During the fall of 2002, the Bush administration was busy developing plans for an invasion of Iraq. As a part of this effort, the Treasury Department was directed to study the possible economic impact of a Middle East war. The briefing was not intended for the president, however, but for Vice President Cheney, who was coordinating Iraq policy. Treasury's research resulted in a September 11, 2002, memo to Secretary O'Neill preparing him for his meeting with Cheney. The document, written by assistant secretary Richard Clarida, found that a war was unlikely to "derail the expansion," but it did project a worst-case scenario that could reduce GDP growth by 0.9 percent, raise unemployment by three-tenths of a point, and increase inflation. Clarida's forecast, however, deals only with the impact from fluctuations in the price of oil. Not until the last two paragraphs of the four-page memo does he acknowledge that the economic impact of war might not be limited to rising oil prices. War could have unpredictable consequences for the American economy. Consumer confidence and financial markets, he writes, might also fall at the outbreak of hostilities. "For large declines in confidence," he wrote, "it seems likely that consumer spending would be affected over and above what is shown in the previous table. Likewise, the effects on equity markets, corporate credit markets and currency markets are hard to project but could be important." Indeed, they would be important. Starting in the mid-summer of 2002, when the administration began to build its public case for war, investor and consumer "confidence" -- that ineffable quotient that drives the U.S. economy -- has been linked to the situation in Iraq. It some ways, it still is. Read the document here.

The White House was concerned about O'Neill's 10-day trip to Africa with U2 star Bono. A February, 2002 memo from under secretary John Taylor laid the thematic groundwork for the trip, which highlighted the problems of poverty and AIDs.

After giving the keynote speech at a conference in Washington hosted by the George Bush School of Government and Public Service, a part of Texas A&M University, Secretary O'Neill received a thank-you note from the 41st president. The two men had known each other during the Ford administration, when Bush headed the CIA and O'Neill worked at OMB. O'Neill had advised Bush while he was President, and supported his raising taxes to shrink the deficit.

Upon return from his trip to Africa with Bono, O'Neill reported his findings to the President. Progress on fighting poverty and disease on the continent, O'Neill wrote, was much too slow. "A significant amount of the foreign aid that has been spent in the last three decades has failed to achieve strong results," he wrote. "It seems to me that aid donors and recipients alike need to set our goals higher, demand more in terms of measurable results, and expect those results to be achieved sooner." He pushed for funding for AIDS and initiatives to provide clean water.

The hands-off policy towards the Israeli-Palestinian conflict that the President set in his first NSC meeting, was abandoned by the fall of 2002. The "road-map," a plan for gradually resuming the peace process and establishing a Palestinian state, was drafted by the quartet of the US, Russia, EU and UN, but its publication was delayed throughout the fall and winter. In a memo dated November 12, 2002, under secretary John Taylor discusses the timetable for publication of the roadmap and other aspects of U.S. policy in the region, including the finances of the Palestinian Authority, a particular area of concern for the Treasury Department. The memo reported that putting the roadmap on hold "could undermine the President's credibility with key allies (all of whom are looking to the US for leadership on this issue) and is therefore not a desirable option." The quartet eventually decided to postpone publication of the roadmap until after the Israeli elections in 2003, at which point it was released and largely ignored by both Arabs and Israelis.