By MARTIN CRUTSINGER
The Associated Press
Monday, July 10, 2006; 2:56 PM

WASHINGTON -- Henry M. Paulson took over Monday as the nation's 74th Treasury secretary, pledging to make sure the country does not retreat from the global economy.

Paulson, the former head of Goldman Sachs Group, was sworn in by Chief Justice John Roberts in the Treasury Department's ornate Cash Room with President Bush, Federal Reserve Chairman Ben Bernanke and other dignitaries from the administration and Congress looking on.

"We must always remember that the strength of the U.S. economy is linked to the strength of the global economy," Paulson said in his brief remarks. "If we retreat from the global stage, the void is likely to be filled by those who do not share our commitment to economic reform."

Paulson said he planned to expand trade and investment, modernize international financial markets and "be vigilant in identifying and managing potential financial vulnerability."

Bush praised Paulson for giving up the top job at Goldman Sachs to become his third Treasury secretary as part of a Cabinet shake-up designed to bolster the president's sagging public approval ratings and stalled second term economic agenda.

With Paulson, the administration hopes it has obtained the same kind of economic star power that Robert Rubin, another former head of Goldman Sachs, brought to government when he served as Treasury secretary in the Clinton administration.

Paulson succeeds John Snow, who was praised by Bush for his leadership in the war against terrorism, including a formerly secret Treasury program to track thousands of international money transfers. Snow had succeeded Paul O'Neill, who was forced to resign over policy differences with the administration.

The president said Paulson would be his "leading policy adviser" and principal economic spokesman as the administration works to make the tax cuts of Bush's first term permanent while bringing federal spending under control and reigning in the growth of Social Security and Medicare.

Bush said the government's big benefit programs were "growing at a rate faster than inflation and faster than the economy and faster than we can afford." Bush's drive to overhaul Social Security with the introduction of private savings accounts went nowhere in Congress last year.

During his confirmation hearing, Paulson stuck close to the administration's economic policies, saying he strongly opposed tax increases, wanted to address the long-term obligations of Social Security and Medicare and wanted China to move more quickly in changing its currency policy.

Paulson, whose wife, two children and mother witnessed his oath taking, said during his remarks that he would work to make sure that the U.S. economy "remains a model of strength, flexibility and openness."

The head of Goldman Sachs since 1999, Paulson, who is reportedly worth more than $700 million, has agreed to divest his extensive holdings in the company. In a recent regulatory filing, Goldman Sachs said it paid Paulson a cash bonus of $18.7 million for a half-year's work for the company.

In a rare move, Bush walked rather than traveling by motorcade from the White House to the Treasury Department next door for the ceremony. Paulson was waiting for the president on the building's west steps.

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Associated Press reporter Jennifer Loven contributed to this report.