Hank Paulson ranks among the Bush administration’s many disappointments. When he left the top job at Goldman Sachs to take the helm at Treasury, Washington was abuzz: This man was a problem-solver; this man had clout; the president had practically begged him to accept the job, and Mr. Fix-It hadn’t acquiesced just to warm a seat around the Cabinet table. But Washington can be a frustrating place. After 18 months, Paulson has made no serious impact on the issues that he cares about: entitlements, tax reform, China, trade, the environment.
Now Paulson’s predicament is reversing itself. Having been prevented from acting on his chosen issues by Washington’s constraints, Paulson is being forced by Washington to act on something he might rather leave alone — the mess in the financial and real estate markets. He is being pressed into action partly because the mortgage meltdown threatens a recession and partly because the pain will be especially acute in election battleground states such as Florida and Ohio. At the end of his spell in government, Paulson’s legacy will be determined by a question that he never sought to pose: When fate handed him an issue on which he was required to lead, did he lead constructively?