Thursday, March 19, 2009

Terminate Geithner?

Deborah White set me to thinking. Her column this morning recommends that Timothy Geithner be cut loose by the president.

At minimum, Timothy Geithner has proven incompetent and naively over his head in dealing with the sharks of Wall Street.

I don't buy that. Geithner is one smart, educated cookie about the ways of Wall Street... which is precisely why Chicago-hardened politician Obama nominated him for Treasury Secretary.

Geithner honed exceptionally deep knowledge and an extraordinary host of close contacts in the banking and corporate world as Under Secretary of the Treasury under President Clinton, as Senior Fellow at the Council on Foreign Relations, as a director at the International Monetary Fund, and until recently, as President of the New York Federal Reserve.

The Obama administration's phony, after-the-fact "We're shocked, SHOCKED!" routine doesn't hold water.

Here's the real political deal: during the '08 campaign, Barack Obama won the Democratic nomination and the presidential election in large part by deftly playing both sides of the street on many issues. It's a time-honored American political tradition. Bill Clinton did it. George Bush often did it. Ronald Reagan was the master of it on social issues.

Two full days after first "hearing" of the AIG bonuses, President Obama today huffed in front of cameras in his best martyred-leader tone of angered surprise.

Fact is, though, that Obama's key economic advisors are unabashed free-market supporters with deep, long roots to Wall Street. And they certainly know that key corporate executives routinely have employment contracts and bonus agreements.

Political Posturing for the Cameras

That Obama is stunned that his economic posse failed to inform him of fat bonuses for their long-time friends, or that Obama himself doesn't understand that this is a commonplace practice, is pure public-relations baloney. Two-faced pretending. Political posturing at its finest.

Reality is that the Obama administration has been caught by the public and press attempting to play both sides of the political street: the Main Street side, and the Wall Street side. And the picture is neither pretty nor popular.

She fleshes out the argument in the rest of the column, making an air-tight case that it's time for Geithner to go. Here is the comment I left. Writing it helped me cobble together a few ideas that have been bothering me for a couple of weeks now.

Deborah, I think you are on to something. This last few days has taken a toll on my obamathusiasm.

It started about a week ago when I did my homework about Charles Freeman. Having been tied up with paying bills and rearing a family for the last two or three decades I have had to skip over all but the most superficial issues. I never heard of Freeman, but the more I read about him the better I liked him. When Greg Djerejian (Belgravia Dispatch) came out of hibernation to defend Freeman I realized that (once again) a good appointee - in this case, chair of the NSC - had been put nominated and shot down. Badly. And without any defense from Barack Obama.

I am realizing as the weeks go by that Barack Obama is a politician first and man of principle second. This doesn't mean I don't like his principles. It only means I'm seeing him more and more as a poker player at the opening of a game who is being very careful, maybe too careful, with his chips (political capital).

Early on he was quick to say "I screwed up" when the Daschle tax problem (among several, it seems) hit the fan. By doing so he was able to make lemonade out of a bad situation, boosting his image, standing up for his team and protecting everyone's credibility at the same time. I realize that's a card that can't be played politically but once or twice, but it shows character. Yesterday, in a sense, he did the same kind of thing with Geithner, this time spending a little political capital to save someone. When it happened, I felt a pang of regret that he hadn't done the same for Charles Freeman. And I have no axe to grind. After reading about Freeman, being swept away by the scope and depth of his diplomatic vision and experience it is as though someone as iconic as Schlesinger or Brzezinski had been tossed overboard.

This weeks' focus on executive bonuses strikes me as dangerous as driving while talking on a cell-phone. We probably won't crash, but the controversy is terribly unimportant other than as an opportunity for politicians on all sides to do a little populist hotdogging. Obama himself couldn't resist. In the scale of things, the amounts in question are like dust on a balance scale. (Great image, don't you think? Abagail Adams used it in a letter to her husband. I'm just starting McCullough's bio of Adams.) As I heard this morning, "trillion" has become the new "billion." News and commentary about global finances since last September have made us drunk with zeroes. What we thought was an economic universe we understood turns out to be a speck in a really big galaxy most of us never thought about. When I think of the IAG bonuses as the trivial distractions they really are I am reminded of arguing with myself over whether to give a dollar to a wino. Ten minutes later it makes no difference at all, unless he runs into traffic in his excitement and gets run over by a truck.

So back to Geithner, principles and all that. When I back away from the economy and try to put the US into the global picture, I realize how very badly we have screwed up.

Most lay people (myself included until recently) think of America on the world stage as the Last of the Superpowers, First among Equals, Leader of the Free World, and (most importantly) the economic engine that runs the world economy. To some degree all of the above is true, but when compared in economic terms, we may not be as smart as we imagine.

It is true that America is the richest place on earth, that our economy is so influential that when Wall Street catches cold the whole world sneezes, that it is US currency, not local legal tenders, that will always be accepted all over the world. Even in isolated places like the mountains of Brazil or behind enemy boundaries, no one turns down a Ben Franklin. And by now everyone knows it is China's investment in US Treasury notes, together with petro-dollars from the Middle East, that are keeping our economy afloat. Both, as well as global ties from everywhere else, have ulterior motives (US as export market, customer for oil, source of venture capital, whatever).

But the US, unlike most of the world, has been living on credit for some time now. Our culture is not like that of China where ninety percent of cars are bought for cash and loans that we would call mortgages typically have fifty percent "down." Most of the world is, compared with the US, on a cash economy. In fact, until recently most of the world was on a cash economy. Savings rates worldwide have reflected this for years. India, I heard, is somewhat protected from the current financial meltdown because their banks (nationally run, incidentally) didn't get involved with exotic "securities" that turned out to be fool's gold.

Which brings us back again to Geithner. Whether or not he is competent or trustworthy is important. But from from a global perspective it's not relevant. Obama (and by extension all of us) is in the unfortunate position of having to choose among SOB's Under the circumstances we must choose the least among very few disagreeable options, all of which balance on the too-late-to-change fact that as a population we have not saved enough to get us through a very rainy day and are trying to piss out way out of a crisis by using credit. And credit is the very poison which has led us to where we are.

Geithner may be an SOB but to use a tired line, he's OUR SOB.

I hate it. I wish it were not so. And I have to admit I'm starting to feel the same way about the president.

Let me explain that last line. It was triggered by something else Deborah pointed out, the matter of what she calls Obama's political tone deafness.

Political Tone-Deafness by Obama

That President Obama continues to stand by Secretary Geithner displays political tone deafness on Obama's part, as well as characteristic over-confidence in his abilities to personally charm and distract the public from the burning issue at hand.

Several years ago, I wrote about Barack Obama, "Although armed with shrewd political sensibilities, he's sometimes slow to recognize viable threats to his agenda."

That's precisely what Obama is doing again, this time in relation to Timothy Geithner: failing to realize the intensity of this poisonous threat to Obama's larger agenda.

Put simply, Timothy Geithner is apparently not trustworthy . And judging by recent events, he's not competent, either. ot competent, either.

She didn't mention it, but another indication of what I would call serious political tone-deafness went down yesterday with a news flash about Obama wanting to "make veterans pay for their health care." I caught wind of it yesterday afternoon listening to a promo for one of our local radio shock jocks, making reverence to "billing wounded heroes for their sacrifices" or some such phrase. By sundown -- unfortunately not in time to stop the evening news from showing plenty of archival footage of amputees, hospital beds and uniformed flag bearers with prosthetic limbs -- he withdrew the idea. Too little. Too late. You can't put the shit back into the elephant once it's in the street.

The president's proposal was part of health care reform, an effort to get the insurance industry to pick up some of the tab for veterans health benefits as plart of an overall plan to stop the private sector from cherry-picking among the nation's many health care challenges. Unfortunately both the timing and spin on the story got badly out of hand. Score one big point for the insurance industry and a big, fat zero for the Obama health care reform initiative. The lede read "the Obama administration is considering a controversial plan to make veterans pay for treatment of service-related injuries with private insurance."

It should have read "the Obama administration is considering a plan to make private insurance companies share treatment costs for treatment of service-related injuries" noting that veterans benefits are paid for by tax dollars and requiring insurance companies to include veterans in their risk pools is not an unreasonable idea, especially since whatever "premiums" those companies might charge would be paid by tax dollars. The story is clearly a preemptive PR strike by the insurance industry. The "wars" on drugs and terrorism pale when compared with attempts to reform the US health care system. Those other wars have identifiable bad guys, but in the case of health care reform, everyone is a good guy. The only bad guys are those wanting to make changes, particularly changes that affect my bottom line.


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Hoots said...

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