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Appointing New Treasury Secretary Doesn't Require Political Capital

By Anonymous

Ben Stein offers a bizarre piece of advice to President-elect Obama:

HAVE REALISTIC EXPECTATIONS Plan what must be done to effect the minimum amount of change you?ll be happy with. All politicians basically promise the moon and the stars to their supporters. For any new president, it?s crucial to try to decide what can be reasonably changed ? like naming a new Treasury secretary and having higher taxes for the wealthy. Then the president must set to work on those while his prestige and mandate are still fresh and strong.

Naming a new Treasury secretary isn't something that Obama may-or-may-not be able to do, depending on his political capital. It's automatic. And with a large Democratic majority in the Senate, confirmation of Obama's nominee will also be automatic. (Yes, potential Treasury secretary Larry Summers made some controversial remarks about women in the sciences a few years ago, but there's absolutely zero chance of that threatening his confirmation.)

As for the two leading candidates for Treasury secretary?Larry Summers and Tim Geithner?I sincerely hope that Obama picks Geithner. I met Geithner once a few years ago, and have heard him speak a couple times, and he's very impressive. He's also extremely well-respected on Wall Street.

But I think Obama will end up picking Summers instead, primarily because there's no obvious replacement for Geithner at the New York Fed. President of the New York Fed is a critically important position?one which, probably more than any other position, requires someone with the full confidence of Wall Street. Unless William McDonough can be persuaded to come out of retirement, I just can't see Obama plucking Geithner from his position at the New York Fed in the middle of a financial crisis that's driven in large part by a crisis of confidence. Like Yves Smith, I'm not a huge fan of Summers, but people much smarter than I insist that he's a once-in-a-generation mind, so I suppose I'd be content with Summers as Treasury secretary.

Full post as published by Economics of Contempt on November 08, 2008 (boomark / email).