During the first six months of the Obama administration there were stories about how difficult it was to fill the political slots at the Department of Treasury. Some of this was over difficulties with the disclosures and background checks, but there was a sense that potential candidates were uneasy about a rotation through the Department of the Treasury during the Obama administration being a resume enhancer. A couple of months later we began to hear voices of uneasiness -- strictly off the record -- that the President never seriously consulted his economic advisors, including Lawrence Summers and Paul Volker. Charles Gasparino in the New York Post:
The guy who seemed like such a steady voice -- vowing to curb runaway spending and restore order to the banking system and the economy as a whole -- is instead so driven to achieve his big-government policy goals that he and his policy people are ignoring their own economic advisers on the severe economic costs that his agenda will cause.
I'm told that Treasury Secretary Tim Geithner and chief economic adviser Lawrence Summers have both complained to senior Wall Street execs that they have almost no say in major policy decisions. Obama economic counselor Paul Volcker, the former Fed chairman, is barely consulted at all on just about anything -- not even issues involving the banking system, of which he is among the world's leading authorities.
At most, the economic people and their staffs get asked to do cost analyses of Obama's initiatives for the White House political people -- who then ignore their advice.
Almost two years later with many people calling for Treasury Secretary Tim Geithner's resignation, Paul Rahe has a very good question buried in his analysis.
In the current circumstances, President Obama needs - or thinks he needs - a weakling in Geithner's post. The President could not find a reputable economist willing to take up office as Secretary of the Treasury today and not be listened to. Nor would the U. S. Senate be willing to consent to the appointment of another toady. In effect, the President would be hostage to the man he chose. Moreover, the hearings on the man's nomination would bring the debt crisis back into the news. From an electoral perspective, Obama's greatest nightmare is an ongoing, fierce public debate on the deficit and the national debt that he cannot possibly win.
Who would want to replace Geithner in the current circumstance? The President seems unwilling to alter his perception that financial capital is a bottomless well, rather than something that must be nurtured, nor has he shown any inclination to bend his policies of over regulation, expansion of entitlements and profligate spending. Then there is the relentless demagoguery about wealth creators not paying their fair share. Jon Corzine has been mentioned as a possibility, perhaps out of hopes that his status as a former US Senator would make for an easy confirmation process. In this environment I suspect that might not be the case.
Rahe observes that that Tim Geithner is twisting in the wind. So is the rest of America. The September 2009 story on Obama not listening to his economic advisors ended a story that the author called "funny" at the time. Today it seems chilling.
The [Wall Street] executive said he told the president that he's at a disadvantage because he's relatively inexperienced in economic matters during a time of economic crisis. "That's why I have Valerie," came Obama's reply.
"Valerie" is senior adviser Valerie Jarrett -- a Chicago real-estate attorney and one of Obama's closest friends, who has deep ties to the Windy City's Democratic political machine.
Now you know why Wall Street is so nervous.
How about demanding Valerie Jarrett's resignation? By Obama's admission she's making the economic decisions. At least Geithner has some background in the field. Jarrett has a BA in psychology and a law degree -- plus a well deserved reputation in Chicago political circles for manipulating the political system and her two-fer status as a black woman for personal gain.