Taxes and why everybody loves Hank.

• Position: OFF THE NEWS - Treasury secretary Hank Paulson - Brief article

Washington insiders say one reason new Treasury Secretary Hank Paulson's popularity is soaring, both internationally and on Capitol Hill, comes down to one word--taxes. It is commonly known that Paulson and George W. Bush are in disagreement over the issue of tax increases. Paulson theoretically believes tax increases at the highest bracket may be necessary as a bargaining chip to achieve a bipartisan grand compromise on deficit reduction on Capitol Hill. By contrast, Bush believes in the Karl Rove theory that tax cuts (or at least the promise not to raise taxes) is the one issue both separating Republicans from Democrats and cementing the Bush White House to its conservative base.

Few Washington observers believe the President will relinquish his promise not to raise taxes, and tax hikes clearly are not on the Treasury Secretary's agenda. The intrigue stems from the fact that Paulson is one of 2008 Republican presidential frontrunner John McCain's closest informal advisors on...