Tuesday, December 2, 2008

A Former First-Lady and a Guy Named Tim

With his announcement of the national security team yesterday, President-elect Barack Obama materially completed his cabinet and White House staff. There are of course more appointments to be made, and some of those are promised to be Republicans, but the major positions of the new Administration are now mostly known. You've seen it written in many other places already, but it bears repeating that this is a demonstrably pragmatic-looking Administration, at least in terms of its top personnel, though the "centrist" label is far better-deserved for the cabinet secretaries (whose independent power has gotten out of whack under Bush-II anyway), than for the actual White House staff, from whom the policy initiatives are supposed to flow. A run-down of exactly what we know, and what we may expect, is in order at this point:

By far the biggest appointments announced so far are, on the domestic policy side, Timothy Geithner for Secretary of the Treasury, and, on the foreign policy side, Hillary Clinton for Secretary of State. The Clinton appointment has of course roadblocked the recent coverage of the transition--dripping as it is with Shakespearean pathos and the veiled prospects of poor message discipline, in-fighting, leaks, and even the chance of fresh new scandals.

With this selection, Mr. Obama demonstrates once again that he is willing to take calculated risks on the political side of the ledger if the end-result is to channel the productive energy of a one-time rival in his favor. And if you hesitate to agree that this can be a very, very favorable strategy indeed, just go back and look at some of the things that were being written in late July about Joe Biden. Indeed the best part of the decision, from Obama's standpoint, is that whatever drama emerges from this move will redound to Clinton's detriment rather than his own. Obama's credential as a disciplined manager who evokes strong loyalty and all but leak-proof message control is permanently punched--while the reputation brought to the situation on the same scores by the Clintons is... well... not quite as distinguished. If Mr. Obama finds himself in the worst-case scenario of having to fire Mrs. Clinton, few will remember back to these past days and weeks as an invitation to question his judgment in picking her for the job.

But if the Clinton appointment is the one garnering all the news, the Geithner appointment is surely the one that tells us considerably more about just what sort of Administration the new team promises to be. Geithner is neither a liberal firebrand nor a Chicago-style political crony (the two things we were promised by the radical right to expect from Obama's inner circle). What he is, instead, is a uniquely qualified individual with a full resume aimed specifically at the job. As President of the New York branch of the United States Federal Reserve, Mr. Geithner's current position straddles the fence between the regulatory function of the Fed (all district banks regulate the banking activity in their districts), and the monetary policy side (since the New York bank, in particular, enjoys permanent standing on the Federal Open Market Committee, where the money supply is raised or lowered by simple majority vote).

The most visible of the Treasury Secretary's jobs in the next Administration will be to account for the bailout money that has been shoveled willy-nilly at the financial sector over the past few weeks, and to more prudently spend whatever of that money is left (which won't be much). But the ongoing job of the Treasury Secretary--to raise the necessary bond revenue to cover deficit-spending--is likely to become a significant challenge in the next four years, as both the Social Security Trust and the government of the Peoples' Republic of China find it increasingly difficult to purchase new bonds at the daily Treasury auction. Once this simmering crisis erupts onto the scene, perhaps within the first two years of the incoming government, Geithner's track-record as a cool head on the FOMC, and his proven credential as a proactive, outside-the-box thinker will serve us all, regardless of party affiliation. It promises to be a very difficult assignment, and essentially no one is as qualified to fulfill it right now.

There is at all events a desperate need for a fresh look at the question of regulatory oversight of the financial markets, and on this front as well, Mr. Geithner scores high marks for taking just the sort of pragmatic, centrist approach to such questions that the Obama appointments are receiving so much attention for in general. Clearly the Bush/Paulson approach has left the nation's financial system in tatters--but it's not obvious to even some of the most liberal thinkers on the subject that a return to the days of Glass/Steagall wouldn't exacerbate the problem by disincenting capital. It's a poignant thought to consider for the pro-regulation crowd that many of the best-performing securities during the current bear market would have been illegal before Glass-Steagall was repealed. However one looks at it, the Geithner nomination is a laudable, perhaps even brilliant decision. Call it two-for-two, if you must, though there have certainly been others outside the scope of this particular column.

Oh, and there's one last major element of aplomb to Mr. Obama's galaxy of selections made thusfar: Geithner, who might otherwise have had one of the most visible (and probably controversial) tenures in the history of the Treasury, doesn't like publicity. He's a wonk, just as all the district bank presidents in the Federal Reserve system are wonks. So how does a President who wants the most effective performance from such a key player, do his part to help ensure that's exactly what he gets? How about by nominating an ambitious, headline-hungry formal rival for Secretary of State?

Dave O'Gorman
("The Key Grip")
Gainesville, Florida

4 comments:

isuyankee said...

I am impressed with Obama's choices in this sense: part of the idea of "change" is changing the partisanship that has dominated in Washington forever. A lot of liberals see Obama as a chance to replace right-wing partisanship and division with left-wing partisanship and division. That is the wrong message for the country especially in a time of extreme crisis. Obama is sending the mesaage that he will change Washington by uniting the country on a path out of the mess that Bush and his cronies created. I am more confident than ever that he will succeed.

The Key Grip said...

We have broad areas of agreement, it would appear -- but I for one am saddened by the notion that, after what has been essentially a forty-year Republican juggernaut of pushing the country further and further to the right, there isn't a little bit more momentum behind the idea of reevaluating how much of their agenda has been good for the country, and how much should instead be reversed. Regulation, for example, seems to be a subject for which "bipartisanship" might be taken as code for not restoring many of the useful government oversight tools that were gutted by the Republicans.

It's been one of the more painful lessons of my adult life, both watching national politics and navigating the complex local pathways of my own career and social set, that once an idea has been adopted by the group -- no matter how bad -- it's impossible to stand up and say that the quickest path to fixing things is to simply and politely undo the bad idea: Instead people just stand up and say, "Ooh! He just wants to go back to the PAST!"

Long story short, I hope all of this high rhetoric about putting partisanship behind us doesn't translate into a mass-amnesia about what made us Democrats in the first place.

isuyankee said...

With all due respect, I think you are worrying too much on this one. Regarding regulation, who is the voice (on the right or left) saying, "yeah we did a pretty good job regulating the banking sector, let's just leave things status quo." ??? We will get tougher regulation of the financial industry, a roll back of tax cuts for the wealthy and a stimulus package that puts people to work building bridges, etc...what else were you looking for?

The Key Grip said...

Well, I'd be looking for any number of things -- a reinstitution of the Fairness Doctrine, a rejuvenated Antitrust division at Justice, and a major arm-twist for immediate ratification of Kyoto, to name just three.

And what would the other side say, and what would the MSM enable by repeating their statements as if they were inherently valid?

"The Fariness Doctrine is 1970s thinking -- this guy just wants to go back to the past."

"Antitrust laws are just government restraining trade for quasi-socialist objectives -- this guy just wants to go back to the dark days when consumers didn't have choice."

"Kyoto hasn't been seriously on the table since the 'dark days' of the Clinton White House -- where's all the *change* this guy promised us when he was running?"

The sad fact of the matter is that the progressive movement in this country had all the right ideas all along, but the combination of Proposition-14 and a hostage crisis in the late 1970s was enough to make it look to low-information voters like a failed model for policymaking. Maybe we'll have the right ideas again, sure -- but I do seem to want to think it'll be harder once the original set of right ideas has been permanently taken off the table.