Thursday, November 27, 2008

Obama’s Economic Team: Clinton Redux? Heartburn for the Democratic Wing of the Democratic Party? Even for some centrists?

The Obama media love-in continued unabated this week as the President-Elect held his second, third and fourth press conferences, all in the Chicago Loop at the Chicago Hilton on Michigan Avenue. Obama’s first presser, almost two weeks ago, attracted an overflow crowd of more than two hundred media members. Perhaps much of the Obama thrill is gone, for all but Chris Matthews, as attendance this week fell to a hard core of about sixty media members, a nice mixture of national/traveling media and locals, with perhaps a smattering of the international press corps still represented.

Although Obama answered a total of a baker’s dozen of questions at the three pressers, and we will come back to that in other posts, that dialogue was not the main focus of the press conferences. Instead, it was to present Obama’s economics team in a controlled environment. And, much of the time, that was under the watchful eye of Cong. Emanuel, Press Secretary Robert Gibbs and senior strategist, message developer and communications expert David Axelrod.

At Monday’s presser, Obama introduced the initial core of his economics team: former Clinton Treasury Secretary and Harvard University President Larry Summers (53, Econ Ph.D., Harvard) as the Director of the National Economic Council; Tim (bailouts) Geithner (47, MA, Johns Hopkins, International Relations) as Obama’s Treasury Secretary. Geithner, although currently President of the New York Federal Reserve Bank and intimately involved in most of the recent government bailouts of failing financial firms, was formerly, inter alia, a senior aide to Summers at the Clinton Treasury; and University of California, Berkeley Economics Professor Christina Romer (49, Econ Ph. D., MIT) as Chairman of Obama’s three-person Council of Economic Advisers.

Melody Barnes (44, UNC-Chapel Hill, History; JD, University of Michigan Law School) although introduced with the above on Monday, is not really a part of the economics team. Barnes will head the Domestic Policy Council and most recently was a senior domestic policy adviser to the Obama campaign. Prior to that, Barnes worked as an EVP at former Clinton Chief of Staff John Podesta’s think tank and prior to that was Chief counsel to Senator Kennedy on the Senate Judiciary Committee.

At Tuesday’s presser, Obama introduced his budget honchos: Peter Orszag (39, Econ Ph. D, London School of Economics), as Director of Office of Management and Budget and Rob Nabors (37, MA, UNC-Chapel Hill) as Orszag’s Deputy. Orszag was previously Special Assistant for economic policy to President Clinton and is currently Congressional Budget Office Director. Nabors is a former Clinton OMB staffer, most recently Staff Director on the House Appropriations Committee.

At yesterday’s presser, Obama introduced some additional members of his economics team: Former Fed Chief and long-time Senior Treasury official Paul Volcker (81, Econ MA, Harvard) as Chairman of the new White House Economic Recovery Advisory Board (“ERAB”) and University of Chicago economics professor Austan Goolsbee (39, Econ Ph.D. MIT) as Staff Director for the new ERAB and member of Obama’s Council of Economic Advisors.

Goolsbee has been a trusted economics adviser to Obama for about the last five years, going back to Obama’s 2004 Democratic Senate Primary, which essentially was Obama’s first win in a contested election [he knocked all his opponents off the ballot when he won his state senate Democratic primary race in 1996]. Volcker became a significant economics adviser to Obama during the Presidential campaign.

So, you ask, is the Obama economics team “Change you can believe in.” Well, the Daily Kos type Democrats are a bit worried. Indeed, even voters more in the center might be wondering what happened to the "Change," they were promised. One, Sommers/Geithner/Orszag/Nabors is a heavy dose of the Clinton Administration, which of course worked with the Republicans to bring NAFTA and other free trade policies and agreements to the Country. While that should make many Republicans and free traders happy, that brings acid reflux to the Democratic Wing of the Democratic Party, as Howard Dean was wont to refer to his following in 2003-04, and maybe even to a number of centrist Democrats who have become disenchanted with free trade.

Two, Volcker, the Democrats might remember, is the man who stepped on the monetary policy brakes too sharply in 1982, having the happy effect of lowering President Carter’s out of control inflation dramatically, but having the unhappy consequence of driving the national unemployment rate to almost eleven percent. Putting that number in perspective, the “Bush economy, much criticized by Democrats, currently has a national unemployment rate of six and one half percent. Having broken the back of inflation, though, the economy turned around in 1982, Democrat Volcker was re-appointed Fed Chairman in 1983 and Volcker presided over most of President Reagan’s robust economic expansion, staying in the position of Fed Chief until he was replaced by Allen Greenspan in 1987.

Three, it was reported earlier this year that Goolsbee had told a Canadian Consul General that Obama's attack on free trade is "more reflective of political maneuvering than [his] policy.” Although Goolsbee argued that those were not his words, he went into an undisclosed location for a while and was not heard from much until the Presidential election was over. So, the left and some centrist Democrats may not see Goolsbee as “change you can believe in.”

Four, Larry Summers' politically incorrect statements of a few years ago as Harvard President, including why he thinks females may constitute disproportionately small numbers of those involved in math and sciences, continue to cast doubt with the left and feminists as to whether Summers should be trusted to make public policy, economics or otherwise.

On the other hand, Obama adopted, yesterday, at his pressers, Hillary Clinton’s argument that you need “experience,’ to produce change. That is, President-Elect Obama argued, if his administration didn’t use Clintonites, he would have “inexperienced,” advisers, and given the significant problems facing this country, people would not like it if he chose somebody to be Treasury Secretary “who had no experience in government whatsoever.”

Further, team Obama might argue that its choices for its economic and budget teams are having a “calming effect,” on the financial markets, with the Dow Jones industrials moving up four successive days this week, a first for the last three months. Of course, there are lots of factors affecting markets, so it remains to be seen whether the names of those on the Obama economics team did that, or not.

Who is right on team Obama’s economic advisers? The left and some queasy centrists or Obama? Do those nominated this week represent the change Obama promised? We discuss, you decide.
Jeff Berkowitz, Show Host/Producer of "Public Affairs," and Executive Legal Recruiter doing legal search can be reached at *************************************************************
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