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BUBBLE ALERT.
Unlike most everybody else, I tend to be a Tim Geithner defender. But this doesn't sound too good:
... Geithner pressed the incoming president to commit to cutting the deficit to 3 percent of the economy over the next five years, which would keep the nation's debt roughly in line with normal economic growth. [NEC Chair Larry] Summers quickly backed him.Some, including economist Jared Bernstein, resisted, saying that such a strict limit would make it more difficult to confront the many challenges ahead and that the size of the government's emergency response to the economy and financial markets would make the cap tough to maintain.
In February, the entire economic team convened in the windowless Roosevelt Room in the White House. Obama abruptly ended the debate. Geithner and Summers would have their way.
"The two of them being together ended up being pretty decisive for President Obama," an administration official said.
... Complaints are growing that having so much authority centralized in Geithner and Summers is creating a chokepoint, preventing key constituencies from being heard. The automakers and their parts suppliers said they struggled to get an audience with the pair, despite the fact that their enterprises are facing the prospect of running out of money if they do not receive federal aid in a matter of weeks. Executives from these firms eventually met with Treasury officials last week.
I don't like seeing Bernstein getting blocked out. At the same time, the article points to staffing issues as part of the reason the pair are getting somewhat overwhelmed, and notes that they have been fostering expansive policy debate within the administration. We still need to judge the administration's economic team by the fruit of their efforts, and with the exception of their response to the problems of the financial markets, there has been success thus far between the stimulus, the budget and the housing plan. But the specter of the Bush administration's closed-off policy process still haunts Washington, and shouldn't be forgotten anytime soon.
-- Tim Fernholz
COMMENTS (4)
No offense, but does Bernstein really have a track record that justifies trusting his economic instincts?
As a reporter, I've interviewed Bernstein and I find he is wrong a lot more often than he's right. His predictions about changes in the overtime laws were disasterously inaccurate and read more like an AFL-CIO press release than actual analysis.
Posted by: Michael | March 2, 2009 11:59 AM
this was completely predictable with Summers in charge. what he does is make sure nobody gets heard. Just like he silenced ay economist who predicted the financial crisis. Summers is the absolutely wrong person for the NEC job. Laura Tyson should have gotten it, with Larry as a second in command somewhere.
Posted by: CalDem | March 2, 2009 12:06 PM
and as to the staffing issues - it seems likely that the pool of candidates who can pass the conflict-of-interest conditions and who are willing to buy into the G&S Show is probably pretty small.
what worries me most is that their policies are designed to avoid the kind of visible cratering that could discredit them and get them out of this dominant role, if not necessarily out of their jobs. but avoiding catastrophe is not the same as solving the problems.
Posted by: tatere | March 2, 2009 4:22 PM
Some, including economist Jared Bernstein, resisted, saying that such a strict limit would make it more difficult to confront the many challenges ahead...
It's just a pledge, though -- it's hardly a done deal. I'm confident if the economy doesn't grow fast enough to bring the deficit down by that amount, nobody's going to force the issue.
Posted by: Jasper | March 9, 2009 4:54 PM