We can resist some but not all of the temptation to note that President-elect Barack Obama has put a lot of Clinton retreads on his economic team. This from a man who ran on vague promises of change.
Of course, it’s not surprising. Now that he faces the prospect of actually governing and has hundreds of administration jobs to fill, previous service in important government jobs is more a recommendation than a disqualification. And the most-recent Democratic administration was the Clinton presidency.
Given the universe from which he could have chosen politically acceptable appointees, he’s not doing too badly.
Timothy Geithner, slated to be treasury secretary, by almost all reports, is smart and highly regarded by colleagues and former colleagues. And Geithner, as head of the New York Federal Reserve, has been intimately involved in the financial bailouts and capitalizations to date. That not only implies some continuity and historical memory from one administration to the next, but he already knows most of the major Wall Street players.
To some extent, however, his very experience is somewhat troubling. In his previous service in the Clinton Treasury Department, Geithner was closely involved in bailouts of Mexico, Indonesia and others, and he was an early advocate of the financial bailout. A treasury secretary who conceives of his job as bailing out whatever industries are getting into trouble and are deemed “too big to fail” would make the government much more generally interventionist into the economy than is healthy.
Likewise, former treasury secretary and Harvard president Larry Summers was hardly the worst possible choice to head the National Economic Council. The very fact that he got in trouble at Harvard for a couple of politically incorrect remarks and for mildly upsetting the comfortable Ivy League apple cart at Harvard suggests a certain commendable independence. On the other hand he is a fairly orthodox Keynesian, meaning he’s inclined to believe that governments can spend their way out of economic difficulties.
As for policy, the news that the Obama administration is unlikely to raise taxes quickly during this apparent recession — even on the so-called “rich” who featured in so much campaign rhetoric — is welcome news. Less welcome is the apparent conviction that the key to economic health is injecting more and more government money (either taken from taxpayers or manufactured out of thin air) into big financial and corporate entities.
President-elect Obama is still coy about just how big a “stimulus” package he hopes to sign (surrogates are suggesting another $700 billion). But the fact that he is talking stimulus indicates a lack of understanding that real jobs with a future are those that involve producing products and services that people will buy voluntarily rather than those “created” by government largesse.