Thursday, August 4, 2011

How Bad are Things for Obama?

Imagine if Obama were a prime minister in a parliamentary system suffering, as he does as president, from the widespread perception that he has been an ineffective steward of the economy. Calling an election before the economy gets better would be out of the question. The conventional move would be a cabinet shake-up that, at a minimum, included a new finance minister whose appointment signaled that the government would be implementing new and better economic policies.

Granted, Prime Minister Obama might defy convention if he thought his government had already put the right economic policies in place but they hadn’t yet shown their benign effects. But no one, including the neo-Keynesians who advise Obama on fiscal policy, really believes anything like that.  Under the circumstances, a similarly situated prime minister’s failure to get himself a new finance minister would be widely viewed as an admission that his government had run out of ideas.

President Obama is in worse shape than that unenviable prime minister. If this New York Times article is accurate, he has been reduced to pleading with his widely disparaged Treasury Secretary to stay on:
“Mr. Obama and his chief of staff, William M. Daley, have been urging Mr. Geithner to stay, administration officials say, not only for continuity when the economy has weakened and to avoid an all-but-certain confirmation fight in the Senate over a successor, but also because Mr. Obama has developed a close rapport with Mr. Geithner.

“Whether the president persuades Mr. Geithner to stay will be a central development for the White House as it girds for a re-election race expected to turn on the economy and the continuing battle of the budget with Republicans.”
Got that? The ever-loyal Geithner is ready to fall on his sword. Yet Obama thinks he needs to hold onto him--a Treasury Secretary who has presided over an economy sinking again after a tepid recovery--in the name of continuity.

5 comments:

Dave said...

I doubt that Obama will utter the words "heckuva job, Timmy", but otherwise there's a pretty striking comparison to Bush 2005.

Henry said...

I think a better comparison than Dave's would be Bush's firing Rumsfeld after the 2006 election to dramatize a change in his Iraq policy. By the time he was canned, Rumsfeld probably would have supported the new surge strategy, but Bush still needed to fire him to tell the country that he was changing gears. That didn't satisfy anti-war Democrats, of course, but Rumsfeld's replacement, Robert Gates, commanded enough respect to buy Bush the time he needed to execute his new policy. Couldn't Obama replace Geithner with someone who'd do the same for him?

Sosueme said...

I can only assume Obama wants continuity because Obama thinks he, meaning Obama, is doing a good job. I think he lives in an echo chamber where everyone thinks the stimulus worked and the economy is improving and Obama's foreign policy, aka leading from behind, is America at its best.

Losing Geithner would appear as if the Treasury Secretary was a sacrificial lamb to a failed policy. Perish the thought.

Barb said...

I wonder if a 500 point drop in the Dow and the spreads between Italian and German bond yields make Geithner look any more dispensible.

Anonymous said...

According to the news today (Monday), Geithner is not going anywhere. And we're supposed to be relieved.