Treasury Chief Rubin Resigns
Treasury Secretary Robert Rubin, Wall Street's guy in Washington, quit Wednesday, but the Street barely missed a beat.
The departure of the man who put meaning in the slogan, "It's the economy, stupid," caused the Dow Jones Industrial Average to fall more than 200 points after rumors of his resignation hit the market early Wednesday.
But stocks and bonds quickly recovered as the market realized that despite his departure, the economy remains in top shape with the nomination of Deputy Treasury Secretary Lawrence Summers to replace Rubin.
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In a Rose Garden ceremony, President Clinton praised Rubin as the leader of the economic team that had helped create "the strongest economy in a generation, and perhaps ever."
Mr. Clinton said financial markets had restored its confidence in the economy based on its belief that "as long as he was Treasury secretary, nothing bad could happen."
"He is the most effective Treasury secretary since Alexander Hamilton," Mr. Clinton said, referring to the first man who held Rubin's job.
Undersecretary of State Stu Eizenstat will be nominated to replace Summers as deputy, Mr. Clinton said.
Rubin, 60, has been President Clinton's most trusted and respected economic adviser since the beginning of his first term. He is credited with bringing some Wall Street pragmatism to an administration elected on an idealistic and vague economic program.
In an interview Wednesday night with CBS News Anchor Dan Rather, Rubin said he frsees "continued, solid growth and low inflation."
"But I think there are serious issues and we need to address them," Rubin added. "One of them certainly is that we are the only major part of the global economy that has robust domestic growth.
"It is a risk to our economy that every other part of the world's economy is relatively soft. It's critically important that we continue to provide leadership on the economic issues that address that problem."
CBS News Senior White House Correspondent Scott Pelley reports that Rubin advised the Clinton administration that cutting the deficit was more important than new social programs. Rubin is credited with pushing the 1993 budget deal to reduce deficit spending, resulting in lower interest rates. He also backed reform of the IRS and intervened when meltdowns in Mexico, Russia, Brazil and Asia threatened the U.S. economy.
Rubin was unique among cabinet secretaries, Pelley reports, in that President Clinton sought his advice on all matters not just economic ones. The president is truly losing one of his closest advisors.
CBS News Correspondent Anthony Mason notes that when Mr. Clinton faced impeachment, Rubin's presence reassured the markets.
His greatest contribution, says former colleague Robert Hormats, was "being able to navigate the American economy through a series of icebergs that could have knocked it way off kilter."
Rubin's resignation had been rumored for months as the administration groomed Summers for the job.
Administration officials said Rubin discussed his decision with Mr. Clinton "within the past week" and said Rubin's decision was fueled solely by his desire to return to private life after working for Mr. Clinton since the start of his administration.
"He just decided it was time to get back to private life," one official said, speaking on condition of anonymity.
This official said Rubin had no immediate plans for returning to public service, although Rubin has long been viewed as a possible top candidate for the chairmanship of the Federal Reserve if Chairman Alan Greenspan should choose to retire.
Rubin "has been one of the most effective secretaries of the Treasury in this nation's history," Greenspan said in a written statement. "He will be missed, especially by those of us at the Federal Reserve who have been privileged to work with him over these last four and a half years."
Greenspan welcomed Summers. "He is a person of extraordinary talent and judgment who will continue the important work Bob Rubin initiated," the Fed chairman said.
Rubin is expected to stay at Treasury through July.
Rubin had considered leaving sooner, but did not want to leave the administration during the Monica Lewinsky scandal or the global financial crisis, said one official familiar with his thinking.
Rubin, a former co-director of Goldman Sachs, joined the White House a the head of the new National Economic Council.
While Mr. Clinton campaigned on a promise to boost spending to pull the nation out of the lingering recession that doomed George Bush's presidency, Rubin argued that smaller deficits would bring the lower interest rates the economy needed to grow over the long run.
After Rubin's sales job, it wasn't such a great leap for Mr. Clinton to find common ground with the congressional Republicans on a balanced budget plan in 1996.
Under Rubin's prodding, Mr. Clinton adopted the most restrictive fiscal policy since Herbert Hoover. But, unlike Hoover, Mr. Clinton was lucky enough to take the oath just as the economy embarked on the longest sustained expansion in its history. Rubin's tight policies, combined with a Federal Reserve that was increasingly willing to give the economy more leash, were perfect for the times.