follow-the-money-book.thumbnail.jpg(Please welcome John Anderson, author of Follow The Money: How George W. Bush and the Texas Republicans Hog-Tied America — jh)

Earlier this morning, Paul Krugman delivered what Scott Horton (“No Comment”) afterwards correctly termed “a devastating judgment” on the Obama administration’s emerging economic policies. Wrote Krugman:

This administration, elected on the promise of change, has already managed, in an astonishingly short time, to create the impression that it’s owned by the wheeler-dealers. And that leaves it with no ability to counter crude populism.

Worse, the feeling is fast growing that this is no mere “impression,” but a reality of sorts. That, under the swami-like (or is Wizard of Oz-like?) influence of former Goldman Sachs chair-cum Clinton administration Secretary of the Treasury-cum former Citigroup vice chair Robert Rubin, the administration has effectively abandoned its own principles for the status quo demanded by a Wall Street elite.

On the economic stage, Rubin’s influence seems omnipresent: Not only Treasury Secretary Timothy Geithner, but also senior economic advisor and former Clinton Treasury Secretary Larry Summers are both longtime Rubin protégés. But for Summer’s notoriously arrogant, heavy-handed—failed—presidency of Harvard, he rather than Geithner would almost certainly be Treasury Secretary now. It’s worth pondering that some among his fellow Harvard Fellows—the university’s trustees—still haven’t forgiven Rubin for having stiffed them with Summers in the first place.

Given his tempestuous Harvard adventure, Summers, the current administration seems to have concluded, wasn’t sufficiently presentable to be wheeled out as the front man for their economic policy. And so it fell to Geithner, who, in his own way, appears even less presentable, so seemingly weak is he in public. Never was there a time when Treasury needed—nay, demanded—to be seen as trustworthy. Yet, Geithner has already—and quickly—established a reputation for evasion, not to say prevarication.

Given the administration’s—and, particularly, Treasury’s—obvious mishandling of the AIG “retention” bonus situation, you have to wonder how much longer Geithner can last. To remove him now would make President Obama himself appear weak. To leave him in office, however, is an equally unappealing choice. As Krugman keeps reminding us, the administration has done little more than muddle along with its economic policies. Again and again, it’s the old story: Too little, too late. And, meanwhile, faced with the firestorm over bonuses, the president’s political capital is sure to take a hit sooner or later. Obama is almost certainly going to need to come back to Congress and ask for more money for more stimulus. Will he get it? Can he get it with Geithner as his Treasury Secretary?

It should be remembered that Obama’s favorite president, Abraham Lincoln, did not always choose rightly. His own first Secretary of War, Simon Cameron, was corrupt and proved incompetent in high office. For all the current-day “Team of Rivals” talk, Lincoln quickly came to the realization that Cameron was no fit member of the team and dispatched him in short order to Moscow as minister to the court of the Czar. His replacement: The difficult, but talented Edwin Stanton.

In this country’s moment of greatest need, its most important cabinet officer surely was the Secretary of War. Yet Mr. Lincoln saw fit to sack Cameron. And he was right to do so. He did not have time to waste—nor did the nation.

It is an example that his admirer, Mr. Obama should consider following.

Mr. Obama might also want to consider following the lead of another great American president enmeshed in crisis—a Democratic president, at that, Franklin D. Roosevelt.

Roosevelt too misjudged some of his initial cabinet appointments, none perhaps more so than the Republican industrialist William H. Woodin as Secretary of the Treasury during the first months of the New Deal. Uneasy with Roosevelt and the New Deal, and ill as well, Woodin was gone in less than a year, replaced by Henry Morgenthau, Jr., who would serve successfully in that office for the next eleven years and into the presidency of Harry S. Truman.

Roosevelt, it should also be remembered, staffed the inner circle of his New Deal administration with bright, energetic, politically astute youngsters, the likes of Ben Cohen, Thomas “Tommy the Cork” Corcoran, Abe Fortas and Jim Rowe. Lyndon Johnson would later follow the same pattern, staffing his administration with the likes of Billy Don Moyers, our own Bill Moyers.

Tim Geithner might have proved a fine second-tier member of this administration—with a great deal of luck, he might yet prove a fine first-tier member—but time is ticking, and Geithner’s standing with the public and the Congress is lowering by the minute. He lacks presence, he lacks eloquence, he lacks gravitas.

Faced with the second great crisis of his administration, Franklin D. Roosevelt brushed aside the placeholder Harry H. Woodring (1936-1940) as his Secretary of War and turned to the Republican lawyer-statesman Henry L. Stimson, already 77 years old at the time. Steady, intelligent, experienced, Stimon proved a formidable war secretary. He did not lack gravitas. He did not lack wisdom.

Paul Volcker, the man who once tamed inflation, is 82 years-old, but already serving as chairman of the newly formed Economic Recovery Advisory Board. He surely is not a member of Bob Rubin’s magic circle. Larry Summers is reported to have done everything he could to isolate Volcker and keep his opinions out of the current White House’s economic loop. No wonder: Volcker is no one’s minion.

Volcker does not lack gravitas, he does not lack intelligence or experience. Perhaps if he were paired with the modern-day equivalents of Tommy the Cork, Ben Cohen, Jim Rowe and Bill Moyers, he might be what the doctor ordered.

President Obama could do worse than take the measure of Dr. New Deal.

Related posts:

  1. Liz Warren and Paul Volcker: “Break Up TBTF Banks,” but Geithner Says “No”
  2. Will Financial Reform Become Healthcare II: The Sequel?
  3. Peter DeFazio: Geithner and Summers Should Be Fired
  4. Reps. Lynch, Kaptur Rip Geithner on AIG Counter-Party Payments
  5. NY Post Floats JPMorgan Chase’s Dimon to Replace Treasury Sec. Geithner