A Critical Look at Obama?s Economic Team

Confidence Men is an exposé, by the reporter Ron Suskind, of what he claims is incompetence, infighting, and insubordination at the highest levels of economic leadership in the Obama administration during the global financial crisis.  Those accusations are largely misdirected. After all, there was no playbook for the administration’s economic thinkers to work from – the rapidly unfolding crisis forced them to improvise. 

As I interpret the events that unfolded, Obama’s initial team of top economic advisers – Larry Summers, Christina Romer, and Timothy Geithner – took great professional and personal risks to protect Obama from himself – that is, from his radicalism and naiveté.  The team’s relative caution enabled the cure, such as it was, for the crisis to involve a relatively minor expansion of government’s role in the economy.  Skyrocketing government debt notwithstanding, a much greater expansion of state power could have occurred. 

Obama, armed with little more than a citizen’s knowledge, was right and his team was wrong on one important issue, as I will explain later on. But for the most part his advisors were giving him sound counsel, even if at times they seemed to be working at cross-purposes with the president.

A much-discussed example of the insubordination described by Suskind is Tim Geithner’s alleged failure to prepare and publicize a plan for breaking up Citigroup when the president instructed him to do so.  As Confidence Men tells it, Geithner believed that public awareness of such a plan would cause depositors and investors to lose confidence in Citigroup, making the potential for the bank’s failure a self-fulfilling prophecy.  An interesting question is whether a secretary of the Treasury is there solely to execute the will of the president or to use independent judgment.  Tradition and a great deal of constitutional interpretation favor the former; by this logic, it was Geithner’s job to change the president’s mind, not ignore him.

Geithner has been widely quoted as saying that Suskind’s account “bears no resemblance to the reality” of the situation, but, at the very least, Suskind’s telling of this episode raises a valuable hypothetical question for readers and historians to debate.