Potusphere, Economy

POTUS Watch:

Weekly Survey of the Advisors to the President Of The United States Issue nº1 – ECONOMIC TEAM Paris, 5 December 2008 Since the election on November 4, 2008, the Obama transition team has been piecing together the President-elect’s eventual administration, pulling from a wide variety of experts, including, among others, many of the people that have served as Obama’s closest, most reliable advisors. I present you with a weekly briefing that aims to provide an analytical overview of the members of, and networks of influence present in, President-elect Obama’s entourage. Each week until the inauguration on January 20, 2009, I will identify those close advisors to the President-elect, – the would-be appointees –, those who have already been offered a position in the White House, and the few institutions that have played a particularly important role. By focusing on those people and institutions that are closest to the next President of the United States, these analyses will provide a look into the political orientations, expertises, and worldviews surrounding the President-elect as means to better understand the foreign policy decision-making mechanisms of the next administration as quickly, accurately, and clearly as possible. * Depuis l’élection du 4 novembre 2008, l’équipe de transition de Barack Obama constitue son administration avec des experts des communautés politique et académique. Naturellement, le Président élu cherche également à nommer dans son administration certains de ses plus proches conseillers. Je vous présente un briefing hebdomadaire qui offre une vue d’ensemble des membres et des réseaux d’influence autour du 44e Président américain. Chaque semaine, jusqu’à l’investiture du 20 janvier 2009, j’identifierai les proches conseillers de B. Obama, les nommés actuels, et les quelques organisations jouent un rôle particulier. Portant sur les individus et les institutions situés au premier rang de la future administration Obama, ces analyses examineront les orientations politiques, les expertises, et les visions du monde de l’équipe présidentielle afin de mieux faire comprendre et le plus vite possible, de manière fiable et claire, la politique étrangère de la prochaine administration. Amy Greene

Prepared by Amy Greene [email protected], +33 (0) 6 37 08 79 90

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WILLIAM DALEY Co-Chair, Obama Economic Transition Team Daley served as Commerce Secretary during the Clinton Administration and had previously been the chairman of Clinton’s task force on the North American Free Trade Agreement (NAFTA). He stepped down from the administration in order to run Al Gore’s 2000 presidential campaign, for which he was in charge of selecting the vice presidential candidate. Once affiliated with Amalgamated Bank, Daley is currently a chairman for J.P. Morgan Chase, a non-practicing attorney, and a member of the Board of Directors of both Boeing and Abbott Laboratories. The member of an Illinois political dynasty (his brother, and father before him, have both been mayor of Chicago), Daley has often advised his brother on government relations with the business community. As previously mentioned, he was integral in brokering the passage of NAFTA, and helped to propose reforms on issues like patronage and international trade missions. As Commerce Secretary, Daley urged the administration to collaborate with the private sector to bridge the so-called digital divide in order to better train and protect American workers into the globalized and information-based economy. MICHAEL FROMAN Advisory Board Member, Obama Transition Project; under consideration for a post at the Treasury Department, U.S. Agency for International Development (USAID), or the White House An expert in emerging markets, sustainable development, and alternative energy, Froman, who is also an attorney and a managing director at Citigroup, understands the delicate intersection between economics, its application to human life, and the legal nuances surrounding the implementation of change. Froman is a strong advocate of regional economic growth programs as a means of fostering stability and creating incentives to avoid conflict. Froman introduced the President-elect to Robert Rubin, to whom he is also very close. Froman met Rubin during his work with the Clinton-era the National Economic Council and the Treasury Department, where Froman eventually became Rubin’s chief of staff in 1997. After his government service, Froman joined Rubin at Citigroup, where he manages infrastructure and sustainable development portfolios. Froman has extensive work experience and knowledge of the Central and Eastern Europe. While at the Treasury Department, he was Deputy Assistant Secretary for Eurasia and the Middle East. Under this title, he specialized on U.S. economic policy toward the former Soviet Union and Central and Eastern Europe, and participated in the economic component of the Dayton Accords. He once lived in Albania and ran a legal reform program. Froman was also a member of the Forward Studies Unit of the European Commission in Brussels.

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JASON FURMAN Under consideration for a top deputy job in the White House or Treasury Department relating to economics and fiscal policy Furman has spoken out on free trade and criticized President Bush’s trade policies for having been forged "with economically insignificant countries that move us backward on labor and environmental standards and don't address the problems of dislocated American workers." (Council on Foreign Relations) He advocates strengthening domestic policies and ensuring social protections - such as universal health insurance, wage insurance that would pay in the case of a lay-off – as the pillar to better align America’s priorities as it negotiates free trade pacts. In his extensive research on tax code, health care, and fiscal policy, Furman has called universal health care an imperative for the American society and its economy. Currently a senior fellow at the Brookings Institution, Furman served as economic policy director for the Obama presidential campaign and was previously a special assistant on economic policy for President Clinton. Furman has also worked for the Council of Economic Advisors and the World Bank. During his tenure at Brookings, Furman directed the Hamilton Project, an economic policy proposal research group, under the advisement of former Treasury Secretary Robert Rubin, to whom Furman is often linked. As such, he is known for being a partisan Democrat capable of navigating across party lines, but is also tightly linked to Rubin’s variety of fiscally prudent centrism. TIMOTHY GEITHNER Secretary of Treasury Timothy Geithner, like Barack Obama, is widely praised as a nonpartisan pragmatist, cerebral and analytical, and suspicious of ideology. Geithner is very popular in Washington and on Wall Street. He is known to encourage competition of ideas, consensus building, transparency, and to possess an outward-looking worldview. Geithner’s nuanced understanding of monetary and fiscal policy served him in managing international market crises in Argentina, Mexico, Thailand, Brazil, and South Korea. He was integral in allowing Russia to default on its debt in 1998 and played a key role in helping Asian markets during the crash of the late 1990s. More recently, and more controversially, he helped orchestrate bailouts for Bear Stearns, Lehman Brothers, and AIG. Geithner has warned for years about the potentially destabilizing consequences of lack of federal oversight of major financial systems. He strongly supports increasing the authority of Treasury to find innovative solutions to this crisis. Geithner has lived in East Africa, India, Thailand, China and Japan. After working at Kissinger Associates, the lobbying firm of the former Secretary of State, he joined the Treasury Department in 1988. He then moved on to the Council on Foreign Relations before assuming a post at the International Monetary Fund in 2001. In 2003, he became the President and CEO of the Federal Reserve Bank of New York. Geithner is close to former Secretary of Treasury Lawrence Summers, to former Treasury Secretary Robert Rubin, and to Paul Volcker. He maintains a close working rapport with Federal Reserve Chief Ben Bernanke and is a confidante of current Treasury Secretary Henry Paulson.

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AUSTAN GOOLSBEE Head Staff, Economic Recovery Advisory Board Goolsbee, known for meeting with Canadian officials to insist that a President Obama would not seek to renegotiate NAFTA, is a steadfast centrist with an unapologetic commitment to free trade. He derides the Bush administration for not having sufficiently enforced the rule of current free trade agreements and for underutilizing the World Trade Organization to settle trade disputes. He is strongly opposed to deficit spending and argues that a balanced budget serves as an insurance policy against future crises by allowing a larger margin for maneuver in the instance of a national emergency or global financial crisis. He also warns that foreign ownership of American debt threatens its geopolitical stance. Goolsbee, an expert in tax policy, criticizes the Bush tax cuts for the rich, which have not only failed politically but have also contributed to the record U.S. deficit. He calls to repeal those tax cuts, to institute middle class tax cuts, and to reduce federal spending in order to fully finance Obama’s policy proposals and to meet his goals in health care, education, and reducing poverty. Goolsbee is currently a professor at the University of Chicago, but has criticized supply-side economics, the current to which that university subscribes. He is also a senior research fellow with the American Bar Association, a research associate at the National Bureau of Economic Research, and a columnist for the New York Times. Goolsbee has worked at the Progressive Policy Institute and for the Department of Justice’s Antitrust Division. His political experience is limited to the Obama and Kerry presidential campaigns. In the Obama White House, Goolsbee will essentially serve as deputy to Paul Volcker. JEFF LIEBMAN Senior Advisor on Domestic Economic Policy to Obama Campaign Currently a professor at Harvard’s Kennedy School, research associate at the National Bureau of Economic Research, and member of the advisory board of the Center for American Progress, Liebman has served as a top advisor to President-elect Obama in the area of domestic economic policy, notably on tax and budget policy. His research areas of expertise also include income distribution, poverty, housing, Social Security, and other entitlement programs. During the Clinton Administration, Liebman served as both a special economic advisor to the president and a member of the special working group on Social Security reform. A reputed centrist, Liebman has advocated for payroll tax increases to fund meaningful Social Security reform. He insists that any solution to solving the problem of Social Security would require cutting benefits, raising taxes, or a combination of both. He has also publicly supported the partial privatization of Social Security accounts, as well.

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PETER ORSZAG Director of the Office of Management and Budget (OMB) Orszag was the director of the Congressional Budget Office since January 2007 and resigned immediately after being named Director of OMB. Previously, Orszag oversaw a staff of more than 200, which was responsible for producing nonpartisan economic and policy issues analyses. Instead of following tradition of number crunching, Orszag chose to use his position as a platform to become a leading voice for health care reform in the United States. He has often stated that health care reform remains the single largest threat to the U.S., and that cost increases for entitlement programs such as Medicaid and Medicare will contribute to unsustainable budget deficits. Widely popular, Orszag has drawn bipartisan praise for his wisdom and deep understanding of the complexities of the budget. As Director of the OMB, Orszag will comb the federal budget looking to eliminate inefficient or nonworking programs and will contribute to policy-making vis-à-vis health care, the environment, and education. Orszag is pleased to assume a position that will have message control over the financials, and thus a major role in determining the President’s policies. Orszag was a member of former President Clinton’s Council of Economic Advisors before becoming his economic advisor. After founding an economic consulting firm, he moved to the Brookings Institution where he co-directed the Hamilton Project (of which Jason Furman was a member) with his mentor Richard Rubin. And like other disciples of Rubin, Orszag is often accused of being too centrist – that is, in favor of free trade and vocal on fiscal restraint. Another mentor to Orszag was Nobel Prize-winning economist Joseph Stiglitz. BILL RICHARDSON Secretary of Commerce The most influential Latino politician in America, New Mexico Governor Richardson will serve as the United States’ liaison with the domestic and international business communities, will promote U.S. technology abroad, and will protect American intellectual property. A pragmatist capable of crossing party lines, Richardson’s record of presiding over strong economic growth during his time as governor adds to the case for his qualifications to hold this post. In 2006, Forbes named Albuquerque the best city in the U.S. for businesses and careers based on Richardson’s reforms. But his heavy Washington resume suggests that his appointment to Commerce is effectively a political demotion and consolation prize for Secretary of State. Throughout his career – fifteen years in Congress, U.S. Ambassador to the United Nations then Secretary of Energy under Clinton, and finally Governor – Richardson built up first an innate understanding of state and federal bureaucracies and how to maneuver through them, then a reputation as a tough negotiator and innovative diplomat with vast international experience. He has been dispatched to talk with some of America’s staunchest adversaries and directly participated in the successful release of Americans in custody in North Korea, Sudan, and Iraq. In 2003, he met with a North Korean delegation, at their request, to discuss concerns about that country’s nuclear program and was sent again, by the White House, in 2005 and 2006. In 2007, he was named “Special Envoy for Hemispheric Affairs” at the Organization of American States to promote regional immigration and free trade.

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CHRISTINA ROMER Director of the Council of Economic Advisors Romer, a professor at the University of California (Berkeley), is a specialist in U.S. microeconomics and recessions, particularly the Great Depression. She has researched significantly on the effects of monetary policy on growth and inflation, and the effects of tax cuts on investment and government spending. While Romer argues that tax increases, for example to reduce a budget deficit, hinder economic growth and dampen investment, she also notes that tax cuts can generally be linked to increased government spending. Overall, she concludes that the main result of tax cuts is to temporarily offset legislated tax increases, which almost inevitably follow. More recently, she has publicly supported the Federal Reserve’s aggressive first response to the crisis was correct, emphasizing the need to save the New York financial market and thus to buy the time to reflect on the necessary innovations to come. Prior to her professorship at Berkeley, Romer was a professor at Princeton’s Woodrow Wilson School and former vice president of the American Economic Association. She is currently codirector of the Monetary Economics Program at the National Bureau of Economic Research. She is otherwise well known for her extensive collaboration with her husband, David H. Romer. ROBERT RUBIN Co-Chair, Obama Economic Transition Team Rubin, former Secretary of Treasury during the Clinton administration from 1995-1999, and senior economic advisor to President-elect Obama, is a figure that looms large over Obama’s economic team. Several of his protégés – including Michael Froman, Peter Orszag, and Timothy Geithner among others – have already been selected for key positions, meaning that Obama is already being associated with “Rubinomics,” the brand of economics that favors reducing spending, eliminating the deficit, and balancing the budget as the pillars of financial policy, even at the expense of investments in technology, research and development, and infrastructure. Liberals often criticize Rubin for his support of free trade. Overall, both parties perceive him as focused on policy over politics. Prior to his service as Treasury Secretary, Rubin spent significant time in the Clinton White House, as first-ever director of the National Economic Council then as economic policy advisor. Soon after becoming Treasury Secretary in 1995, Rubin, along with Federal Reserve Chief Alan Greenspan, advised President Clinton to provide $20 billion in loan guarantees to lift Mexico from its financial crisis. Two years later, during the course of 1997 and 1998, Rubin and Greenspan, joined by Deputy Treasury Secretary Lawrence Summers, successfully worked with the International Monetary Fund to curb crises in the Latin American, Russian, and Asian markets. More recently, Rubin has been criticized for helping to create the conditions that led to the current financial crisis. Upon leaving the government, he joined Citigroup in a strategic and managerial capacity and led them 1 - to consolidate investment, commercial banking, and insurance services, and 2 - to take greater risk in debt markets. While at Treasury, Rubin vehemently opposed regulation of derivatives and even favored stripping the derivatives regulatory agency of its authority. In 2008, insufficient regulation of credit derivatives was a

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fundamental cause of failure of Bear Stearns, AIG, Lehman Brothers, Merrill Lynch, and Washington Mutual. More recently, he has changed his views on regulation, understanding that the crisis calls for a new approach. Rubin is co-chair of the board of the Council on Foreign Relations and co-directs the Hamilton Project housed within the Brookings Institution. Rubin is a former member of the board of both the Ford Motor Company and the New York Stock Exchange, and serves on the Africa Progress Panel, an independent group that prescribes development opportunities in Africa. LAWRENCE SUMMERS Director of the National Economic Council (NEC) As Director of the National Economic Council, former Treasury Secretary Lawrence Summers will be the president’s senior economic advisor, a role that he played in an unofficial capacity during the final months of the campaign. As NEC Director, Summers’ widely touted brilliance and expertise in the area of global economic issues will be exercised through four primary functions –ensuring compatibility of all economic decisions with the President’s agenda, overseeing the implementation of the President’s economic agenda, and coordinating both policy-making efforts and economic advice on behalf of the President. At Treasury, Summers advocated for deregulation, free trade, and free-market policies. He worked to extend financial privacy protections, reform corporate tax havens, and reduce predatory lending. However, since he has reconsidered his stance on each, asserting the need for increased regulation, trade restrictions, and policies that aim to eliminate the income gap. He was a key negotiator of China’s entry into the World Bank, worked to coordinate expansion of third world debt forgiveness, and has fought for greater transparency in the financial system. Currently a professor at Harvard, where he was President from 2001 to 2006, Summers was ousted after backlash for his comments that women may be inherently incapable of math and science. Earlier, Summers was Deputy and Under Secretary of the Treasury, economic advisor to President Reagan, Chief Economist at the World Bank. DANIEL TARULLO Head of Economic Working Group, Obama Transition Team Tarullo, Georgetown Law professor and senior fellow at the Center for American Progress, is an expert on international economic regulation and banking law. During the Clinton Administration, he worked first in the State Department on economic policy before becoming Clinton’s top coordinator of its international economic policy. Tarullo has written extensively on problems with sovereign debt, international financial regulation, and trade. He is noted for criticism of the Central American Free Trade Agreement (CAFTA), which Obama eventually voted again, stating that it is a flawed pact that has been ineffective at addressing development challenges and diffusing the gains in the region. Recently, he has written about the need to increase regulation on banks and is actively involved with the formulation of regulatory policy for the upcoming administration.

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PAUL VOLCKER Director of the President’s Economic Recovery Advisory Board Volcker was selected to head the President’s Economic Recovery Board, which will gather business, academic, and other leaders to find creative, innovative solutions to the financial crisis. The choice of Volcker, who has become one of Obama’s closest advisors, was made not only to reassure markets, but also to bring aboard a sober realist – one with a special credibility to frankly assess the ongoing implementation of the eventual stimulus package. A fiercely independent thinker with a common sense approach, Volcker will do whatever it takes to repair massive economic damage – no matter how unpopular or tough. Volcker is not an economist but is credited with having a better, more nuanced understanding of markets and economies than many others with formal training. He is best known as the Chairman of the Federal Reserve under former Presidents Jimmy Carter and Ronald Reagan. When appointed by Carter, amidst two oil crises, Volcker immediately identified spiraling inflation as the key the instability of the time. He foresaw the larger, structural implications of inflation and vowed to do whatever necessary to rein it in. By limiting money supply and cutting credit, he dramatically slashed inflation within just two years, but was faulted for plunging the U.S. into a recession with the highest unemployment rate since the Great Depression. Although initially controversial, Volcker’s tactics - including rapid increases of interest rates - were eventually lauded for breaking the cycle of inflation and stabilizing prices. Volcker served as Chairman of the Fed until 1987. Volcker has recently criticized budget deficits, entitlement programs such as Medicare and Social Security, and American dependence on foreign capital to finance its debt. He has become more active in the debate surrounding restructuring financial regulation and is praised as a reasonable, temperate, and disciplined voice in the flurry of the “casino economy.”

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POTUS Watch Obama Administration Key Advisors – ECONOMIC TEAM Name

Position

William M. Daley

Co-Chair, Obama Economic Transition Team

Michael Froman

Advisory Board Member, Obama Transition Project

Jason Furman

Under consideration for a top deputy’s post in economic and fiscal policy

Timothy Geithner

Treasury Secretary

Austen Goolsbee

Head Staff, National Economic Recovery Board

Peter Orszag

Director, Office of Management and Budget

Bill Richardson

Commerce Secretary

Christina Romer

Director, Council of Economic Advisors

Robert Rubin

Co-Chair, Obama Economic Transition Team

Lawrence Summers

Director, National Economic Council

Daniel K. Tarullo

Head, Economic Working Group, Transition Team

Paul Volcker

Director, National Economic Recovery Board