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Hangover Time: Focus on the Treasury

By       Message Michael Fox       (Page 1 of 1 pages)     Permalink

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Within the first forty-eight hours of Barack Obama's election, important names started to be floated in the press; potential posts in the coming Obama administration to be filled by Clinton era holdovers. Rahm Emanuel is the right person for the job of White House Chief of Staff. The Chief of staff’s job is not one of policy making, but, rather, of policy enforcement. For this, Emanuel the “Blue-dog” Democrat will be very useful, undoubtedly helping to get support for liberal policies through the centrist Democratic caucus whence he comes. Additionally, and indisputably, the appointment of Israeli-American Emanuel should placate some who were unsure of Obama’s position on Israel policy.

Then names started to appear for Treasury Secretary. The first one that got play was Lawrence Summers. Summers was Bill Clinton’s last Treasury Secretary, and on his watch, the Gramm-Leach-Bliley Act and the Commodities Futures Modernization Act both were passed by Congress and signed by Clinton. These bills had an enormous effect on what could be traded, how it was (or, more precisely, was not) regulated, and the level of risk that could be taken with money put into banks that were, due to theses policies, able to gamble with that money. Summers’ endorsement of these policies should be enough to disqualify anyone from managing what promises to be a very different economy.

Summers rode title into Harvard Yard, and made an ass of himself there until he was forced to resign. Appointment of such a polarizing figure is precisely not the sort of choice one would expect from President No-False-Moves. Clearly, there is need to find people from the Clinton administration. If you have to hit the ground running, you’d better have leaders who know how to work the system, at least for the first year. But why not get Robert Reich, who served as Labor Secretary under Clinton, for Treasury Secretary now.

With the economy ranking far and away the top issue of concern to voters, it would be an important step in the right direction to follow the death of the era of deregulated capitalism (footnoted to a fare-the-well in A Suicide Note) with an economist whose view departs from the free-market, laissez-faire model subscribed to by the followers of Milton Friedman and the church of Chicago School economics. Reich would be the best choice: he has the Executive Branch experience and the Progressive philosophy that is needed now.

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If Reich doesn’t want the job, retired Rep David Bonior (D-MI) is also sitting on Obama’s Economics panel, Professor and Nobel Prize winner Paul Krugman from Princeton, Professor Ravi Batra (SMU) or Professor Nouriel Roubini (NYU) should be tapped. These men have shown the foresight, boldness, and intellectual honesty to call the gambling that passed for sensible economic policy what it was, and foresaw the collapse. It will require that kind of cerebral heft to steer the new economy back into the black (though it will remain in the red through the entire first Obama term no matter what).

It is vital that the massive political awakening and involvement that brought Obama to the Presidency not be allowed to wane. Perhaps even more important than the election of the President is the assemblage of his Cabinet. Make your voice heard – whether you agree or disagree with his choices, contact your representatives and tell them. Evidently, they’re actually starting to listen. Franklin Roosevelt’s campaign was an appeal to the center, but circumstances upon his inauguration made him veer left. Obama should follow his lead.


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Michael Fox is a writer and economist based in Los Angeles. He has been a corporate controller, professor, and small business entrepreneur. After a life-altering accident, he spent five years learning more about medicine and the healthcare (more...)

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