Behind Closed Doors at the Treasury Department

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So just what happened at yesterday's closed-door roundtable meeting between Treasury Secretary Hank Paulson and a group of prominent Wall Street economists? To find out, I rang two of the participants, both of whom did not want their names used. "I think Paulson just wanted to see how Wall Street views the economy," said one of them. "And I think he senses a benefit from trying to keep a dialogue open ... He said that he tended to agree with us that the economic backdrop is very favorable."

Paulson spent the first half of the meeting talking about the budget and the effect of future entitlement costs, a concern that he also expressed when originally taking the job. "He focused on the need to reign in entitlement spending," said the second economist. "But he didn't say a word about the Bush tax cuts ... We also talked about Bush's healthcare plan. We all thought it was a good idea but incomplete. Maybe it should have had tax credits instead of deductions. Paulson said it was a good point."

As far as risks to the economy go, Paulson only asked about the housing slowdown in an off-handed way and seemed more concerned that investors and market participants were too overconfident about the state of global economies and markets. "Hey, if anything goes wrong, him and [Federal Reserve Chairman] Bernanke are the guys who are going to have to fix it," the second economist said.