So Barack Obama picked Timothy Geithner as his future Treasury Secretary today. What is the new secretary’s track record, and what does his appointment tell us about the emerging course of the Obama administration?
As you will have read elsewhere, Geithner (right) rose up in the Treasury Department during the Clinton administration, and was Under Secretary for international affairs in 1998-2001. After a stint at the International Monetary Fund, he became President of the New York Fed in 2003. He is also the vice chairman of the Fed committee which is responsible for formulating US monetary policy.
Tim Geithner first registered as a Republican, but switched his party affiliation while he was at the Treasury. The Bush administration blocked his application for the IMF’s number two position in 2001.
Geithner has been a protégé of Larry Summers (left) since the early 1990s. Like Summers, he was a strong supporter of the Washington Consensus at the Treasury and the IMF. When Japan pushed for the creation of an Asian Monetary Fund after IMF policies helped trigger the East-Asian financial crisis in 1997/98, Geithner led the Treasury’s successful lobbying efforts against this proposal.
Tim Geithner at least differs from Larry Summers’ arrogant personal style. The new Treasury Secretary is said to be a consensus builder, and will presumably harmonize better with no-drama Obama than his mentor, who will join the administration as the director of the National Economic Council. Like your blogger, Geithner speaks some Chinese, plays tennis and enjoys skiing. He grew up in Southeast Asia, where his father was a senior official of the Ford Foundation. We may hope that his biography and education will allow him to be open for NGO concerns, but I have so far not seen any evidence for this.
The world economy is at the brink of collapse, and we are told that “the markets” (who I’m sure go under more personal names when they call up the President-elect) need an insider and crisis manager whom they can trust in the Treasury position. But didn’t Summers, Geithner and their colleagues create the crises which they subsequently managed with their misguided financial deregulation? Wasn’t Geithner supposed to monitor the capital adequacy of the Wall Street banks, which were so clearly over-leveraged, as the President of the New York Fed? Why aren’t the promoters of the Washington Consensus held accountable for their failures?
I didn’t see a strong progressive candidate for the Treasury position. But I am amazed that leading intellectuals such as Joe Stiglitz and Paul Krugman, who got it right with their critique of the Washington consensus, are not part of Obama’s economic advisory board. And I don’t understand why after the failure of mainstream policies in Iraq, on Wall Street and on global warming, no leading progressives appear to be on Obama’s shortlist for other important cabinet positions. As Chris Bowers and Christopher Hayes have said in their blogs, even after two landslide elections under the slogan of change and amidst unprecedented economic, military and environmental disasters, the only government options in the United States seem to be right-wing Republicans, and a mixture of centrist Democrats and Republicans. Progressive movements quickly need to light some fires under Obama’s feet if we expect his administration to make a difference on the issues we care about.
Peter Bosshard is the policy director of International Rivers. His blog, Wet, Wild and Wonky, appears at www.internationalrivers.org/en/blog/peter-bosshard