Last Man Standing
It's been a tough month for the Obama economic team. Over the course of the past few weeks the Budget Director Peter Orszag and head of the Council of Economic Advisers Christina Romer have left the administration to return to private life. Ms. Romer was a principal architect of the "stimulus" plan, designed to spur economic growth and cap unemployment at 8.5%. Oops. Orszag created the budget that gave us our largest deficit ever. Ouch.
On Sept 21, President Obama's Chief Economic Adviser, Larry Summers, announced his return to Harvard. If the name sounds familiar the reason may be his controversy as President of Harvard suggesting that women do not pursue careers in math and science due to gender differences. As Chief Economic Adviser Summers was responsible for creating policy. This included implementation of the stimulus package and creation of the financial reform package. He became notorious for the term "too big to fail" and also for his advocacy of unlimited bank size, thus guaranteeing the existence of institutions "too big to fail". He is the man who as Treasury Secretary under former President Bill Clinton, presided over the deregulation of the banking system.
On Sept 22, Herb Allison, head of the TARP Bailout Fund charged with administering it and distribution of funds announced his departure to return to private life.
That leaves only Treasury Secretary Tim Geithner as the last man standing. We remember President Obama's characterization of Geithner as "uniquely qualified" to take on the current "unprecedented economic crisis". These comments came out as it was revealed that the man who would be responsible for oversight of the IRS, was found to have neglected paying his income taxes in an accurate manner.
We at TPP ask, is President Obama cleaning house and rethinking his economic policy, or are his advisers abandoning ship?
Leading Republicans are looking with guarded hope that maybe the President is rethinking his policies. Minority Leader John Boehner called for Obama to fire his entire economic team last week. Having 4 out of 5 top economic advisers leave when the ideas proposed by those advisers have "underperformed" (to use Obama's word), might indicate the willingness to try something else.
Still, President Obama has become famous for doubling-down on his policies and pushing harder against resistance - just look at the healthcare war. He has not shown the Clinton talent for "triangulation" (changing path to achieve a goal) or adaptation (changing goals to remain relevant). A change of heart or mind is possible, and so is a winning lottery ticket, but wisdom sides with experience.
Abandoning the sinking ship may be more relevant. The policies crafted by the economic team have not panned out as advertised. The names attached to those policies are obscure.The average man on the street has no idea who Romer, Orszag, Summers or Allison are. The policies are identified with President Obama. Should they sense a sinking ship, bailing out now to return to academia would preserve their reputation before the second dip in that double-dip recession occurs.
There is also a political aspect to all of this. The mid-term elections are fast approaching. A very visible shakeup in the economic team would give the impression that President Obama understands that the average person is not satisfied. It would be seen as less than a Clinton "I feel your pain", but at least up to the "ass kicking" that he gave BP and Wall Street. Cynical you may think, but reports are leaking out. Reports with specific regard to Larry Summers replacement.
Our sources indicate that the first consideration coming out of the White House is the replacement of Summers with a woman - maybe someone with some practical experience, rather than an academic. The two names being bandied about are Meg Whitman and Carly Fiorina, both Republicans (by name at least), both running for elected office in California (Whitman for Governor, Fiorina for Senate), and both with a good shot at winning that office.
Scoring one of them would be a trifecta win for Obama. Replacing Summers with a woman expands his reputation as one committed to diversity (regardless of qualifications). It sucks the wind out of a strong Republican challenge in one of the bluest of states. The Republicans would be stuck with building a campaign challenge with a relative unknown over the course of 6 weeks. This brings us to our third win - it preserves the seat as Democrat, and gains Obama a strong ally in what will be a troublesome 2012 reelection campaign.
If TPP were a betting entity, our money would be on the job going to Fiorina in order to preserve Barbara Boxer's Senate seat. The California governorship goes Republican on a regular basis but little changes because the legislature remains firmly Democratic. Jerry Brown, the Democrat nominee for Governor (yup, Governor Moonbeam - he's back) doesn't add much value for Obama.
In contrast, preserving a Democrat Senate seat in a year where every seat counts is vital to Obama. Among the pollsters, just about all see the House of Representatives going Republican majority (congratulations Rep. Boehner). The Senate is much more in flux. Most pollster say that a majority is not out of reach but guaranteeing Boxer's seat makes the calculations more difficult for the GOP.
The plausibility in such a scenario is that neither Fiorina nor Whitman have strong conservative credibility. Fiorina was a sock puppet for John McCain in his erratic 2008 Presidential campaign. Whitman is one of the bored millionaire class looking to burnish her resume. With Obama being handed lemons, this is an opportunity for him to reach across the aisle and make lemonade. Oh the bipartisanship...
Common Sense Dictates
If nothing else, we at TPP can conclude that President Obama is a master tactician with a solid poker face. He channels himself from the Presidential campaign, turning himself into a canvas for us to project our interpretation onto. He has pushed through to passage several programs that were not popular with the American public - the stimulus, healthcare, financial reform (which should have been a winner), and escalating Afghanistan. He has proposed programs that are counter to the mindset of average Americans - Cap & Trade, Immigration reform, and the automaker bailouts. He does not change his mind. He just continues to explain why this is really good for us.
He has no "tells" - nothing to tip his hand, and he plays his cards close. To gain an educated guess as to the cards he holds, we need to look elsewhere, to the members of his team. In addition to the economic team there are other changes. Obama's hand-picked General to run the Afghan war, Stanley McChrystal, has been fired for speaking his mind outside the family. SecDef Robert Gates is leaving. Chief of Staff Rahm Emmanuel is on his way out the door. TPP does not see SecTreas Geithner lasting much longer. We have posited here that SecState Hillary Clinton is keeping quiet and will return to private life if the mid-terms go really badly, only to rise in 2011 to challenge Obama. The House of Representatives will likely be in Republican control. The Senate is up for grabs.
Taking all of this into account, and combining it with President Obama's willingness to go to the wall, TPP concludes that those who are leaving are not being forced out (except for McChrystal), they are abandoning ship. We do not count President Obama out. He has shown a remarkable resiliency in the face of vocal opposition. However, important members of his own team are heading for the lifeboats.
This is turning into a world class game of chicken. The Obama agenda hurtling towards the GOP agenda at top speed. The unsinkable Titanic boring full speed at the iceberg, aiming to blast through it. The GOP iceberg preps for Obama's best saying, "Hey, we're an iceberg." Most of the Democrats are sitting on the sidelines watching, unwilling to ride with Obama. The crash point is Election Day. That is when we find out who sinks and who swims, whether the last man standing is the President or the GOP. Hopefully Common Sense will take over from there.
RLB
Categories: The Economy, political leadership, Partisan Politics
Tags: economy political leadership
Gotta give credit. Only Obama could take a situation where his people were bailing and figure out a way to profit from it. I don't think either Carly or Meg would go for it.
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Looks like Jones is on his way out as NSA chief. Funny how all of the departures are in the economics or foreign policy / defense departments. I'm thinking a lot of people Obama hired think he got it wrong.
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You know, it's customary for a bunch of people to leave the President's administration at the 2 year mark. It happened under Bush I & 2, Clinton and Reagan. This isn't really news.
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It is if they are all out of the same departments.
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I'm up for giving Obama the benefit of the doubt on this one. His economic policies aren't very popular and neither is the war. That new Woodward book is a tell all on all the division over the proposed surge in Afghanistan. That explains the defense shuffle. The points were made bluntly on the economic team missing the mark, but you can't say they weren't true. Obama is looking at a hostile Congress coming up. Looks like he's getting his ducks in a row. Seems smart to me.
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Anytime I look at this White House I see nothing but politics and agenda pushing at all costs. Look at health care. Look at the stimulus. Just ram it through. I have no doubt this is purely political. I'll bet the interfering in the CA politics in on the money too. It's what we've seen all along.
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Look, I'm not all that happy with Obama, and I voted for him. He's screwed up a lot. So did Bill Clinton in those first two years. I'll let him make his changes and see what shakes out. Maye he'll get it right with new people.
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Nice conspiracy theory with Fiorina. I can see it happening. Carly seems to just be in it because she got used to the campaigning with John McCain. We don't need another RINO, and she's one. Maybe if Obama takes her California can have a real conservative step in. It's not impossible, if you're well known enough. Tom McClintock - your state is calling you.
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I just keep hearing "another one bites the dust" in my head. I hate to give Boehner any credit, but when you're right, you're right. These clowns sadly misread what was going to work. Otherwise we'd start to see some improvement, somewhere. Unemployment holding near 10%, housing market still sinking, but the good news is the stock market is rallying. Woo-hoo! Thanks Obama, and your pitch perfect team. PLEASE pick someone with some real world experience. The professors are killing us out here.
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Well, it would be nice to see Obama take you up on your suggestion to put someone in charge who has actually experienced working in the economy. Theory vs practice - sort of like Rumsfeld said "no battle plan survives contact with the enemy". Get it fixed Obama, or get out of the way.
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Carly? Really?? Didn't she do her best to drive HP into the ground? Well at least she would be doing to the whole country what she wants to do to California.
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Hell, Bob - just wrote a comment about this on "Suicide Candidate". Nice pick up. Lots of pluses for Obama in snatching Carly, and it really screws up the Republicans. He does have a talent for turning bad news to his advantage. Gotta give credit where credit is due. Let's see if it hapens, and if she goes for it.
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Carly can't take it - she will be personna non grata with he Republicans for torpedoing their best shot at knocking down Boxer. She'll have to become a Democrat,which I guess isn't that long a stretch.
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A lot of administration people do leave at the 2 year mark in every President's term. Still they are usually spread across the board. People get tired of Washington if they can't adapt to the culture. Obama is losing people in 2 areas, and only 2 areas. The people he is losing, at least in defense are old Washington hands. Summers too really. This looks more like policy disagreements than people getting homesick, especially with the economics team leaving all at once.
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OK, now let me get this straight. Obama hires the guy who dismantled banking regulations to fix the problem? What is this you broke, you fix it? Did he get a raise with the new job? No wonder we are so screwed up.
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Yeah, ain't that a kick in the head. The crisis keeps changing but the players stay the same. It's not enough to throw the bums out of office. You have to get rid of the rotating advisers. Next thing you know, that toad Greenspan will be back.
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You have to admire the change in strategy. Obama is replacing Romer with Austin Goolsbee. He's the guy who won the Washington "government" Stand Up Comedy contest last year. I guess he's going to get us to laugh our way out of this economic mess. Even I'm giving up on this.
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Goolsbee already was on Obama's economic team. Looks like rearranging deck chairs on the titanic.
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I believe that the Obama is realizing that too many people are hurting still. The shake up of his team reflects this. I would think it more constructive to see if this new set of eyes that he is putting on the problem can come up with something to help those families that are still struggling. It is no vice to elp those in need.
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Is Obama getting the message? I doubt it. He's just pulling out a new dog and pony show to distract the voters and make it look like he's doing something. The guy consistently mistakes doing something with doing something helpful. The problem is that most people get taken in by this. It's how he got elected in the first place.
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Maybe Obama is learning. There's a lot of people unhappy with the job he is doing. A Republican controlled congress could help with that. His idealism needs to be tempered with pragmatism. I don't think that he understands that his policies might work great on the drawing board, but they are causing pain to a lot of people at the same time. A lot of the Republican ideas aren't bad, just different. Let's see if they work any better.
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The Woodward book explains the departures at Defense and State. Obama didn't want to do what all of the people advising him wanted to do. Instead of taking the advice he crafts his own policy and tells them to make it work. I can only imagine the same thing happening with the economic team. Orszag wrote a blistering piece in the NY times blasting Obama's tax policy. That says it all. Junior wants what Junior wants. We have a three year old in charge yelling FIX IT! It's gotta be really depressing to work at the white House.
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I think if we continue to see housing sales increase, other businesses will begin to rebound. Remember, there are a lot of businesses that support housing in general. A lot of those have went under because people don't want to spend the money on repairs or upgrades.
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Well, Meg isn't going to Washington, or maybe even the governor's mansion. Seems she had an illegal alien working for her for 9 years, and just fired her after deciding to run for gov. More hypocrisy from the right.
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Meg put out a statement. The housekeeper provided her with a CA driver license and a Social Security card. She had the housekeeper fill out all of the tax forms and paid all of the taxes due. She did everything that was required to determine legal status and only found out she was illegal when the employee came to her about her immigration status in June 2009. At that oint she did what was legally required and terminated the housekeeper's employment. Gloria Allred is just doing what she always does - trying to turn a buck off of someone's misery. Meg did nothing wrong.
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So what you're saying is the Obama is exactly like Clinton except for the likability factor. I remember Clinton. He wouldn't change positions, he would get inside your head and convince you that it was a good idea. He connected. Of course that was after he was handed a Republican majority in 1994. He also discovered the joys of working with the Republicans at that point. He was at heart a pragmatist. I think Obama is too much of an idealogue to pull any of that off. He's right, you're wrong, either get religion or get out. The staff changes seem to bear that out.
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I agree that Hillary is headed for the exit soon. She looked ridiculous today announcing some new meaningless sanctions against Iran for human rights violations. Maybe if she stamped her feet really hard it would help. I always considered her capable and serious. She must be frustrated as hell being the ventriloquist dummy for Obama.
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Rahm is gone as of tomorrow morning. He's planning on dragging his knuckles over to Daley's old office. Good riddance Rahm. Maybe we can get some actual dialogue going with the White House instead of thuggery.
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Axelrod and Plouffe are out by year's end to start on Obama's 2012 campaign. I hear Gibbs might be moving over to Chief of Staff. Not a bad move for the current propoganda czar.
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Jim Jones out at NSA - another one bites the dust.
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Carville summed it up great today - and he's not apologizing. He said that "if Hillary would give Obama one of her balls, they'd both have two."
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