“His reputation is sinking in this town and sinking fast.” ~ Juan Williams on Fox News Channel’s The Beltway Boys, March 7, 2009
He was supposed to be the only guy who understood what was happening with the economy — the smartest guy in the room and one of the architects of the Bush-Paulson bank bailout program known as “TARP.” However, several weeks into his job as Treasury Secretary, Tim Geithner is being mocked on Saturday Night Live, and liberals and conservatives in the “punditocracy” are close to calling for his resignation.
It started in early February, when President Obama said this about Sec. Geithner’s pending announcement about the economy: “I don’t want to preempt my Secretary of the Treasury; he’s going to be laying out these principles in great detail tomorrow. But my instruction to him has been, let’s get this right, let’s create a template in which we’re restoring market confidence.” The President promised that Geithner had a plan to be unveiled the next day. In actuality, Geithner said nothing of consequence, and the markets have been in a free fall ever since.
While the markets have been declining since 2007, the pace of the decline has accelerated dramatically since the Obama team took over. White House National Economic Council Chairman Larry Summers seems to be literally asleep at the wheel. Former Federal Reserve Chairman Paul Volker is unseen, and Geithner and the administration can’t seem to staff the Treasury Department.
The President has so many meetings and concerts at the White House, Geithner may be having a difficult time getting Obama to focus. But in a New York Times interview last weekend, Obama said he spoke with his economic team for at least an hour a day. There’s a lot of talk, but not much else.
The problem with this economy is not that we are not injecting enough money. It’s a confidence problem. The markets and now to some degree the independents that voted for President Obama see the frenetic pace at which this administration is jumping from one issue to another, and they don’t see any of the specific plans that would restore market confidence. The "cap and trade" global warming tax that Obama proposes will be a huge burden on the economy, and the overhaul of the health system might be nice things to discuss, but those discussion should come after an economic policy is articulated, debated and put into practice.
The overwhelming majority of people in America are employed by small to medium sized businesses, and those businesses don’t know which industries are going to be targeted next by the tax and spend majority, and they don’t know what the tax structure is going to be in two years. They are unsure, and even if they have the resources, they are not going to expand their business — they have no reason to be confident that whatever they do, the government won’t interfere.
As of today, the stock market has declined at the same percentage rate as it did in the same period of time after the 1929 stock market crash. When FDR took over, he focused on the financial markets before moving onto the creation of the New Deal. We can debate the effectiveness of the New Deal and if it ultimately worked or not, but we can’t debate the markets rebounded because of the initial policies of FDR.
The problem with the Obama administration and Geithner as head of the economic wing of the administration is they do not believe in the free market. In Tom Woods’ book Meltdown, he talks about the 1920 Depression. (Note to Speaker Pelosi who wondered aloud last year about why the depression that followed in the late ’20s and ’30s was called “great.” It’s a question of magnitude, not happiness, Mrs. Pelosi.)
It’s something we don’t learn about in today’s history of America. You don’t learn about it because it was a short Depression that the government did not act on — they let the markets work it out. It was one of the shortest in our history and lead to the boom of the 1920s. Markets will go up and down and the government needs to stay out of it.
This brings me back to Geithner. While the White House announced on Sunday three names to be considered for support positions around the Secretary, many others have withdrawn their names for consideration. They cite the long vetting process. I have to wonder if they see this as a failing proposition by a one term president and a short term Secretary of the Treasury. Or maybe the Obama administration is having trouble finding any Democrats who’ve paid their taxes in recent years.
Geithner is failing and failing fast and taking the American economy with him. I believe he has a good economic mind and probably could put together a good plan if he resorted to conservative economic theory, which he won’t.
Obama loathes the free market and his philosophy goes against basic economic principles.
Geithner may be the first casualty of the Obama administration. I predict if he doesn’t get a team put together and get it confirmed by the Senate quickly, he will resign by year’s end. He’s squandered all his credibility, and he lost the trust of Democrats and Republicans. We need an economic team that will have sound policy.
But how do you do that when the President of the United States has policies that don’t have the confidence of the markets? It’s an impossible task: we are stuck with President Obama at least until Jan 20, 2013 — but Tim Geithner can go any time.