Senators grill Treasury nominee


U.S. Treasury Secretary nominee John Snow testifies during a Senate Finance Committee hearing on Capitol Hill Tuesday. Snow told his confirmation hearing Tuesday that President Bush's tax-cut proposal was "an investment in the American people and their future" and that he would not rest until everyone who wanted a job had one.

The Associated Press
Published: Wednesday, January 29, 2003 at 6:01 a.m.
Last Modified: Wednesday, January 29, 2003 at 1:36 a.m.
WASHINGTON - Treasury Secretary nominee John Snow told his Senate confirmation hearing on Tuesday that President Bush's tax plan will boost a lagging U.S. economy. But critics told Snow the program was weighted too heavily to the wealthy and would have to be changed.
Snow faced a barrage of questions from members of the Finance Committee about the stimulus proposal, but his nomination to replace the controversial Paul O'Neill won widespread praise from both Democrats and Republicans.
Committee Chairman Charles Grassley predicted Snow would win quick confirmation, perhaps as soon as Thursday.
Snow, whose net worth of around $100 million will make him one of the wealthiest members of the Bush Cabinet, was asked about lucrative benefit packages he was awarded during his 14 years as the chief executive at railroad giant CSX Corp.
Snow, 63, who had served in top transportation posts in the Ford administration, described his compensation as "sort of standard fare for CEOs of Fortune 500 companies." Grassley noted that the compensation was awarded before Congress, in response to a wave of corporate scandals, passed legislation last summer imposing new standards of corporate accountability.
One benefit Snow received, a $24 million loan from CSX to buy company stock, would be prohibited by the new law. It bars companies from making loans to their top executives, such as those given to officials of now-bankrupt Enron and WorldCom.
Snow told the panel that, if confirmed, he would give up CSX stock options worth between $25 million and $50 million, calling this "a significant part of my net worth."
Snow also has said he would sell his extensive stock holdings in CSX and 60 other companies, going beyond what government ethics laws require, in an effort to avoid any conflicts of interest in the Treasury post.
He was chosen by Bush in early December to replace O'Neill. The president decided to shake up his economic team in an effort to get more effective salesmen for a new round of tax cuts.
Snow began the sales process Tuesday, calling the Bush plan "an investment in the American people and their future," and saying that passage would boost economic growth and add an extra 500,000 jobs this year alone.
"As long as there are Americans who want a job and can't find one, the economy is not growing fast enough," Snow said.
At CSX, employment has dropped from 48,308 in 1993 to 41,393 in 2001, according to reports filed with the Securities and Exchange Commission.
Snow told the panel that CSX, like other companies, has felt the effects of the weak economy with railroad trains that would normally have 100 to 110 boxcars often going out of the yard with only 60 to 70 loaded cars.
Democrats criticized the Bush stimulus proposal, contending that only $39 billion of the tax relief would come this year, too little to provide much momentum. They also criticized the centerpiece of the plan - $364 billion over 10 years to eliminate the double taxation of corporate dividends, saying its benefits would flow mainly to the very wealthy.
Sen. Max Baucus, D-Mont., encouraged Snow to consider scaling back the overall cost of the program by eliminating the dividend proposal, and instead supporting his proposal to provide $75 billion in relief this year to cash-strapped state governments.
While many Republicans on the panel told Snow they supported the Bush plan, Sen. Olympia Snowe, R-Maine, said she was concerned about the impact of the proposal on future budget deficits, which she said could hit a record $300 billion this year, including the cost of a potential war with Iraq.
She told Snow she would prefer a smaller stimulus plan focused "more on the short-term and immediate future."
Several Democrats questioned Snow about comments House Ways and Means Committee Chairman Bill Thomas, R-Calif., made on Monday raising his own doubts about the dividend proposal.
Snow, however, insisted that elimination of taxes on dividends would give a boost to the battered stock market and would eliminate an inconsistency in the treatment of dividend earnings that are now taxed at the corporate level and at the level of investors.
Snow said he still believed that federal deficits matter by driving up borrowing costs in the private sector, but he said that was not the case at present with the economy struggling and interest rates on mortgages and other loans at a four-decade low. He said the best way to attack the deficit was to promote higher growth through tax cuts, echoing a key administration sales point for its plan.
During the nearly four-hour hearing, there was no mention of a DUI charge, later dismissed, against Snow, or a dispute over child-care payments that he had had with his ex-wife, two issues which Snow revealed last week in response to written committee questions.

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