Monday, June 05, 2006

More on Paulson Appointment -- Truly a Bush Blooper Big Time

Since I think the Town Hall column of Jonathan Burns is a must read, I give you most of it below. It concerns Henry Paulson (shown at left with one of his friends) and the absurdity of his selection as Treasury Secretary by President Bush.

...On Tuesday President Bush announced his nomination of Henry “Hank” Paulson for Treasury Secretary. Paulson, currently the CEO of financial giant Goldman Sachs, is generally well-regarded by his peers on Wall Street. During his tenure, Goldman has seen some of the greatest share-price gains in the company’s history.


Paulson is also an environmental leftist who has used his company to pursue and support his conservation efforts at the expense of shareholders. His use of company assets to promote personal environmental goals has led to the criticism that his personal interests have at times been ahead of his principal duty as CEO: protecting shareholder investments and increasing profitability in both the short and long terms. Shareholder advocate Free Enterprise Action Fund has led the charge against Paulson.

“Paulson is extremely weak on property rights...He has basically used corporate assets to pursue his personal interests. When the conservative base finds out what Paulson really stands for, they're going to be up in arms,” said Fund portfolio manager Steven Milloy.

While it isn’t clear whether or not Paulson was kidnapped and brainwashed by lefty environmental groups, it’s clear he “drank the Kool-Aid” a long time ago. Paulson is troubling because it isn’t clear how much sway environmentalist groups have over him, or how much his own environmentalist views will affect his execution of office. In Thursday’s Wall Street Journal, columnist David Wessel raised some interesting points when he wrote, “…given [Paulson’s] record in using Goldman’s power and money toward environmental ends, he just might use his clout to push the administration toward dealing with climate change or even – don’t mention it before the elections – considering an energy tax.”

The buzz around Washington is that unlike outgoing Treasury Secretary John Snow, Paulson will be given a great deal of latitude in crafting policy. If this is true, and if Paulson is, as suggested by Lawrence Kudlow, being named “deputy president for economic policy,” then having an environmentalist “sleeper” in the cabinet is quite the coup for enviros, and reason for panic for anyone who derives their income from the American economy.

It’s hardly a secret that Paulson believes in man-made global warming. Last year, Goldman Sachs issued an eight page statement in which it laid out its environmental policy. The brief stated that the company believed in the UN Intergovernmental Panel on Climate Change’s (IPCC) assertion that global warming is a threat, and that market forces could not be counted on to solve the problem. Paulson and company support massive regulation. Goldman Sachs supported the McCain-Lieberman legislation proposal dubbed “Kyoto-Lite” by critics. The legislation, which was handily defeated in the Senate, would have capped U.S. carbon dioxide emissions to 2000 levels within five years. Experts estimated Kyoto-Lite to cost the U.S. economy hundreds of billions of dollars and countless jobs.

Equally troubling, Paulson has presided over two groups now under investigation for alleged financial misdeeds and dirty deals which occurred on his watch.

Paulson is the outgoing Chairman of The Nature Conservancy (TNC), a secretive environmentalist group based in Arlington, VA. TNC is the richest environmental group in the world with assets exceeding 3 billion dollars. It has been under scrutiny since 2003, when the Washington Post broke a story alleging inappropriate tax breaks claimed by major benefactors, private side deals for “conservation easements” and drilling for oil in the habitat of an endangered bird.

“The financial scandals at The Nature Conservancy are only the tip of the iceberg. The Nature Conservancy has served as the agent for turning millions of acres of productive private land into federally-owned land and has made huge profits from doing so,” said Myron Ebell, energy expert at the Competitive Enterprise Institute.

During Paulson’s tenure at Goldman, the firm spent 35 million dollars on 672,000 acres of land in southern Chile, which it then donated to The Wildlife Conservation Fund. Paulson’s daughter sits on the board of the environmental group, which has links to The Nature Conservancy. The Nature Conservancy was paid a hefty sum for helping facilitate the deal.

Goldman announced in November of 2005 that it would apply pressure on clients in “environmentally sensitive” areas, and committed itself to investing one billion dollars in alternative energy. Furthermore, the firm announced it would be establishing the Center for Environmental Markets to study free-market solutions to environmental problems. Goldman promised to endorse “stringent federal regulation.”

Goldman Sachs is currently under investigation by the Securities and Exchange Commission for allegedly aiding lender Fannie Mae in cooking their books; Fannie Mae executives are alleged to have falsely reported their profit numbers to line their pockets.

The problem with Paulson is not just the nature of his passion – for he’s clearly misguided on global warming regulatory policy and other environmental policies – but the fact that he sees fit to use other people’s money to support his passions. Paulson is a rich guy - $500 million rich by some estimates. If he wants to spend his own money to bankroll a free-market environmentalist non-profit or invest in alternative energy, so much the better - this is a free country. But for Paulson to steer Goldman down that road, and to spend the firm’s money on projects unrelated to profit, is wrong. As Treasury Secretary, whose money will he be willing to sacrifice to support his passions?...