President-elect Obama’s new economic team may represent continuity as much as change.
True, Treasury Secretary-designate Timothy Geithner is only 47, and looks younger. But he’s served as a high-ranking US official for years, and as president of the Federal Reserve Bank of New York he’s helped shape the Bush administration’s current financial rescue efforts.
Lawrence Summers, set to advise Mr. Obama from inside the White House as head of the National Economic Council, was a Treasury secretary under President Bill Clinton. The probable new budget chief, Peter Orszag, already runs the Congressional Budget Office.
To some critics, this trio may not look like the radical break from past politics that candidate Obama promised. But at a time when the US economy is as fragile as it has been in a generation, in a bid to calm markets the president-elect appears to have opted for known figures respected by both parties.
Obama and his transition team have begun moving more quickly following a week of wild stock market volatility, due in part to a perceived vacuum of leadership in Washington.
For instance, it’s now all but certain there won’t be a new government stimulus package until after Inauguration Day. It’s unclear whether Congress will be able to coalesce around any bailout proposal for the Big Three US automakers. Current Treasury Secretary Henry Paulson has said he’s going to sit on the remaining half of his $700 billion financial rescue fund, saving it for the incoming Obama administration.
Given this context, the Obama team decided it needed to take action, and on Nov. 22 in the Democrats’ weekly radio address Obama vowed to design a two-year stimulus plan with the goal of saving or creating 2.5 million jobs.
Following that, on Monday Obama is set to introduce his top economic trio all at once, said transition officials. New Mexico Gov. Bill Richardson also is likely to be nominated secretary of Commerce, although that announcement may come later in the month.
The prospect of Mr. Geithner, a known quantity to investors, at Treasury already has cheered the stock market, at least for one day, as it rose 6.5 percent to close at 8046.42 on Friday.
As head of the New York Fed, Geithner serves a role close to that of official Treasury envoy to Wall Street. With Secretary Paulson and Federal Reserve Board chairman Ben Bernanke, Geithner is already part of the inner team running US financial rescue policy.
Boyish and unpretentious, Geithner is well-liked by his staff. He’s not an economist by training, or a veteran of Wall Street’s commercial world. Instead, he’s largely risen through the bureaucratic ranks, having worked in a variety of Treasury positions. He’s also served a stint at the International Monetary Fund, where he was director of policy development from 2001 to 2003.
If any one word describes his professional focus, it might be “internationalist.” His undergraduate degree from Dartmouth College was in government and Asian studies, and his master’s degree, from Johns Hopkins, was in international economics.
He rose to prominence within the Treasury in part due to the brilliance of his work in helping to manage the multiple international economic crises of the 1990s in Brazil, Mexico, Indonesia, South Korea, and Thailand.
“He’s the best choice” from Obama’s short list of Treasury candidates, says Peter Morici, a University of Maryland business professor and former chief economist of the US International Trade Commission.
But Geithner also represents the status quo, says Dr. Morici, and thus may not push for changes radically different from those pursued by President Bush.
In addition, Geithner is a former protégé of Mr. Summers, who is slated to be top White House economic adviser. Himself a former Treasury chief, Summers is famously strong-willed. He stepped down from the post of Harvard president in 2006 following comments, including some on women’s contribution to science, that riled many in the university’s community.
The relationship between Summers and Geithner may be analogous to that between Henry Kissinger and William Rogers when the former served as President Nixon’s national security adviser and the latter was secretary of State, according to Morici.
Dr. Kissinger sought to undermine his rival at every turn and eventually dominated policymaking from his position close to the president. “Geithner had better study up on the Kissinger-Rogers relationship,” says Morici.
Meanwhile, a top Obama adviser said Sunday that the stock market’s leap on Friday showed the wisdom of the president-elect’s choice of Geithner.
“The response has been great, and it should be.... Tim Geithner is uniquely qualified to do this job,” said David Axelrod, an Obama senior adviser, in a broadcast interview.
Geithner and others will get to work on designing a stimulus plan that will be significantly larger than the $175 billion investment that Obama proposed during his campaign, said Mr. Axelrod.
“Our hope is that the new Congress begins work on this as soon as they take office in early January, because we don’t have time to waste here,” said Axelrod.
- Associated Press material was used in this report.