[The President's] two principal economic policy makers are useless, if not counterproductive, surrogates. Timothy Geithner, the Treasury secretary, was probably fatally compromised from the moment his tax lapses surfaced; now he is stalked by the pileup of unanswered questions about the still-not-transparent machinations at the New York Fed when he was knee-deep in the A.I.G. bailout. Lawrence Summers, the top administration economic guru, is a symbol of the Clinton-era deregulatory orgy that helped fuel the bubble.When Mr. Obama added these men to his administration, many Americans were happy to see the grown ups back at the table again. Geithner and Summers (along with Bob Rubin) were key players in the Clinton administration fiscal team and helped formulate an economic policy that led to the strongest economic growth and lowest unemployment since the Great Depression. Who better to clean up the economic wreck left behind by the Bush administration?
Alas, it turns out that in addition to Bush's pillage of the U.S. Treasury, the deregulation that took place under Clinton (and earlier by Reagan) helped bring on the collapse that took place during 2007 and 2008. Now that the cat is out of the bag, I think President Obama should dump both Geithner and Summers.
Even if the two men have had their "come to Jesus" moment - even if the President believes in his heart of hearts that these are the men to pull America out of this horrible recession - he should ask them to leave. Perception is everything in government, and as the election results in Massachusetts this week indicate, Americans perceive the current team to be lackluster.
More from Rich:
Obama needs more independent economists like Paul Volcker, who was hastily retrieved from exile last week after the Massachusetts massacre prompted the White House to tardily embrace his strictures on big banks. Obama also needs economic spokesmen who are not economists and who can authentically speak to life on the ground. Obama must also reconnect. The former community organizer whose credit card was denied at the Hertz counter during the 2000 Democratic convention now spends too much time at the White House presiding over boardroom-table meetings and stiff initiative rollouts instead of engaging with Americans not dressed in business suits.The President should nominate Volcker to head up the Treasury Department. Volcker has called for more regulation of banks and believes a breakup of the nation's largest banks and a reimplementation of many aspects of the Glass-Steagall Act, which prevented commercial banks from engaging in investment banking activities such as trading securities, are the key to restoring America's economic engine. (Banks that were "too big to fail" that took part in some really shady investment schemes are credited with contributing to the current economic crisis.)
If the President wants to keep his party's losses to a minimum in November, he would do well to follow Volcker's counsel. Because right now, most Americans, from the tea-baggers on the right to the impatient unemployed on the left, have had about all they can take of the big banks.
If I were president, I would also pull the nomination of Ben Bernake to stay on as chairman of the Federal Reserve. That said, I also understand that such a move would rile Wall Street. And so, to keep those folks from totally wigging out, I understand why Obama is sticking by his man. (For all he did to contribute to the crisis, Bernake's fast thinking did pull us back from the brink. And he should be applauded for his efforts.)
In addition to Volcker at Treasury, I would replace Summers with Christina Romer as Director of the White House Economic Council. Roemer is an expert on the Great Depression, and that knowledge is crucial as the President tries to tackle the extremely stingy unemployment problem. I'd also add Nobel Prize winning economist Paul Krugman to his White House team.
Volcker, Romer, and Krugman are considered quite liberal when it comes to economic policy. But after eight years of incompetent Republican government by the previous administration (a right-wing approach that caused the economic collapse) and one year of the centrist approach by the current administration (that hasn't done as much to bring unemployment numbers down as we had hoped), too many Americans remain out of work and increasingly frustrated.
Mr. President, it's time to change to course in a big, bold way. To be sure, your first year had the most serious challenges facing any president since Abraham Lincoln. I understand fully that the 2008 stimulus was in and of itself a tremendously bold move and helped keep the country from spiraling out of control into the the deep depths of a depression. But your fellow Americans still feel stuck. And that is because their perception is that YOU are stuck.
As for me, I'm still behind you. I know there are no quick fixes and that your governing style is to face the problems head on, as an adult, with a steady hand and a solid team. But your economic team isn't looking so solid right now.
Perception is everything in government. I truly believe you would do well to change that perception by shaking up your economic team.