Who SHOULD be the Next Treasury Secretary?

Four days ago, Ezra Klein reported that Erskine Bowles is the front-runner for Treasury Secretary in a second Obama Administration.  It’s hard to think of any plausible Democrat who would be a greater disaster.  Bowles has a man-crush on Paul Ryan; his chairman’s mark for his eponymous commission was simply an embarrassment on both political and policy grounds; a managing director of Morgan Stanley, he is Wall Street’s creature.  He has no business running Treasury any more than I do.  Take a look:

But if that is the case, then assuming (in best chickens-counting style) that there even is a second Obama Administration, who should the next Treasury Secretary be?

This isn’t merely idle blog talk (although I am under no illusions about RBC’s awesome policy influence).  One great failing of progressives is that after the 2008 election, we simply celebrated.  Wall Street did not: it got to work making sure that its people were in key positions, and that Barack Obama’s agenda would never challenge the financial industry’s power.  That’s how we got Timothy Geithner at Treasury, Larry Summers at NEC, Ben Bernanke reappointed at the Fed, Bowles himself appointed to an absurd “deficit reduction commission”, Christy Romer sidelined at CEA, and ditto Elizabeth Warren.

So if, as anyone not committed to entrenched plutocracy should hope, President Obama wins a second term, the very next day should be devoted to making sure that President Obama does not make such disastrous picks again.  That means being prepared to push very hard against rancid appointments like Bowles and in favor of someone else.  I would hope that the day after Obama’s re-election, Al Franken and re-elected Senator Sherrod Brown call the White House and make it very clear that if they have anything to say about, Bowles will never be confirmed.

But who should be?  A couple of notes: 1) at this stage, we should not worry about confirmability too much.  The Republicans will seek to block anyone (whether by filibuster or otherwise), and at some point progressives will have to press President Obama to make a recess appointment; and 2) for what it’s worth (and it may not be worth much), there has never been a woman or a minority heading Treasury.

There are a few I can think of offhand: former FDIC chair Sheila Bair, former CFTC chair Brooksley Born, Paul Volcker (too old?), Gary Gensler, Christy Romer, Jared Bernstein.  Hillary?  I would be very wary: the Clintons created the Wall Street Democratic party, all of her advisors will be Rubinites, and if she wants to run for President in 2016, negotiating with Wall Street potential campaign contributors provides dark incentives.  Still, she could be more progressive as a way of attracting primary support. 

 Paul Campos wants The Shrill One: that would be great, but I think that’s a little too far-fetched even at this stage.  Nevertheless, Campos is asking the right question.

By the day after Election Day, progressives should have an answer.  Because Wall Street sure will.


More Hillary-in-2016

Gillibrand and Carville are weighing in. Could be real.

With both Gillibrand and Carville chiming in, this is starting to look real to me. I should add that my enthusiasm for a Clinton/Biden job switch drew skepticism from a politically connected and sophisticated Republican I met recently who told me he’d probably vote for Obama against Romney. His take was that such a move would be a turn-off for independents, who would see it as reflecting lack of loyalty to Biden on Obama’s part. My sense is that it would still be a net boost for the campaign, but if I had to choose between my own political judgment and my informant’s, I’d choose his.   In any case, I don’t think Clinton needs to be VP to be the instant frontrunner - possibly the uncontested choice - four years from now.

Hillary in 2016

What a great idea!

I have no idea whether John Heilemann and Mark Halperin know what they’re talking about in predicting a Clinton-for-President campaign four years from now.


But one thing I’m sure of:   I’m for it.  And so is every other early Obama fan I’ve talked to.  None of the baggage she would have had to carry in 2008 will be nearly as heavy then, and her record as Secretary of State is both a huge political asset and reassurance about her managerial ability.  And Bill Clinton would also be a big asset in four years from now, which he wouldn’t have been four years ago.

There was a rumor running around that Clinton was tired of being Secretary of State and Biden equally tired of being VP, and that they would switch jobs. That rumor seems to have died, but it seemed like a great idea to me. Clinton as the incumbent VP would probably walk to the nomination, greatly improving the Democrats’ chances of holding the White House. Otherwise, there’s no obvious front-runner. And for this year, an Obama-Clinton ticket would create more energy on our side than an Obama-Biden ticket, without especially stirring up the Republican base any more than it already is.

It all works: if only HRC has the stomach for a Presidential campaign at age 68.




Cheney’s Assertion that Torture Works: Hillary Nails It

Why should anyone pay attention to anything Dick Cheney says?

More of this, please:

“Are you in favor of releasing the documents that Dick Cheney has been requesting be released?,” asked Rep. Rohrbacher.

“Well, it won’t surprise you, I don’t consider him a particularly reliable source of information,” responded Secretary Clinton.”

Cheney now claims that there are documents showing the efficacy of torture. Maybe there are. But consider:

1. Cheney claimed that Saddam Hussein had reconstituted nuclear weapons.

2. Cheney claimed that there were operational links between Saddam and Al-Qaeda.

3. Cheney claimed that the insurgency was in its last throes.

And he did this all on the basis of what he claimed were classified documents showing his position.

As Jane Mayer demonstrates in The Dark Side, Cheney out-and-out lied to Dick Armey — hardly the thin end of the Marxist wedge — in making the case for war in Iraq. And as Josh Marshall has pointed out, Cheney’s “leadership” of the administration’s anti-terrorism task force in 2001 and his attempt to enlist Middle Eastern leaders in favor of the Iraq War in 2002 were grotesquely incompetent.

Indeed, the question everyone should be asking now is: is there anything that Dick Cheney said about national security policy during his 8 years as Vice-President that has been shown to be true? Did any of his national security initiatives produce anything but failure and disaster?

And if not, then why should anyone pay attention to anything the man says?

Hillary’s State Department Changes: Two Comments

As Mark observes, it’s a good thing that Hillary Clinton has appointed Jack Lew as budget director within the State Department. Two other things emerge from the NYT piece, one good, one bad:

1) Clinton seems to want to get State more involved in international economic affairs. This is good. Matt Yglesias is worried about this, suggesting that “letting the Treasury lead on this worked fine during the Clinton administration and insofar as it hasn’t worked under Bush it’s been because his Treasury Secretaries have been unimpressive and subcabinet jobs have often lingered vacant for long periods of time.”

I think that this is strongly open to doubt. Joseph Stiglitz’ takedown of Treasury’s blindness during the 1990’s on international economic affairs has been answered, but not very effectively. Brad DeLong, here, seems to think Rogoff gets the better of the argument, but in my view, he misrepresents the position of Stiglitz, who never argues that debt-laden countries should print more money: he simply argues that in countries without inflationary pressures should not be required to raise interest rates in order to avoid currency speculation: instead, the solution should not be insisting on international capital market liberalization-a position that the Fund has seemingly accepted now. Thomas Dawson of the IMF castigates Stiglitz for his attacks on the IMF, and then mentions offhand that the Fund has now changed its policies to look more like what Stiglitz wanted.

Bottom line: I’m not persuaded that leaving international economic affairs in the hands of the Treasury is necessarily the best policy. As a non-economist, I could be persuaded otherwise.

2) Note that although State appears to be ramping up on a variety of levels, climate change does not appear to be one of them. That brief will continue to be buried at Foggy Bottom, once again suggesting that perhaps USTR is the best place to put it. I don’t know much about Ron Kirk, Obama’s USTR selection: as a Texas Democrat, he doesn’t figure to be overly concerned with carbon emissions. But it would at least be more high-profile.

Does Hillary Clinton really want to be Salmon Chase?

I doubt it.

UK reporters tend to be rather fanciful in their accounts of U.S. politics, so there’s every reason to hope that the report from the Leonard Doyle in the Independent about the negotiations between HRC and BHO about staffing the State Department reflects a strong imagination rather than good sources.

If it were true it would be hard to figure out which player had made the bigger blunder: Clinton for demanding that she be allowed to staff the State Department with her own loyalists, or Obama for agreeing.

Obama’s lack of interest in getting revenge on his defeated opponents is a welcome change from the recent past. But if he had a similar lack of interest in rewarding his friends, that wouldn’t speak well of his ethics or his judgment. As for Clinton, a Secretary of State known to be on the outs with the White House has relatively little power. Clinton ought to want to have a couple of strong Obama loyalists around her, or she’s going to keep losing fights with the National Security Adviser.

Given the choice of believing either that two savvy players agreed to make an appalling mistake and or that a British journalist got a Washington story completely wrong, it seems to me that William of Ockham would bet on sloppy journalism rather than stupid politics.

At least, I hope so.

Hillary in the Cabinet: why not DOD or Justice?

After several days of speculation, I still fail to see why Hillary Clinton would want the job as Obama’s Secretary of State.

1) Secretary of State is a more important office when the President does not want to focus much on foreign policy; if he does, then he will concentrate authority in the White House and particular with the National Security Advisor. Obama seems to have very strong ideas on how his foreign policy will operate: that will generally leave Foggy Bottom less important. This means that to the extent that Hillary wants to do something, Steve’s scenario of a circular firing squad seems more likely.

2) A Cabinet position carries power inherently if it has a large and powerful bureaucracy that the Secretary can direct. But that is not the case with State, as opposed to, say, HHS, or even Justice.

3) If Hillary really would want to do something major in terms of national security policy, she should be angling not for State but rather Defense. That has the biggest and most powerful of all bureaucracies; she would make history by becoming the first female in charge of the Pentagon; and she knows something about it, having served on Armed Services for 8 years.

4) Since this hasn’t been mentioned, I’m assuming that Obama is going to keep Gates on for several months.

5) One might think that Sec Def is a poisoned chalice, because it means extracting US forces from Iraq. Perhaps true, but the new Iraqi resolution on the SOFA makes this something less of a problem.

6) The other place where Hillary would be extraordinarily qualified would, of course, be the Justice Department. Again, no talk of this.

7) Putting Hillary in charge of DOJ, and the prosecutorial power, might be a little too risky, even if we buy (as Steve and I do not) that the “team of rivals” philosophy is applicable.

8) This suggests to me that Obama might be trying to sideline her. But then why would she accept it?

Circular Firing Squad of Rivals?

I am not at all sure that I understand Obama’s reasoning in considering HRC for Secretary of State, but my gut tells me that we may be seeing an instance where politicians get in trouble through the misplaced use of historical analogy, in this case the “team of rivals.” Abraham Lincoln really had to have a highly inclusive cabinet because: a) the Republican party was still not a completely institutionalized entity, and to keep it together in its first shot at power Lincoln needed all the major figures in the party to be represented and; b) the country was at war-a real war-and that almost always calls for inclusivity, even to the point of having governments of national unity. Neither of these factors apply in this case. Obama has massively more control over the Democratic party than Lincoln did, and while we are in an economic crisis, it’s not nearly as bad as the Civil War or WWII. So the conditions that necessitated a “team of rivals” don’t apply. I’m increasingly wondering if this will turn out to be a “circular firing squad of rivals.”

Fundamentally, the president always faces a “principal-agent” problem where his cabinet is concerned. The work of cabinet departments is sprawling, impossible to oversee effectively from the White House. The only way to really make the national government work is to have pretty effective ideational agreement between the president and the people in the power departments, so that the president doesn’t need to be looking over their back to see if they’re screwing him over. Those people don’t have to be friends, but they need to be people who the president knows agree with him on the fundamentals, so that he has confidence they’ll do what he wants without the president needing to supervise them.

The Gates idea makes sense, for example, if Obama has gotten some sort of prior agreement about what it is Gates is expected to do in the (limited) time he’ll be in office. But that’s as much of a risk as I’d be willing to take. And frankly, I just don’t trust Hillary. There is no evidence based on the historical record that she is a competent manager (and plenty of evidence to the contrary-her campaign and the Clinton health care process are only two examples), or has the best interest of our chief executive at heart. So given that the structural conditions that necessitate a “team of rivals” approach don’t apply, I find the argument for this idea extremely weak.

I was joking with someone last week that all of us who write about politics should have to state now what we think the 2012 election recriminations story will be, if Obama loses (not that I’m saying he will-I’m saying, if he does, what do we predict will have done him in). Mine is, “Unfortunate Reading of Goodwin Seen By Observers as Cause of Obama’s Downfall. Obama Agrees, Claims, ‘I Should Have Read Cod: The Fish That Changed The World Instead’.”

All the spin money can buy?

Why is someone betting the bank on McCain-and Hillary?

Nate Silver notes that the InTrade presidential futures numbers are suspiciously good for McCain-different enough from the other markets that arbitrage would normally make the difference go away (and does, regularly, until another big InTrade bet bumps up the difference again). Interestingly, someone is buying big futures positions not just in McCain but in Hillary Clinton.

Nate suggests that someone thinks he or she has reason to believe Barack Obama isn’t going to make it through the election. This suggestion is incendiary but not therefore false: I second Nate’s proposal to have the FBI look into it. But a simpler hypothesis seems just as plausible. Someone with very deep pockets has decided that the easiest way to influence the election on behalf of McCain is not to buy third-party advertising but to bump up the InTrade markets. It doesn’t have to work for more than a couple of hours at a time to have some effect on both reporters’ campaign narrative and donor and volunteer morale-especially given that InTrade is by far the most famous of these markets in the U.S.

Wild speculation? Sure. (And feel free to email, or link to me on your own blog, with reasons I must be wrong.) But then again, the phenomenon I’m trying to explain is an episode of-wild speculation, in fact speculation that seems guaranteed to have strange reasons behind it.

If you must run, learn to sit

Obama must learn to sit right.

How did you think Obama’s venture into O’Reilly’s den on Thursday went? Video here. I give him high marks for cool and for content - though I reckon O’Reilly is beginning to run for cover, as Rupert Murdoch finally realizes the wind has shifted.

But I hated our man’s posture. Perched on the front of his seat, leaning forward, face tilted up: the nice young man ingratiating himself with his future father-in-law. Look at this screenshot:


Continue reading “If you must run, learn to sit”