Ezra touches on it in this morning's Wonkbook, but I want to draw out a problem inherent in all of our discussions of the vacant National Economic Council directorship and the White House's continuing search for a new permanent Chief of Staff. Right now, we should be worried that President Obama is most concerned about short-term politics.
As an example -- perhaps the biggest mistake of Obama's presidency -- was reappointing Ben Bernanke to the position of Fed Chairman. If you'll recall, Obama interrupted his vacation to announce the sudden decision, which was timed to reassure the markets after a mid-session budget review revealed a higher-than-expected deficit. While market nerves, real or imagined, were assuaged, Bernanke also was slow to move the Federal Reserve toward the kind of monetary policy that gets more high-powered dollars into the economy to promote recovery.
Some might argue that Bernanke's credibility as a member of the Republican party and long-standing economic conservative were needed to shepherd along the Fed's policies, but given the need for rising inflation expectations -- indeed, explicit price-level targeting -- it seems smarter to appoint someone with none of Bernanke's credibility in order to convince the markets that the Fed is serious about stimulus. Regardless, Bernanke's decision to delay bolder policies for months, until after the mid-term elections had passed, also delayed the economic recovery that Obama, and this country, desperately need.
Now, in figuring out who to put into top White House jobs, it seems everyone has some Wall Street connections, ranging from the relatively -- underline "relatively" -- minor independent contracting done by Gene Sperling to being an actual major banking player, like Roger Altman and William Daley. It seems absurd that the White House can't even float the name of anyone who hasn't been involved in finance (perhaps Brad Delong is right about where Dems get their leaders).
Now, the White House seems convinced it has a problem with business, which is why Daley might serve better as a liaison rather than as a principal on the White House staff. But the relationship problems with business are more structural than anything else, despite the many good things that this administration has done for business. Obama needs appointees around him who he can trust to do solid work in the long-term, not someone who offers public relations value right now. While these appointments may not have the weight of Bernanke's, it would behoove this White House not to make the same mistakes twice.
-- Tim Fernholz
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