What happened
President-elect Barack Obama this week named a high-profile team of economic advisors to his incoming administration and signaled he would be ready to sign a potentially massive economic stimulus package moments after being sworn in on Jan. 20. Obama picked New York Federal Reserve President Timothy Geithner to be Treasury secretary, and Harvard economist and former Clinton Treasury Secretary Lawrence Summers as head of the National Economic Council. Obama also said he would create a new advisory board, headed by former Federal Reserve Chairman Paul Volcker, to help create jobs and revive the economy. All three men are well-respected on Wall Street.
“I think it is very important for the American people to understand that we are putting together a first-class team,” Obama said. “Help is on the way.” Aides have begun work on a plan to create 2.5 million jobs rebuilding roads and bridges and creating alternative-energy sources, which analysts believe could cost $700 billion. Obama also pledged “line by line” cuts in the federal budget, to help offset the hundreds of billions committed to bailouts, but made it clear that government spending to jump-start the economy, not debt reduction, is his top priority.
What the editorials said
Obama’s top choices—Geithner at Treasury and Summers at the National Economic Council—are “men of talent,” said The New York Times. The question is whether they’ve “learned from their mistakes.” As President Clinton’s Treasury secretary, Summers championed deregulation of derivatives, the “toxic assets” that have spread financial chaos around the world. For his part, Geithner has been a “ringmaster” of this year’s “serial bailouts,” a performance that hardly inspires confidence. Before Geithner takes the reins at Treasury, we need a full accounting of his actions during the crisis.
For the job of “Secretary of Bailouts,” said The Wall Street Journal, Geithner “is probably the best choice.” He’s a good listener who knows all the players on the banking and Wall Street scene, and where the weak spots lie. In fact, Obama’s whole economic team promises expertise and continuity. We’ve had our differences with the famously arrogant Larry Summers, “who would find a way to condescend to Albert Einstein,” but he’ll undoubtedly prod Obama to hold back on taxes and regulation until the economy revives.
What the columnists said
Who would have guessed that “reconstituting the Clinton administration” was what Obama meant by “change”? said Rich Lowry in the New York Post. Obama, who has asked Hillary Clinton to head up the State Department, has drawn his economic team from acolytes of former Clinton Treasury Secretary Robert Rubin. We still don’t know who Obama is—he’s been a “shape-shifter” throughout his career. But he’s showing a “ruthless pragmatism” as he morphs into “an establishment Democrat.” Given the enormity of the disaster facing him, that’s his “best version yet.”
Well, the stock market approves, said Lawrence Kudlow at Realclearpolitics.com. Investors cheered when Obama hinted last week that he would not raise taxes on top earners, as he promised during the campaign, but instead would let the Bush tax cuts expire in 2010. After Obama named the “market-oriented” Geithner and Summers, the market rallied 900 points in two days. In fact, Geithner could have easily been John McCain’s choice at Treasury.
That’s the problem, said William Greider in Thenation.com. The new economic team has been drawn from the Wall Street insiders’ club, and remains committed to spending trillions in taxpayer money trying to revive “insolvent mastodons” like AIG and Citigroup. But even Washington can’t save these grievously damaged companies from extinction, and it’s time to shut off life support. Didn’t Obama get elected on a promise to “turn the page”?
What next?
Obama is displaying an unprecedented air of command for a president-elect—defining priorities, working with Bush Treasury officials, and establishing an ambitious agenda for January and beyond. President Bush, keenly aware of his lame-duck status and his dismal approval rating, is clearing Obama’s path to power, said University of Virginia professor of politics Larry Sabato. “This is a full-blown crisis,” Sabato said, “and neither president wants a complete meltdown.” Since Obama has more credibility than Bush, he will take the lead “with the quiet acquiescence of the Bush administration.”
