Saturday, November 8, 2008

Clinton III: Obama's economics and energy choices likely to make left unhappy

The Democratic Party's left flank is already getting uncomfortable.

When President-elect introduced his economic advisors, the effect would dispel two fantasies,
(1) the right's fantasy that he is a socialist,
(2) progressives' fantasy that he will change everything, that he will implement their dream policies.

The profile of his advisors suggests an establishment, centrist, neo-liberal administration. Yes, his team is fronted by Chief of Staff -to be Rahm Emanuel, reputed to be a pitbull. Yet, there are the figures from the second half of Carter's term and Clinton's two terms that alienated (and infuriated some) progressives:
Robert Rubin, Laura Tyson, Paul Volker.
And most of all, the anticipated Treasury Secretary possibility, Lawrence Summers.(--Or Paul Volker, as Melbourne, Australia's Herald Sun suggests.) In short, Oblama's administration is shaping up to be, as Rachel Maddow said, Thursday night, Clinton-Term III.

This important article in today's NY Times, by Jackie Calmes and Ben White, "Obama’s Possible Treasury Choices Draw Criticism," covers the essential points.

CHICAGO — Former Treasury Secretary Lawrence H. Summers, a member of the new economic advisory board that met with President-elect Barack Obama here on Friday, is also a leading candidate to be the next Treasury chief.

That prospect has critics of Mr. Summers, particularly on the Democratic Party’s left, reviving old controversies in hopes of dooming his chances. In the days since Mr. Obama was elected, liberal bloggers have sought to ignite an online opposition by recalling the rocky five years Mr. Summers spent as president of Harvard, where he angered many women and blacks before resigning in 2006.

Reaching back farther, other Web sites have resurrected a 1991 memorandum that Mr. Summers signed as an economist at the World Bank that suggested parts of Africa could be repositories for toxic waste.

Mr. Summers, 53, left the meeting on Friday with Mr. Obama without answering a question about the controversies, and Obama advisers declined to discuss them.

The main rival to Mr. Summers for the Treasury job, according to Obama advisers, is Timothy F. Geithner, president of the New York Federal Reserve Bank and a Treasury staff member under Mr. Summers when he led the agency in the final two years of the Clinton administration.

But Mr. Geithner presents a different problem for Mr. Obama, who staked his campaign on a call for change in Washington, especially in areas of economic policy.

Though a nonpartisan Federal Reserve official, Mr. Geithner is tightly linked with the policies of the current Treasury secretary, Henry M. Paulson Jr., and the Bush White House. Among the public, there remains deep skepticism over the wisdom and fairness of the bank bailouts.

Many on Wall Street still question Mr. Geithner’s role in allowing the investment bank Lehman Brothers to collapse into bankruptcy, an event some believe exacerbated the financial crisis. Some also say Mr. Geithner relies too much on financial executives for guidance and, except in the Lehman case, is too quick to come to their rescue.

“He is too tied to Wall Street and too tied to this administration,” said Joseph Mason, banking professor at Louisiana State University and a critic of the bailout plans.

The simmering opposition to Mr. Summers and Mr. Geithner is typical of post-election transitions, when various groups weigh in for or against potential recruits.

Mr. Summers is widely known to want another stint in the job he held in 1999 and 2000 at the end of President Bill Clinton’s administration.

But in angering feminists, blacks and environmentalists over time, Mr. Summers has hurt himself with three groups that make up much of the base of the Democratic Party — making him a prime example of the constituent politics that Mr. Obama must maneuver around in coming weeks.

While at Harvard, Mr. Summers sparked a furor by suggesting that innate factors might help explain why more men than women go into scientific fields and excel there.

“There is no need for Obama to open that can of worms and court controversy when there are other good people” who could lead the Treasury, said one Democratic source who asked to remain unnamed. While Mr. Summers could weather the attacks, he also faces skepticism among colleagues, even those who admire him as an outstanding economist with a successful record at the Treasury, as being arrogant and sometimes condescending.

But Mr. Summers has influential promoters, not least his predecessor as Treasury secretary, Robert E. Rubin, for whom he served as deputy. Speaker Nancy Pelosi, through a spokesman, on Friday also praised Mr. Summers as “one of America’s leading economic minds” and “a valuable resource to House Democrats” as they have sought ways to address the economic crisis.

Typical of the material on the Internet about Mr. Summers, on the morning after the election, the Huffington Post reported that Kim Gandy, president of the National Organization for Women, had contacted the Web site to register her “mixed feelings” about his rumored prospects.

A day later, the site posted the private memorandum from 1991, when Mr. Summers was chief economist at the World Bank, that suggested dumping waste in underpopulated and “underpolluted” African countries.

The issue was raised in 1993 at Mr. Summers’s Senate confirmation hearings to be under secretary of the Treasury at the start of the Clinton administration. He was confirmed then and two more times, as deputy and then as secretary.

One Obama adviser counseled against interpreting Mr. Summers’s inclusion on the 17-member economic advisory board that Mr. Obama announced on Thursday, and Mr. Geithner’s absence, as indicating anything about their relative chances.

Mr. Geithner is a sitting Federal Reserve official, while the Obama board includes former government officials like Mr. Summers and Mr. Rubin and corporate leaders.

Like Mr. Summers, Mr. Geithner served at the Treasury under Mr. Rubin, helping manage the Russian credit crisis in the late 1990s.

Mr. Geithner, 47, also played a role in the bailouts of Brazil, Indonesia, Korea, Mexico and Thailand. And he spent two years in Tokyo in the early 1990s, where he studied Japan’s economy, later urging Mr. Rubin to assist in lifting that country out of its long financial malaise.

He is widely liked and admired across the financial industry as a tough but fair regulator with a keen understanding of the ways of Washington and Wall Street.

“He is very smart and very thoughtful and listens very, very carefully and is able to earn the trust of everyone he deals with,” said Peter G. Peterson, senior chairman of the private equity firm Blackstone Group. Mr. Peterson led the search committee that selected Mr. Geithner for his job at the Federal Reserve.

In addition to his ties to the current administration, some critics say Mr. Geithner’s quiet persona — he is rarely one to dominate a room — could be problematic for a position that demands a statesman capable of advocating the position of the United States before world leaders.

Mr. Peterson, however, dismissed the idea that Mr. Geithner shrinks from confrontation, noting that he discussed the issue with Mr. Rubin and Mr. Summers in 2003 when considering Mr. Geithner for the Federal Reserve job.

“They rather smiled when I asked the question,” Mr. Peterson said, “and said that Tim can be very, very direct when he needs to be.”

And the above cited Herald Sun article raises rumors by that Obama will nominate California Republican Arnold Schwarzenegger as Secretary of Energy.

"And there's more": "There is also speculation he will retain Republican Robert Gates in the job of defence secretary, to ensure a smooth transition in the wars in Iraq and Afghanistan," according to the Melbourne Herald Sun, date-lined for tomorrow, November 9.

* * *
Obama's landslide vote suggested a shift to "the blue," to liberalism. Will Obama govern with this in mind? The potential economic team choices instead suggest that he will govern from the center, representing purple politics (Democrats and Republicans blended).

Progressives have been pining for the evisceration of moderate, Democratic Leadership Council types. Let's hope that Obama fulfills the dream of a progressive departure form the centrism of the Clinton years. The first indications of Obama's economic team are not encouraging that dream.

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