Can Snow take the heat as US deficit balloons?

Who is John Snow? He may now be the new US Treasury Secretary, confirmed last week by the Senate to the job that makes him the Bush administration's chief economic and financial spokesman. But he is still a relative unknown.

One way of defining him is by comparison with his predecessors. Mr Snow cannot boast the political pedigree of Lloyd Bentsen, the suave Texas Senator who became Bill Clinton's first Treasury Secretary.

Nor does he have the Wall Street reputation, and legendary financial acumen, of Mr Bentsen's successor, Robert Rubin. Nor does Mr Snow possess the coruscating, on occasion abrasive, intellect of Larry Summers, Clinton's third man at the Treasury, who is now president of Harvard University.

But most important of all, he is not Paul O'Neill.The unfortunate Mr O'Neill, George Bush's first Treasury Secretary, was unceremoniously dumped from his post last December. His sins were not so much incompetence as a tin ear for politics, a proneness to gaffes and an inability to get across Mr Bush's economic policies, some of which – as he hardly bothered to hide – he did not even support.

In background, it must be said, Messrs Snow and O'Neill are strikingly similar. Both are Midwesterners in their 60s. Both had some experience in Washington, and both made their reputation running Old Economy companies.

Mr O'Neill was credited with turning around the giant aluminium group Alcoa; since 1991 Mr Snow had been chairman of CSX, the largest railway company in the eastern US.

But there, Mr Bush will fervently hope, the similarities end. Mr Snow's name was not even on early shortlists for the Treasury after his predecessor had cleared his desk in a huff on the day his resignation was announced. But he is billed as everything Mr O'Neill was not: a skilful communicator, a man who ruffles no feathers on Capitol Hill, and who above all is a good team player.

Certainly, he got off to a good start. Within a day of his nomination, Mr Snow resigned his membership of Augusta National, thus avoiding entanglement of himself (and by extension the Bush administration) into the controversy over the refusal by the club, home of the annual US Masters golf championship, to admit women members. The going may not stay so smooth for long.

Whatever his virtues, Mr Snow is not the big economic or financial name Wall Street had been hoping for. His stint in Washington was during the Ford administration, where he ran the national highway traffic safety agency between 1976 and 1977. He then moved into the railroad industry, first as a lobbyist and then up through the executive ranks of CSX.

Mr Snow's record there is mixed; his biggest achievement was, in defiance of a host of predictions, to jointly engineer with another transport group, the acquisition of the former Conrail in 1997, in a $10bn deal. Detractors, however, have pointed to a poor accident record at CSX in the first half of the 1990s, claiming that the Snow regime put profits ahead of safety.

But admirers – including some sections of organised labour – say the criticism is unfair. In his last years at CSX, the company's safety record improved notably. "He was the only railroad executive who tried to break the militaristic culture of railroad management," says Frank Wilner, of the United Transportation Union, which has 8,000 workers at CSX.

Shareholders too have resented his hefty remuneration ($10m in 2001) and lavish retirement benefits, at the very time the CSX stock price was tumbling, and when Mr Snow was pushing a switch in the company's pensions plan to the "cash balance" system, which penalises longer-serving employees.

With pension and other retirement benefits of $40m or more due from CSX on top of a considerable personal fortune, Mr Snow will be one of the richest members of what is already a very rich Bush cabinet.

True, he emerged last year as an angry critic of corporate greed and malpractice. But in the post-Enron and WorldCom world, such sentiments are the business version of extolling the virtues of motherhood. Greater clues to how he will operate at the Treasury may be gleaned from his spell in 1995 and 1996 as chairman of the Business Roundtable, one of America's most exclusive lobby groups, made up of CEOs of big companies.

At the Roundtable, Mr Snow was an advocate of deregulation, and a leading proponent of tax cuts for business. He adapted well to the ways of Washington. "John's a very smooth operator, very personable," said a lobbyist who knows him well, "and he's a mainstream Republican".

But which mainstream? His confirmation hearings provided few answers. Mr Snow declared himself a supporter of a strong dollar – which briefly perked up the sliding US currency. But he added, that a strong dollar should be the product of a strong economy: a hint that he may be no more averse to a policy of "benign neglect" than several predecessors.

The greatest question mark however is his attitude to the Bush tax cuts, and to a budget deficit likely to balloon to a record $300bn in fiscal 2003. Not so long ago, Mr Snow was a paid-up deficit hawk, warning that "the budget deficit puts a hole in the pocket of every American, every day of their lives".

John Snow the team player sings a different tune in public these days. A barely concealed hostility to further tax cuts contributed to Mr O'Neill's demise. Mr Snow will not make the same mistake. On Capitol Hill, in his confirmation hearing before the Senate Finance Committee, he defended a "pro-growth, pro-jobs" economic agenda – which in Bush administration-speak means, to hell with the budget deficit.

But intense questioning, from Republicans as well as Democrats on the Committee, offered a foretaste of the problems the $674bn Bush tax cut package, centred on the abolition of taxes paid by individual shareholders on dividends, will face when the debate starts in earnest.

Mr Snow insists the US deficit, even at $300bn a bare 3 per cent of GDP, is perfectly manageable. But others wonder. "At heart he's against deficits, and in private he'll speak out" predicts his friend Senator Jon Corzine of New Jersey. One way or another, even for good soldier Snow, the 21 months until the next election may be trying indeed.