Against All Odds
Can President elect, Barack Obama, fix the economy, save our country, and right the galaxy? In a recent AP poll, 72% of Americans were confident that Obama will make the necessary changes in order to fix the economy. In an unrelated Gallup poll taken on the same day, only 3% of the nation think the economy is in a good or at least stable condition. That is merely a 69% spread that Obama must make up. If the economy were a sporting event, overcoming that kind of spread might very well qualify as the most monumental upset of all time. So who spiked the Kool-Aid with so much optimism?
A Reason For Hope
Why would 72% of the nation (including 44% of Republicans) show so much faith in someone who hasn’t spent a day on the job during a housing meltdown, credit crisis, slowing/declining GDP, and widespread job cuts? You can’t fault Americans for lack of hope. Obama has united much of the nation and provided it with hope and excitement two months prior to his first day on the job. Meanwhile, he’s begun assembling a diverse team of economic advisors. His selections tip his hand to what his economic plan might entail.
Who’s on Obama’s Economic Advisory Team?
Obama has selected a diverse group of individuals from many different industries and backgrounds to advise him on economic policy. The most recognizable names are Eric Schmidt, CEO of a small internet startup you may have heard of (Google), Warren Buffet (a guy who has been known to make a few good investments), and Robert Rubin, Treasury Secretary during one of the longest expansions in this nation’s history under President Clinton. Breaking down the makeup of the team further, you’ll find: 7 of the advisers were advisors or cabinet members from President Clinton, 4 under Bush II, 1 under Nixon, 1 Carter, and 1 Reagan. 2 professors, 6 private business sector executives, 1 mayor, 1 governor, 1 congressman, 1 non-profit executive, and 8 former presidential appointees. Of those who have recent private sector experience: 2 come from tech, 1 health care, 2 financial, 1 media, 1 hospitality. Zero self-proclaimed socialists.
What does this say about Obama?
In choosing his economic advisors and in the early stages of choosing his cabinet members, Obama has shown that he is not afraid to select talented individuals who may not see eye to eye with him. Advisors for Bush and Reagan? Hillary as a rumored Secretary of State? Talks of McCain as Energy Secretary or other posts? Maybe somebody should tell him the country is in the middle of the biggest economic crisis in 75 years. There are no bonus points for taking on additional difficulty. Based on his advisor picks, here is some of what you can expect Obama to focus on:
1. A Friend to the Auto Industry: Obama’s selection of Michigan governor, Jennifer Granholm, points to his connection to the Great Lake State, and its lifeblood, the auto industry. All political posturing aside, it has been said that 1 out of every 10 jobs in this country are directly tied to the auto industry. Think of the hundreds of thousands of workers directly employed by the Big 3 and the millions of workers employed by their suppliers. What about the millions of retirees who are dependent on health care and a pension from these employers? Also, think about all of the local businesses (bars, restaurants, auto dealerships, publishers, advertising production crews, etc.). If the present lame duck Congress does not support an auto bailout, then they will get one in early 2009.
2. A Fight for Manufacturing Jobs at Home: Obama has made many statements regarding his desire to renegotiate the North American Free Trade Agreement (NAFTA). It’s been estimated that over 1 million high paying manufacturing jobs were lost or not created due to movement across borders as a result of NAFTA. Obama wants to champion himself as a fighter for blue collar, middle-class workers. Anticipating potential battles over NAFTA, Obama has enlisted the help of the former Democratic whip in the House, David Bonior, who strongly opposed its creation in the first place. Bonior has also been mentioned as a Labor Secretary candidate.
3. Creation of Green Jobs and Energy Independence: We’ve all heard about Obama’s plan to invest $150 billion in green jobs over the next 10 years in an effort to ween the country off of foreign oil dependence. To this end, Obama has enlisted the help of former Clinton Chief of Staff and current President of the liberal, Center for American Progress, John D. Podesta. You can read Podesta’s “Green Recovery: A Program to Create Good Jobs and Start Building a Low Carbon Economy” here.
4. Efforts to Fix the Credit Crisis and other Assorted Financial Issues: Curing the country’s credit and financial woes is going to take some brilliant business minds. To this end Obama has enlisted the help of Google’s Schmidt, Buffett, executives at Xerox, Time Warner, Hyatt Hotels, and financial executives from Citigroup, Morgan Stanley, and TIAA-CREF. Additionally, he’s enlisted the help of two former Treasury Secretaries, 2 Fed Chairmen, a former Commerce Secretary, Fed Governor, and an SEC Chairman. He won’t be lacking in experience to draw from.
Breaking News on Obama’s Latest Appointments!
Obama has moved forward on adding key cabinet members to his team over the weekend. Here’s a brief look at each of them: Timothy Geithner: Obama’s choice for Treasury Secretary. Geithner headed the New York Federal Reserve and has been a key player in many of the governments responses to the financial crisis. He has worked on the rescues of AIG, Bear Stearns, and also has worked with Bernanke on the US central bank’s emergency lending facilities. Wall Street has responded positively to his appointment, with a 500 point rally on Friday.
Larry Summers: Has been tapped to head Obama’s National Economic Council, which advises the president on domestic and international economic policy matters. Summers was President Clinton’s last Treasury Secretary, has served as Chief Economist at the World Bank, and became one of the youngest tenured professors in Harvard’s history at the age of 28. He brings a reputation for having a great economic mind.
Melody Barnes: Will head the White House Domestic Policy Council. Melody will be instrumental in constructing Obama’s domestic policy, including health care, education, immigration, and other hot topics of the day. She served as Obama’s campaign policy director, and hit the nail on the head in terms of understanding the top of mind concerns of the country.
Christina Romer: Has been appointed head of Obama’s Council of Economic Advisors. Romer is currently an economics professor at Cal Berkeley and is very well respected by Republicans, as well as Democrats (she’s against tax increases).
Bill Richardson: Obama’s choice for U.S. Commerce Secretary. Currently the Governor of New Mexico, and previously the Energy Secretary and UN Ambassador under Clinton. He had a brief run for the Democratic candidate back in the spring and brings a lot of experience and respect to the team.
Only the First Step
We may not know how the economy will look in 4, 6, or 8 years; but it does look like Obama is beginning to put together a diverse team of individuals from all walks of life. He’s also put political affiliations aside for the sake of adding talent to his team. That’s the first step, but there’s a lot of work ahead. In order for the economy to improve it’s going to take brilliant decision making, corporate responsibility, patience from citizens, time, and even some luck.
For more of GE Miller’s writing, see 20somethingfinance.com