George Bush speechwriter Matt Latimer tells the tale of what the economic crisis looked like from inside the White House — and much of it reads like an attack on Hank Paulson, who he describes as “pretty much a nonperson at the White House.”
Latimer pins the blame on the White House’s seeming ineffectiveness during the crisis—those days when George Bush would pop in and out of the White House like a cuckoo clock and deliver a speech no one really understood or cared about—on the Treasury’s lack of communication with the White House. Basically, he accuses Paulson of shutting the President out of policy making.
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 stabilised.
“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.
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.)
That characterization stands in stark contrast to the story told by James Stewart in the latest issue of the New Yorker. (Sorry, no link because it’s not online yet.) Stewart, who clearly had the cooperation of many Treasury officials for his story but perhaps not many White House officials, says George Bush had ceded economic policy to Hank Paulson because he was distracted by Iraq.
Paulson regularly delivered updates to the White House, but from the outset of his tenure as Treasury Secretary he had been making policy to an extraordinary degree. Bush saw himself as a wartime President, and he was deeply involved in defence issues. The economy was secondary. One person who worked with Bush for many years said, “My sense is, this came up in the final months of an eight-year term. He was so ground down by Katrina, the war in Iraq. He was just out of gas.” A government official added, “Hank Paulson and the Treasury were unilaterally making economic-policy for the Administration. There was no influence from the White House.”
So Lattimer and Stewart agree that the President wasn’t much involved in economic policy during the crisis. But where they diverge is over whose doing this was: had Paulson shut out Bush or had Bush ceded policy-making to Paulson?
“If nothing else, this surely gives Paulson full licence, in case he felt he needed it, to unload on Bush in his own book,” Felix Salmon notes. “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.”