Former Treasury Secretary John Snow told a full List 120 Tuesday that despite being the public face of U.S. economic policy, the treasury secretary has less power than many assume.
Snow's talk was part of the Commerce, Organizations and Entrepreneurship Lecture Series, and students in EC 121: "Intermediate Macroeconomics" made up a large part of the audience.
A lawyer by training, Snow served as president, chairman and CEO of transportation giant CSX Corporation from 1989 until he was nominated by President Bush to succeed Paul O'Neill as secretary of the treasury in 2003.
After nearly three years as a member of Bush's cabinet, working to implement the president's policies on taxes and social security, Snow resigned in July 2006. Since leaving office, Snow has served as chairman of private equity firm Cerberus Capital Management.
Snow's 40-minute speech focused on the relationship between the treasury secretary and the president, his feelings about media pressure and his relationship with other countries' finance ministers.
Though journalists often asked him to speak as treasury secretary about federal economic policy, Snow said he could not comment on the policies as his own - his job was to carry out the president's policies.
"If the treasury secretary has one policy on taxes and the president has another, it won't work," Snow said. Though it can be easy as treasury secretary to begin thinking "these policies are yours," Snow said, it isn't true.
"There is one policy and that's the president's," he said. "Once you stray from that, you get in trouble."
Policymakers must be adept at both crafting policy and communicating with the public, Snow said. There is a "dichotomy between talking about the economy the way you need to (as a policy-maker) ... and the way you have to (when addressing the public)," he said.
For example, he said, the treasury secretary is the only Cabinet member allowed to talk about the U.S. dollar's strength and foreign exchange rates. But "every treasury secretary tries to avoid directly commenting on the dollar" because "nobody knows where the currency is going," Snow said.
Though many economists have tried to find a model to predict how currency exchange rates will vary, none have been successful, Snow said. Still, journalists persist in asking economic leaders questions they can't answer, he said.
Snow fielded students' questions about Social Security and plans to increase the federal minimum wage following his lecture.
Recent plans to increase the federal minimum wage will not affect the economy greatly, he said. "It'll hurt some teenagers trying to get jobs in the summer," he said, since higher wages mean fewer workers can be hired.
An increase in the minimum wage after 10 years of no such raise is reasonable, he said, noting that "no one's proposing the minimum wage be $40 an hour."
After the lecture, Snow told The Herald he wished the Bush administration had solved problems with the Social Security system. "The legislative strategy was flawed," he said.
The administration became "vulnerable to the charge that we wanted to privatize - we didn't," he said. "We didn't have a lot of response from the other side but we made it easy for them to refuse to get on the playing field."
The longer legislators fail to act to fix the Social Security system, the more future generations will lose, Snow said. He estimated that by 2040, the system will be completely useless.
Eva Kolker '10, who attended the lecture, said it was "informative to hear the difference between the academic and policy-making world."
