Unheard of in US presidential history, the world is witnessing a never-seen-before close collaboration between an incoming and an outgoing presidency. By all account, Obama seems to have taken effective control of running the economy since he was elected on November 4th. If there were any doubts, his high profile press conferences at his transition headquarters in Chicago should be enough to erase those doubts. Since Monday, Obama has been on the offensive, unveiling what the media called an economic “dream” team. A series of highly visible names were put forward on Monday. Chief among them are Timothy Geithner, the head of the Federal Reserve Bank of New York, who will be his Treasury Secretary, and Lawrence Summers, the former Treasury Secretary under Bill Clinton, who will head the National Economic Council. Both men are Wall Street gurus and Washington insiders whose entire careers have been spent defending the interests of the American financial elite.
The news of Geithner being nominated to become the new economic czar sent Wall Street in a jubilating mood. Stocks soared, and the DOW has gained more than a thousand points since Monday. But that was not all, yesterday in press conference number 3, another “big” name was unveiled. His name is 81 years old, Paul Volcker, former Federal Reserve Chairman under two presidents from 1979 and 1987. According to president-elect, Volcker will head the new team of Economic Recovery Advisory Board that will advise him on every matter relating to the sagging economy. Obama also announced another top official of the Board. His name is Austan Goolsbee, a University of Chicago economist.
The DOW rose to 247 points on the news of Volcker’s nomination. However, Volcker is no stranger to economic crises. He is a legendary central banker who raised interest rates and restricted the money supply to tame raging inflation in the 1980s. Many investors still remember those grizzly days—days they describe as unforgettable for Volcker’s recipes were called as painful prescriptions that helped send the economy into one of the nation’s worst recessions. However, Volcker is mainly credited for managing nearly three decades of relatively low inflation — an unthinkable feat in the 1970s, when the country was grappling with high unemployment, high interest rates and ever-rising prices. “He pulls no punches,” Obama said of Volcker. “He seems to be fairly opinionated.”
No risk free in these moves
These unprecedented, preemptive measures designed to jumpstart the economy ahead of Obama’s official takeover of the reins of power could present potential dilemmas for Obama’s political future should all fail three or four months from now. Some presidential scholars say Obama is taking considerable risks assuming the burden of governing eight weeks before he takes the oath of office. “By collaborating with the Bush administration on the economic recovery, Obama prematurely ended his post-election honeymoon and made himself a target for criticism should the recovery measures prove inadequate,” claims an editorial in the British Economist Magazine.
Others think that by outlining his expectations for a stimulus package to a lame duck Congress, Obama also might be seen as overstepping his bounds; and according to Tim Blessing, a professor of history and political science at Alvernia University in Reading, Pa. and author of Greatness in the White House, “He [Obama] is setting himself up to lose very seriously if these efforts tank or don’t achieve much, because whatever policies are enacted are going to be Bush-Obama policies.” He went on to say what Obama should have done was to go “back to Chicago, work on assembling his team and leave the mess in Bush’s hand.”
Other intellectuals, however, are adopting a more pragmatic approach in their interpretation to the Obama-Bush cooperation on economic issues. Karen M. Hult, a presidential scholar at Virginia Polytechnic Institute and State University, doesn’t see it in black and white. She thinks that the departing and incoming presidents have been pushed into the singular partnership by the severity of the crisis manifested in the daily jittery of financial markets. “What we’re seeing is a mix of continuity and a commitment to solving problems,” Hult said. “Both sides have incentives to appear they’re responding thoughtfully and seriously to the economic crisis. Obama’s appointments have come quicker than the norm. Given what we think we know about the president-elect, this response will keep up, but be dependent on what’s happening outside world.”
But can Obama be responsible for what happens to the economy between now and January 20th? It is hard to imagine how Obama could be blamed for not taking steps to revamp the economy ahead of his inauguration. But the quick to respond to daily wild swings on Wall Street is symptomatic to unabated pressure from wealthy financiers who heavily invested on Obama and who clearly believe that the Bush Administration is doomed since the dazzling election night. To them, he has to take charge NOW, not 2 months from now.
What ever happened to the liberal speeches on the stump?
One thing remains constant in all of Obama’s preemptive moves: liberal worries—particularly those who wholeheartedly supported Obama during the past two years. They have yet to see a true representative of liberal politics in Obama’s inner circle. All they are seeing is a parade of diehard defenders of the status quo, the forbearers of the US imperial image and power, being put forward with sugarcoating words by president-elect in an effort to cool the tempers on Wall Street.
Obama attempted to put to rest some of those worries in an interview with ABC’s news magazine reporter Barbara Walters aired on Thanksgiving eve. “Apart for my economic team, I have not nominated anyone else,” he said with his usually aloof demeanor. He left the impression that names circulation like Hillary Clinton as Madame Secretary of State and Robert Gate to retain his post as Defense Secretary as just rumors. And when he was pressed on the issue of change, he was quite evasive. “I nominate people whom I deem highly qualified for these crucial posts. But I’m the one who will be the president,” he said, leaving the impression that he is still committed to Change and that he and he alone will be at the driver seat of Change.
It appears though for now Obama, even as president-elect, can only give a subjective meaning to Change. So, the next few days will be key to understanding the true visage of the next US administration.
Also see Obama’s upcoming administration: a new dawn in American politics?