Obama's Shrewd Choices
His economic advisers share his investment and regulation plans
While Barack Obama introduced the first members of his economic team, a wailing noise could be heard somewhere in the background. That was the sound of complaining liberals, who worry that the president-elect is already surrendering the progressive moment to centristsâthe kind of post-election disappointment with which they are all too familiar.
Looking over the names of the new Obama appointees to important positions in the Treasury and the White House, critics on the left have dismissed them as "Clintonite retreads" or worse. According to this gloomy analysis, the incoming administration is poised to repeat the mistakes of the past rather than create new policy for the future, by staffing itself with economists wedded to old ideologies of deregulation and budget-balancing, rather than government intervention and public investment.
If resumes represented destiny, then there would certainly be cause for concern.
After all, most of Mr. Obama's top advisersânotably including Tim Geithner, the new Treasury secretary, and Larry Summers, the new director of the National Economic Councilâeither served in the Clinton administration or have some other connection to Robert Rubin, the man responsible for "Rubinomics" when he oversaw the Treasury during those years. The combination of fiscal discipline and deregulation that bear his name, once lauded as the foundation of an unprecedented boom, seem not only irrelevant but wrongheaded. His reputation has been badly damaged, meanwhile, by the fall of Citigroup, where he oversaw a ruinous and seemingly reckless investment strategy.
Long gone are the days when a smiling Rubin appeared on the covers of the newsmagazines alongside Alan Greenspan, whose record as Federal Reserve chairman and avatar of laissezfaire economics is equally discredited. By now it would be natural for Summersâwho succeeded Rubin at Treasuryâto wish that everyone would forget his was the third face on those same magazine covers.
Taking the Long View
But when liberals point to Summers and other members of the Obama team, crying betrayal, they misunderstand the strategy behind those appointments. The most important thing to remember about the president-elect as he prepares to govern is that he takes the long viewâand that he knows how to make a reasonable case for radical change. He has not taken one step back from the commitments he articulated during his campaign.
Indeed, Obama has steadfastly refused to scale back his platform of spending initiatives, from infrastructure to health care, despite all the tut-tutting commentary. Instead, even as he rolled out his team, he pledged a very substantial spending increase during the first two years of his term as the only means to prevent the recession from plunging into something far worse.
his appointees will implement the Obama program, not only because that
is what he will tell them to do but because that is what they have come
to believe is best for the country. Whatever Summers or Geithner or any
of the other centrists on the new team may once have said or thought,
they will pursue a course of massive counter-cyclical spending, public
investment and strong new regulation.
Several of the significant figures chosen by Obama, such as budget chief Peter Orszag and adviser Jason Furman, have defended liberal priorities throughout their careers. The economists who have influenced them include not just Rubin but also Joseph Stiglitz, the Nobel-winning progressive.
But even Rubinâwho once came to symbolize the Democratic Party's submission to market fundamentalismâhas endorsed a new progressive direction. The Washington think tank associated with him, known as the Hamilton Project, promotes public investment and a refurbished social safety net.
As for Summers, just last month he published an essay in the Financial Times that seemed to acknowledge past errors, writing that the "wealth and income gains from the easy availability of credit were highly concentrated in the hands of a fortunate few."
Sounding liberal themes, he went on to call for a strict new regulatory regime and measures to ensure that the nation's future prosperity will be broad-based and inclusive. He and the rest of the Obama team possess the managerial competence to implement those policies, which is why the president-elect appointed them. He knows that the proof will be in the pudding and not the cooks.