Posted by: Theo Francis on November 23
President-Elect Barack Obama will announce his economic team Monday, unveiling a slate of senior advisers with a broad range of experience and years under their belt with the Clinton Administration and — a group whose names are likely to be familiar even to those lacking the Beltway’s predilection for non-stop predictions.
So far, none of the names themselves are official, but the team that appears to be shaping up is one of well-known, generally centrist Democrats steeped in the territory they will oversee.
While New York Fed chief Timothy Geithner is expected to head up Treasury, Lawrence Summers, the former Clinton Administration treasury secretary, will likely take a top spot as Obama’s closest economic aide, potentially shifting the center of economic power from Treasury — where current Secretary Paulson now has taken the lead — to the White House.
The two have worked closely together in the past, and both men are already heavily involved in either transition planning or tackling the financial crisis. Summers has been in the forefront among Obama’s economic advisers since the election, and should be a key author of the administration-in-waiting’s economic-stimulus plan; Geithner has been instrumental in the current administration’s efforts to stabilize the financial system — including last spring’s sale of Bear Stearns and this fall’s rescue of American International Group.
Jason Furman, the Obama campaign’s economic director, looks set to become a top aide to Summers, while Austan Goolsbee, another campaign economic adviser, is expected to head the administration’s Council of Economic Advisers. New Mexico Governor Bill Richardson is the favorite to run the Commerce Department. Other likely picks: Peter Orszag, now head of the Congressional Budget Office, to run the Office of Management and Budget; and Dan Tarullo, a Clinton Administration international economics expert and Obama-campaign trade adviser, as U.S. trade representative.
Monday’s announcement comes early in Obama’s transition by historical standards, but it has been anxiously awaited as the country continues to grapple with a spreading financial crisis and deepening economic slump. In Saturday’s weekly radio address, Obama called for creating 2.5 million jobs over two years, largely through rebuilding bridges, roads and schools, modernizing the auto industry and developing cleaner energy sources. He praised Congress’s decision last week to extend unemployment benefits, but called it too small a move to help Americans stung by the economic downturn. (BusinessWeek Chief Economist Michael Mandel explores the pitfalls of Obama’s economic plan on his blog, Economics Unbound.)
Just how Obama would balance the many demands of an ailing economy, a painful housing and credit slump and a soaring budget deficit has been the subject of much debate since before he won the presidency Nov. 4, swept in by a tide of economic concern among voters. By naming his economic team early, and laying out his plans even in broad brushstrokes, Obama is seeking to reassure the markets, employers and American workers that he has both the team and the proposals needed to spark and sustain a recovery.
Generally hailed as a sharp economist who encourages constructive debate among his aides, the 53-year-old Summers appears poised to serve as the fulcrum of Obama's economic policy from the head of the National Economic Council.
Summers was President Clinton's last Treasury secretary, serving from 1999 to January 2001, and before that was undersecretary and deputy secretary of the Treasury under his two predecessors, Lloyd Bentsen and Robert Rubin. With Geithner, who worked for him at the Treasury, he played a key role in the U.S. response to the Asian financial crisis in 1997 and 1998.
But Summers is also a managing director for a hedge fund, tying him not only to Wall Street but to investment vehicles widely reviled on Capitol Hill. Over the years, Summers has also shown an impolitic streak that has landed him in hot water, and ultimately helped cost him his job as president of Harvard University after he angered faculty and women's groups by suggesting that inherent gender differences could explain the poor representation of women among top scientific researchers.
His periodic columns in the Financial Times newspaper suggest Summers is likely to advocate bold moves to tackle both the current economic slowdown and what many Democrats see as bigger, systemic problems in the economy. "[T]he crisis creates space to address longer standing problems," Summers said in a late-October column. "Just as patients hear advice regarding diet and exercise differently after a heart attack, so recent events should make it possible for the next US administration to accomplish more than might previously have been thought possible."
Furman and Goolsbee were instrumental in shaping Obama's economic message throughout the presidential campaign, and there is little reason to believe they will be sidelined with high-profile picks like Summers and Geithner.
As Summers' No. 2 on the National Economic Council, Furman would have an influential role advising Obama on a wide variety of policies affecting the U.S. and global economy. In a sense, the NEC -- created by President Clinton in 1993 -- is designed to function as a kind of economic traffic-control panel, ensuring that various economic policies match up with the president's intentions, and that they have the intended results.
Goolsbee, a University of Chicago behavioral economist and longtime Obama adviser, would also remain influential on economic policy from a perch at the head of the Council of Economic Advisers, which functions much like an in-house think-tank, parsing economic data, evaluating federal programs in light of the administration's economic policies, and drafting an annual economic report and policy recommendations for the president.
(For those keeping track at home, here's our own scorecard, with pics of the probables, from just after the election.)
Washington Bureau Chief Jane Sasseen and other BusinessWeek writers cover the run-up to the Nov. 4 presidential election, paying close attention to how the candidates will handle issues such as housing, the economy, unemployment, and immigration.