Ten months back, at the very end of September, I posted online a brief piece entitled Obama’s Wrecking Crew, in which I drew attention to a column in The New York Post in which Charles Gasparino reported two items of interest. First, that the titans of Wall Street – men such as Morgan Stanley’s John Mack, BlackRock’s Larry Fink, Greg Fleming (once at Merrill Lynch), JP Morgan’s Jamie Dimon, and Goldman Sachs’ Lloyd Blankfein – were beginning, in private, to express grave misgivings concerning the Obama administration’s stewardship of the economy. And, second, that these insiders were also telling him that Treasury Secretary Tim Geithner and chief economic adviser Lawrence Summers were complaining to them that they had almost no say in policy decisions. “Obama,” these two were said to have lamented, “is acting as if he has a blank check to do what he wants, while ignoring the longterm costs of his policies.”
In that post, I predicted that Geithner, a young man whose time had come, would suffer, at least for a while, in silence, and I suggested that self-respect would cause Summers to bolt. “Within the world of economics,” I wrote, “his is a name to be conjured with; and, unlike Paul Krugman, he has not in public prostituted himself for partisan advantage. It must be excruciating to watch while Obama’s wrecking crew destroys the foundations for American prosperity.”
As I predicted, Geithner is still there and is still willing to parrot the administration line regarding matters such as marginal tax rates. But Summers has not yet bolted – perhaps because he has nowhere to go. He rose to become Treasury Secretary under Bill Clinton, and he failed ignominiously as President of Harvard. Where, he has no doubt asked himself, do I go from here?
However this may be, my general point was correct – as has become evident in the last few weeks. Not to put a fine point on it, the rats have begun leaving Obama’s ship. The first to announce his departure was our current President’s Director of the Office of Management and Budget Peter Orszag, who had been a budget hawk when – as head of the Congressional Budget Office in 2007 and 2008 – he scored the various budget proposals submitted by President George W. Bush. Last Thursday, Christina Romer , Chairman of the Council of Economic Advisers, announced that she would soon follow Orszag’s example.
Neither Orszag nor Romer is a fool. They were party to a con, and they surely knew it.
They presumed that the economy would bounce back as it usually does after a recession, and they went along with Rahm Emanuel’s strategy of exploiting the crisis lest it “go to waste.” In the process, they did what they were told and said what they had to. They endorsed and defended policies that, as economists, they knew were unsustainable; and they have left us holding the bag. The recovery has stalled; unemployment is at least 35% higher than Romer predicted it would be at this stage; and the deficits stemming from the so-called “stimulus bill” that these two piously praised as necessary for the recovery now threaten its continuance.
I doubt that Barack Obama cares one whit. His aim was the transformation of a country that he sincerely hates, and Orszag and Romer have loyally served his purpose – as Geithner and Summers still do. There will, I suspect, be a political reckoning for all of this profligacy, and its first harbinger will present itself on the first Tuesday in November. You can fool Americans for a time – but not for long.