulson, “You’ve got to tell me what you’re doing!” (In the weeks that followed, Paulson changed his spending priorities two or three times. Incredibly, he’d been given the power to do with that money virtually anything he pleased. All thanks to a president who didn’t understand his proposal and a Congress that didn’t stop to think.)
If nothing else, this surely gives Paulson full license, in case he felt he needed it, to unload on Bush in his own book. There never seemed to be much light between the White House and Treasury at the time. But in hindsight, it seems that there was no love lost between them at all.