The article is here.
I am not a big Tim Geithner fan. Like many progressives, I feel that he was too much “in” on everything as the bubble was bubbling up, and then when Lehman Shock hit, his focus was too much on protecting the big banks, to the detriment of ignoring other sectors of the economy where the bottom fell out.
Among all the turkeys that the President surrounded himself with at the start of 2009, it is the hardest to explain why Tim Geithner is still there. Yes, he is a brilliant man. But allegedly the whole slew of them were brilliant, and the brilliantly left Wall Street and the banking system unregulated enough for it to blow up and cause the rest of us a lot of grief.
Keeping Geithner in there, who had served some TARP role late in the Bush Administration, and even in that roll-up-your-sleeves transition, had the byproduct of confusing the average American whether the crisis was the fault of Bush, or of Obama! More than anyone else who has the left wing of the Democrats up in arms, it’s this guy. It’s a policy dispute, and it’s more, really. He makes it seem like there is no difference between Democrats and Republicans. The fact that Obama keeps him in there, makes it feel like the Democrats are beholden to the big banks the same way the Republicans are.
So we now are getting the story that Geithner would have liked to be out of there already, but that Obama wants him in the Treasury slot. This calls for a little bit of reflection. Why would someone who the general public, and particularly the Democratic base, see as a liability, be so valuable to the President?
It’s probably because Geithner is a very knowledgeable person about the workings of the financial sector. Like a technocrat. And the President, as a Harvard-trained lawyer and professor, learned other things. Not finance. Not banking. So it’s good to have Geithner around.
The problem, though, is that the economic medicine called for is a dose of the New Deal. The missing portion of the economy, that $1 trillion or so of output that is keep us extra 3% of the workforce permanently unemployed, is not going to appear if the Obama Administration keeps taking the banker’s view of what ails America. We need somebody who thinks like the economic policy wonks of the 1930’s and ’40’s were the legends that they really were. It isn’t clear to me that Geithner is in that mold. He seems like he knows how to keep the banks in clover. Whether this is true or not, politics is a game of perception.
One feature of the article that I liked was that it pointed out that Geithner was arguing against extending the Bush tax cuts in the summer of 2010. It was a tactical failing of so-called conservative Democrats in the House and Senate to beat back any idea of de-linking the cuts for those making under $250,000 a year from the others. The same old game of how a couple making $300,000 a year in the New York metro area really isn’t “rich”. Geithner obviously foresaw, though, that the whole trouble with the federal budget is that these unaffordable tax cuts are present. The Bush tax cuts are the reason there is this persistent talk about the deficit.
Obama should have let the tax cuts end, and instead adjusted withholding so that people stop getting these average of $2500 refunds at tax time. This would have forced the Republicans in Congress to focus on jobs, the unemployed and the middle class–instead of playing politics all throughout 2011 like they did. In this regard, Geithner had a lot of foresight.
Twenty twelve is coming up–although, honestly, I think the 2012 election season has been playing out since about March 2009. It will be interesting if we hear more from the New Geithner.