Keeping Counsel at Treasury.

DURING the mid-1970s, when Paul O'Neill was a fast-rising young bureaucrat at the White House Office of Management and Budget, he quickly acquired a reputation for being bright honest, and politically astute.

"One of the things that impressed me most was his ability to foresee how much trouble you could get into with what you said in public," said W. Bowman Cutter Ill, who succeeded O'Neill as deputy director of OMB in 1977 and went to him for advice.

"He was very savvy about that sort of thing," Cutter recalled.

Now, 24 years later, Cutter is out of the public eye as managing director of Warburg Pincus & Co., and it is O'Neill, currently ensconced as Treasury secretary, who needs some pointers on how to avoid stubbing his toe in public.

The boyish-faced, white-haired O'Neill retains his reputation for being bright and honest. He's been anything but politically astute, however, and he's occasionally bordered on being a political embarrassment.

"I wouldn't say he's in trouble, but he probably has been told to lower his profile and stick to the talking points," said Marshall Wittmann, an analyst at the Hudson Institute "This administration doesn't like people straying off-message."

By any standard, O'Neill has definitely strayed off-message during the past several months.

* Early in his tenure, O'Neill hit the headlines with an off-the-cuff comment on the dollar that sent the U.S. currency plunging and traders scurrying to sell more. The Treasury, apparently surprised, had to issue a clarification the next day.

* Seemingly unaware of the potential for causing a brouhaha, he stonewalled demands that he divest himself of some $100 million of stock in Alcoa Inc., where he had served as chairman for 13 years. He finally reversed himself under fire.

* Unhappy with the direction of a U.S.-European plan to crack down on tax havens, he abruptly pulled out of the joint effort without advance notice, leaving the Europeans aghast and the Treasury having to explain it didn't favor money laundering.

* Just before the $1.35 trillion tax cut bill passed Congress, he startled sponsors by advocating the abolition of the corporate income tax, risking the loss of Democratic support for the president's bill.

* In February, just after President George W. Bush unveiled his tax plan, O'Neill angered Republicans by throwing cold water on Bush's assertion that the bill would help ward off a recession, one of his key arguments for passing it quickly.

Eye rolling 

The result has been a round of head-shaking and eye-rolling in Washington that has provided fodder for the administration's critics and left O'Neill's many admirers wondering how it all could have happened.

A few days after the stock-sale controversy broke, the Democratic National Committee unveiled an "O'Neill/Alcoa Stock Tracker" on its Web site that purported to show how much the delay was benefiting him.

The Wall Street Joumal's Washington Wire ran one of O'Neill's choicest quotes on nuclear power as a one-liner: "If you set aside Three Mile Island and Chemobyl, the safety record of nuclear is really very good," the secretary had said.

Some of O'Neill's apparent gaffes have been blown out of proportion. His comments on the dollar were accurate enough. He had a genuine point to make about nuclear power. And ending the corporate tax has been a Republican staple for years.

Just the same, many of O'Neill's biggest supporters have been left open-mouthed over his verbal blunders, which underscore that even if you've got a good point to make, there are times when it's better to hold your tongue.

Art Pine is a columnist for Bloomberg News.