Over the last 24 hours, President-Elect Obama has announced five top members of his new economic team. What do they have in common?
Retreads from the Clinton Administration? Rubin protégés? No, not all.
News services reported today that Tim Geithner, currently President of the Federal Reserve Bank of New York, was President-elect Obama’s choice to be Secretary of the Treasury. The fiancial markets reacted very positively to the news. This presumably captures both relief that some policy uncertainty has been resolved at this critical juncture and approval that Geithner is the man chosen. I share the pleasure at this appointment.
Tim Geithner is refreshingly straightforward and personable, and doesn’t “stand on ceremony.” At the same time, he is cool and unflappable. By coincidence, the Economic Advisory Panel to the NY Fed President, of which I am a member, met today. Unusually, Geithner excused himself at two points in the four-hour meeting to take short phone calls. Given the timing, it seems very likely that one of the phone calls was Senator Obama offering him the Treasury position. These Panel meetings are off the record, but I think I am not betraying any confidences to report that Geithner betrayed no sign to us of what had just happened. No change in demeanor, no change in the substantive flow of the discussion. This is a guy who does not lose his cool. Just what the country needs.
Everyone who speculates on President-Elect Obama’s most likely choice for Secretary of the Treasury has the same two names: Larry Summers and Tim Geithner. I have known them for a long time, and worked with both in the Clinton Administration. Either one would be excellent. As a result of some public opposition to Summers, Geithner has now pulled far ahead according to the Intrade odds: 45% to 27% as of November 14. But if I were to place a bet at these odds, it would be that Obama will go with Summers. For one thing, Geithner is needed at the New York Fed, where he has been one of the key players managing the financial crisis.
Geithner and Summers are both said to have baggage that might disqualify them. I disagree. Some say Geithner is tarred by association with the Bush Administration, because he has been working with it on the crisis. But his position is non-partisan, and some continuity in managing this crisis is desirable. More to the point, it was in the Clinton Administration (under Larry Summers) that Geithner rose from obscurity to prominence. Some say that the President-elect should not choose either of the two, precisely because they are associated with the Clinton Administration, whereas Obama campaigned for change. But that is the most absurd argument of all. We need somebody experienced in the Treasury job, above all at a time such as now. The sort of competence these two showed at the 1993-2001 Treasury, especially at crisis management, and the track record of that Administration, is what we want to change to, not what we want to change from. All the economic indicators improved during the Clinton Administration, as surely as they have worsened since then: employment, growth, inflation, budget balance, poverty, and so on. They have the sort of baggage we want a Secretary of the Treasury to carry !
Most sensationally, Summers is said to be tainted by his time as President of Harvard. Too much has already been said about this. But I will make just a couple of observations. First, although Summers may not be Mr. Personality, and he will never be elected to high office nor chosen to head offices for women’s rights or the environment, he has all the most important qualities for the Treasury job. Despite a tendency to say what he thinks, I don’t think he committed any true faux pas or became involved in any mini-scandals during 8 years in the government — no easy feat. (The closest he came to a faux pas, or what counts for one in the media, was a statement that the argument that was then being made for abolition of the estate tax was based on greed alone rather than efficiency. He quickly retracted the statement without bothering to try to explain what he had meant, having already by then become familiar with the rules of political brouhahas.) In his time in Washington, he learned how to get along with politicians across the spectrum, from socialists to the far right. It’s true that he wasn’t able subsequently to get along with the full range of faculty in the Harvard English Department, but that is a tougher task.