Treasury Nominee Snow Supports Lower Taxes

In Secretary of the Treasury nominee John Snow, President Bush chose a man with a history of support for lower taxes, free-market tax reform, and conservative Republican political candidates. At the same time, Snow has been involved with efforts that put balanced budgets ahead of tax cuts, which makes some supply-side economists nervous about him.

Snow, chairman and CEO of Richmond’s CSX Corp., a railroad company, served on the National Commission on Economic Growth and Tax Reform (the “Kemp Commission”), chaired by low-tax champion Jack Kemp, which in 1996 issued a report calling for a flat tax and lower tax rates.

Wrote Kemp in a column on December 9, the day of Snow’s appointment, “[Snow] was a strong voice on the Tax Reform Commission and is totally committed to the commission’s conclusion that it is time to replace the failed tax system with a new simplified tax code that taxes income only once at a much lower rate on both labor and capital.”

Some of Kemp’s fellow Washington think-tank members joined him in praising Snow, at least cautiously. “John has been a consistent supporter of CEI over the years, which would indicate he’s supportive of free-market ideas,” said Fred Smith, president of the Competitive Enterprise Institute (CEI), in an interview. “The railroad industry is one of the industries most damaged by government interference, government regulation for 100 years. In that sense, he brings a better understanding of the problem of government interference in microeconomics than almost anyone else who has ever been at Treasury. However, Treasury’s main job is macroeconomics. . . . If he has any biases, they are probably in favor of big business over the entrepreneur.”

“As a CSE board member, John Snow demonstrated his commitment to free markets and lower taxes,” said Paul Beckner, president of Citizens for a Sound Economy (CSE). Snow served on that board in 1988 and 1989. Beckner said Snow has “first-hand knowledge of the benefits of deregulation in the railroad industry” and has a “commitment to lower taxes and the need for fundamental tax reform.”

Said Cato Institute Director of Fiscal Policy Chris Edwards in a statement: “Snow will be an excellent spokesperson for the administration’s upcoming stimulus bill that is expected to include a depreciation tax cut component.”

As a long-time promoter of tax fairness and simplification, Snow can be expected to favor long-term methods of encouraging economic growth, such as cutting marginal rates or giving business more breaks on depreciation, rather than one-shot gimmicks such as the 2001 tax rebate or the payroll tax holiday being pushed by Sen. Pete Domenici (R.-N.M.) and Sen. Jon Corzine (D.-N.J.).

Under Ford, Snow served as deputy undersecretary of the Department of Transportation and as National Highway Traffic Safety administrator. He has a law degree and a Ph.D. in economics. He has served as an official at the Business Roundtable, the Business Council, the Conference Board’s Commission on Public Trust and Private Enterprise, and the Committee for a Responsible Federal Budget.

The last group opposes tax cuts when they might result in a deficit, and, reported Bob Novak, “In the early 1990s Snow headed the Business Roundtable, which then was notorious for its opposition to all tax reduction and its tilt in political contributions to Democrats.”

“I have known him for a long time,” said Jim Miller, chairman of CapAnalysis and a member of the emeritus board of CSE. “He’s had to do some group negotiating to get things out the door. . . . He understands that taxes increase the price of and decrease the returns to work. I think he’ll be terrific.”

On May 7, 1999, Snow told CNN in a discussion about the possible end to the budget surplus because of the war in Kosovo, “Well, tax cuts I don’t think are a particularly good idea. But tax reform I think is a splendid idea and I hope we’ll focus on tax reform, rather than tax cuts.”

Snow has also been interested in reining in spending to avoid deficits. At a Roundtable event on June 9, 1993, Snow said to President Clinton, “We in the Roundtable, of course, have made deficit reduction a major issue for a long, long time. . . . How do you feel about the proposals for process reform that I gather are gaining some currency in the Congress to put the spending caps on the entitlement programs, the non-discretionary programs, as well as the discretionary programs, with the firewalls and with the sequestration?”