Team of Rubins
As progressives, we can view President-Elect Obama's emerging economic team in one of two ways. Either he has disappointed us by picking a group of Clinton retreads--the very people who brought us the deregulation that produced the financial collapse; the fiscal conservatives who in the 1990s put budget balance ahead of rebuilding public institutions. Or we can conclude that he has very shrewdly named a team of technically competent centrists so that he can govern as a progressive in pragmatist's clothing--as he moves the political center to the left.
Which will it be? Certainly, Obama's press notices are phenomenal, and Republicans have almost been more enthusiastic than Democrats. When Arianna Huffington and I debated George Will and David Brooks on George Stephanopulos's This Week Sunday morning, the conservatives were, if anything, more approving of Obama's picks than we were.
On another channel, Republican guru Ed Rollins could be heard exulting about the Obama cabinet. I even had the out-of-body experience of debating Pat Buchanan on Hardball, to find that he thought Hillary Clinton was a terrific choice for Secretary of State. Obama now has the highest approval ratings on record for any president-elect, and he has the entire Republican pundit class in a swoon.
The honeymoon can't last, of course, for Obama soon has to make very tough choices: whether to spend massive amounts of federal money to head off a depression; whether to embrace large-scale deficit spending as a temporary stimulus and then to go on to rebuild public investment so that we can have the 21st century infrastructure, energy, and human services that we need; whether to get serious about financial regulation so that the economy is never again brought down by excessive speculation. Whether to rescue the auto industry by imposing very tough conditions in exchange for public aid.
To do all of this right, he may need to nationalize a bank or two rather than just throwing public money at Wall Street, Paulson fashion. The requested aid to the auto companies exceeds the total value of their common stock. We need a plan for a conversion to energy-efficient cars, with a majority of public members on company boards in exchange for the public subsidy; this in turn violates norms of "free trade" by committing the sin of industrial policy. And we need direct government refinancing of distressed mortgages rather than aid to bondholders and banks.
Will Obama do any of this? He has reality on his side. He will have to think and move radically in order to save the economy. By January 20 we will be tottering on the edge of a depression. The entire conservative paradigm is now disgraced. Republicans may support a large initial stimulus package, for their districts are suffering along with Democrats. But they will want it be mostly in the form of tax cuts rather than public investment; and they are likely to oppose much of the rest of Obama's program. The bolder it is, the more rightwing opposition Obama will invite. By January, the lkikes of George Will and David Brooks will be aghast (I hope).
Obama may describe himself as a pragmatist who transcends ideology and bridges differences. But there is no denying the plain fact that only progressive remedies, of large scale public spending and stringent government regulation, will fix what's broken.
Which brings me back to Obama's economic team. Leaks suggest that it will include Tim Geithner as Treasury Secretary; Lawrence Summers as a senior White House adviser, perhaps head of the National Economic Council; Peter Orszag as director of OMB; and Jason Furman, Austan Goolsbee and Jack Lew in other senior economic positions. All are relative centrists. And with the exception of Goolbee, the one thing that all have in common is that every one is a protégé of former Treasury Secretary and current Citigroup executive Robert Rubin. Even Hillary Clinton, as president, might have found a fresher group.
What kind of magic does this man Rubin have? He was one of the key Democratic architects of the extreme financial deregulation that brought the economy to this pass. At Citi, he was one of the grand strategists of the speculation in securitized loans and off-balance-sheet gimmicks that has brought Citi to the edge of bankruptcy. Yet he continues to fall upwards. Surely Barack Obama must have noticed that Rubin is a false prophet. So why is his entire senior economic group a Team of Rubinistas?
On the front page of the Sunday New York Times for November 23 were two feature pieces in startling juxtaposition. The one, "Citigroup Pays for a Rush to Risk," documented Rubin's central role in running America's leading bank into the ground. The other, "Obama Vows Swift Action on Vast Stimulus Package," reported that one Obama top economic official after another was a Rubin man.
In fairness, adults are not merely tools of their patrons. In recent months, Larry Summers has disagreed with Rubin on the scale of the needed stimulus. Tim Geithner is for far more regulation than Rubin. Jason Furman, though suggested by Rubin for his campaign post of economic policy director, actually spent more of his career working for Joseph Stiglitz than for Robert Rubin. Peter Orszag has done a fine job as director of the Congressional Budget Office, and is not averse to large scale public spending.
Obama is the president, and he will do what he deems necessary. In my writings during the campaign, I sometimes found myself second-guessing Obama's strategy--and he invariably turned out to be smarter than I was.
Obama is also famous for listening to a wide variety of views. Others among his senior staff, such as legislative director Phil Schiliro, are further to the left. But this economic team will have influence--in posing options, playing the role of gatekeeper, writing position papers, and serving as an echo chamber of each other's advice.
Obama is intelligent enough to reach his own conclusions, and they are likely to produce far more heartburn for conservative Republicans than for those who worked so hard to elect him. But it would be helpful if his senior economic team included even one person who was not a member of the same centrist club - a Joseph Stiglitz, a Jamie Galbraith, a Jared Bernstein or a Sheila Bair. We shall soon see whether the most interesting team of rivals in the Obama White House will be the president and his own economic advisers.
Loading comments…
Want to reply to a comment? Hint: Click "Reply" at the bottom of the comment; after being approved your comment will appear directly underneath the comment you replied to
Time to shatter some myths. The cost of labor is not the problem with the big 3. You could drop the price of those turkeys by thousands and they still would not sell. Just look at Cadillac and Lincoln and look at the sales of BMW, Lexus, and Mercedes. No, it is not the cost of labor that is the problem, the UAW just makes an simple and easy target.
The Big 3 were selling SUV's and Trucks because that is what Americans wanted, the bigger the better. No one was putting a gun to the consumer. The high cost of gas caught all by surprise. While it has escaped some, Honda and Toyota sales are also way down but they right now have deeper pockets and were backed by Japan financially for years.
I have not purchased an American car for years and not because of gas prices, but because they were more reliable. Having said that the productivity of the UAW workers has increased for years and the quality is no longer a huge issue. The problem remains design and engineering and GM and Ford were attacking that, Chrysler had a bad marriage with Mercedes and their future is highly suspect.
The Arm chair critics want to blame business people and place simple blame for problems, sorry its not that easy.
It appears that the percent of any car sale that comprises labor costs has fallen from around 30% in 1980 to 8-10% today. The UAW has given a huge break to the auto companies in halving the new-hire starting wage, taking over ALL the health care costs, and generally doing concessions as they have negotiated through the nearly 30 years of economic concentration in their industry. No - labor is NOT the problem and never was. It is changes in investment strategies by the auto industry - more and more money is shoveled into paper, less and less into R&D and technology that could improve auto performance. Why should the industrials be any different? Bethlehem Steel started dong this in the mid 1970s to cash in on the short-term bottom line. Now, they are gone. American corporations have exercised NO judgment over the past 30 years - they have caved to the finance capital's demands for quick, large, unrealistic profits. We can see how well that's worked. And there were many of us who predicted precisely this outcome. Only surprised it took so long since we underestimated the amount of government intervention in the 'free market' that would help keep these losing policies afloat. No - labor is NOT the problem. And never were.
You've hit the problem on the nail. The lack of investment in R&D and a proper marketing department which would have conducted proper marketing research.
I am not for labor unions, but even I can see through the republicans BS. It is seriously reprehensible
People have conveniently forgotten that what really got the sales of SUVs going in a big way was women and crime. Women originally were the big buyers of SUVs and what "fueled" those purchases was a sense, real or perceived, of safety and security in the larger and higher vehicles; and what motivated that impulse was the rash of carjackings during the era when SUVs started becoming popular and appealing to women for a belief that they were safer. It was slightly later that the obscene SUV (and truck) ads began, the ones where they are always shown tearing up the environment, running through rivers and through forests. And the fact is that there are parts of the country where SUVs are safer to drive - those places that get a lot of snow, but that's it. I always wonder why the antipathy for SUVs doesn't apply to the gazillion mini-vans, the horrible jet-skis and snowmobiles, and other gas powered machines. Why has it just been SUVs that arouse such hostility? Why isn't that hostility applied to the billions of 18-wheeler trucks all over the highways while trains and rails have been left to utter neglect?
Good night Milton.
Good night moon.
Good night pundit class in a swoon.
Nicely done!
There is one BIG problem that PE Obama and my fellow liberal-pr
If the former Big Three don't shake off that debt, we will all be in this same miserable place a few months after the first cash infusion.
That's interesting as the unions now take the pension money that comes from both the employees and the compainies and manage/invest it. The Big Three have no vested interest in penions now execpt the percent they pay into it.
Hence why the universal health care plan is even more important
The panel had some good suggestions, here are FIVE more:
1. Have the automakers (that we help bail out) post all new design changes before they are "made", this will keep unpopular auto from being made!
2. Post a contest of 1 Billion Dollars for the first 100% American made 4 passenger highway legal auto that will get 75 MPG that is massed produced totally in the USA.
3. Post a contest of 1 Billion Dollars for the first 100% American made 2 passenger highway legal auto that will get 100 MPG that is massed produced totally in the USA.
4. Post a contest of 1 Billion Dollars for the first 100% American made new "class" or generation of small engined single occupant mobility scooters & motorcycles that are street legal (but not highway legal) for in town use that get over 140 MPG that is massed produced totally in the USA.
5. Offer ultra low Gov't. financing for all folks that agree to buy use these SHMV's (Super High Mileage Vehicles) as their ONLY MEANS of personally owned transporta
NOTE: THE 3 Billion dollar prizes to come from "savings" in cleaning up our Environment due to the increased fuel efficiency of these vehicles!
How did you determine the prize amount?
How did you determine the MPG goals?
Who owns the technology once it is developed?
Allow me to be cynical. They folks are just another team of Elite DC and Wall Street insiders. Think things will change? I doubt it.
Tim Gheitner is a public servant, Moran is a teacher and Melody is a progressive. What more do you want?
wow. one rubinite, and 2 tokens. thanks so much......
Robert Kuttner has become one of my heroes. He is on the point and understands the complexity of the issues in regards to the economic tsunami that will begin to sweep over most of us. To suggest that Stiglitz, or Jared Bernstein or Gailbraith to be a member of the economic team is terrific. But we will see. I sure hope this team does not disappoint us. Obama's press conference that was delivered from Chicago today was hopeful. He is the one in charge. He is not like Bush, who could not find his way out of a room by himself. Obama is dictating the long term goals. Now, the team will assemble the objectives.
http://eye
I think Stiglitz, Galbraith, Kuttner, Krugman et all will do much more for us remaining the loyal opposition outside of the government. Even with this administration which has great, good sense, we need fearless critics to remind them of their basic principles, loyalties, and best decisions. I'd rather read them and hear their views in public than have them buried inside the Beltway, not even for this President.
I was impressed with you on "This Week". You managed to disagree respectfully and make your points, and that doesn't happen much on these shows. Guests often seem to defer to the panel's star-power, despite their obvious lack of expertise. I hope you're right that these Rubinites have had a serious change of heart. Larry Kudlow on C-Span this am, still flogging the wonders of "the free market " and regulation hatred, thinks they're basically on his side of the street.
The free market folks will never give up the mantra. Hearing some of them say that the recovery in the 30s was impeded by Roosevelt and the New Deal was disgusting! There has never been a national benefit to unregulated capital - it benefits only a very few at the top whose rapacious actions strip both riches AND wealth from the society. They hear what they want to hear - but it does not make them any more correct now than they've been for the past 30 years.
Free market is not bad, it was the lack of perfect information that was the root of the problem You cannot have free market and miss one of its key component to function.
While our President-elect has yet to take office, I for one am willing to at least wait until he has taken office to see what will happen, even if I don't approve of some of the people that he has picked so far. I think that it's ironic that the press which gave George W. a free pass before he even got into office, is now stoking the fires of unrest so to speak! If these same "journalists" had actually done their due diligence and presented the facts of what he did before running for the highest office in this land say as: Governor of Texas - drop-out rates were the highest, teen-pregnancy was at the highest rates, poverty was high, etc, as a "businessman" he never ran a successful company, et. al. So before we start on someone that hasn't even taken the Oath of Office yet, don't start throwing stones!
"Even Hillary Clinton, as president, might have found a fresher group."
Which is exactly why the old guard Democrats fell behind him early on and begged Clinton to get out of the race. Funny. My 75 year-old black father told me early on "they want him to control him." Maybe they got their wish.
I seriously doubt it. He will not cave.
Wow, you have high respect for the man.
Can we all push to have Robert Kuttner on every week? I love his book "Obama's Challenge and his last one "The Squandering of America". I also love Jamie Galbraith's "The Predator State". And I've ordered Nomi Prins' "Other People's Money". I heard her on Sirius Left and she was fantastic.
Let's praise George Steph for putting Kuttner on.
I don't think Obama can "move the political center to the left". I think the center is already moving to the left. Obama, like all political leaders--especially national leaders-is a lagging indicator.
Deregulation is the GOP Conservative religion that caused this crash.
Clinton gave into to the GOP too often.
Come on, lay off and give the man a chance to govern. He hasn't taken the oath of office yet and everyone is second guessing him. After the nightmare of the last 8 years and no one held W to account why is Obama's plan, which is still being developed and thought out by a team of relative genius' versus the team of idiots we have now. Give it a chance. Change is also recognizing talent and leading that team towards a better government.
Do not be naive and ideological in that smart repubs are bad and smart dems are good, try to think about it?
audrey said; "no one held W to account "
I did. Now why didn't the Democrats?????
thanks for discussing this in depth. i have been wanting a description of Obama's economic team that goes deeper than most of the reporting. I agree that we need to bring in a someone more leftist to balance this out. Encouraging to hear that Furman worked for Stiglitz more so than Rubin...
I have felt that despite Obama putting these "centrists" in the ranks, he is ultimately the "decider" and will bring the voice of opposition to them, allowing their arguments to further and reinforce his own. This article led me to conclude that is what's going on...let's hope!
Please don't worry Mr. Kuttner. Obama will go all "Franklin Delano" on us when he takes the Oath of Office. This is just a tease to "calm down" Wall Street - who frankly, on both Fox Business and CNBC are the most Anal bunch of Human Beings I have ever heard in my lifetime.
You must be logged in to comment. Log in or connect with
