Obama's economic clique and the Summers pick

By Frank Moraes 

When Obama and Clinton were running for the Democratic nomination for president, I tended to side with Obama. The reason was not one I've heard anyone else mention. My fear was that Clinton would be another George W. Bush, just on the left. By that I mean that she would have been to insular. I thought that Obama would be more broad in where he looked for input. But that hasn't been the case. Obama has been very insular. And when it comes to economic policy, it seems that the people he listens to are a group of New Democrat, pro-banking nitwits.

I've been thinking about this because of all the speculation about Larry Summers being nominated as Federal Reserve Chair. It isn't that Summers would make a terrible choice for the job. I have big problems with him, especially his strong dollar policies (under and then following Robert Rubin) while he was in the Clinton administration. But there are far worse candidates for the job. The big problem is: why would Obama be so keen on Summers?

The answer, I think, is just that Obama's insular economic decision making team is dominated by the kind of people who think that Larry Summers rocks. Obama could have just picked Janet Yellen, the current Vice Chairman of the Fed. She is extremely well qualified for the job and she is, as the pronoun indicates, a woman. Obama could have nominated arguably the best person for the job and also done something historic. Apparently, that didn't matter. Or more likely, that didn't even occur to Obama's economic clique.

It's pretty clear that a Summers nomination is not going to fly with most of the Democratic Party.

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Austerity now

By Creature

"I wouldn't do a major second stimulus because I think...we run a risk that it could be counterproductive in creating a lot of additional uncertainty and undermining confidence." Bob Rubin, former Clinton Treasury Secretary and god to current one.

Maybe it's just me, but wouldn't Wall Street be much more "confident" if they knew further stimulus spending was a possibility. More spending means more people can buy their crap. That should be a good thing, no? Only in a world where the haves already got their bailout does this make sense.

Geithner, the Tax Man, and the Treasury

By Michael J.W. Stickings

Oh, how the right is salivating over Treasury nominee Tim Geithner and his tax problems, specifically, his failure to pay almost $43,000 in Social Security and Medicare taxes over several years earlier this decade.

Appearing before the Senate Finance Committee on Tuesday, Geithner explained, according to the Post, that the "mistakes on his tax returns early this decade were unintentional and that he has since paid back the $42,702 he owed, including interest... [H]e mistakenly believed that his employer at the time, the International Monetary Fund, was deducting those taxes from his paycheck." Democratic committee chairman Max Baucus called his mistake "serious," Minority Leader Mitch McConnell is withholding judgement, and two other Republicans, Jim Bunning and Jon Kyl, are temporarily delaying his confirmation, but, of all people, Orrin Hatch, one of the most conservative and most partisan of Republicans, came to his defence: "I still support him. I have no problem. He's a very, very competent guy."

But then there are those who are making much ado, such as the Politico's Roger Simon, a noted conservative, who asks today, "What if I didn't pay taxes?" Which isn't fair, of course, because Geithner still paid most of his taxes, he just neglected to pay certain taxes that he thought were already being deducted." It an incredibly and typically idiotic piece.

Then there's The Wall Street Journal, a right-wing rag (in editorial terms), which facetiously calls for "a Geithner tax amnesty." But Geithner didn't "forget" to pay his taxes, it was just an oversight on his part -- a serious one, to be sure, but it's not like he was engaging in tax fraud or otherwise simply refusing to pay his taxes.

And it isn't just the right. Even The New York Times (which is actually far more rightist than most people realize) editorialized that "the disclosures cannot be dismissed so easily, or papered over," that "Geithner must be questioned forcefully about these matters at the hearing next week, and his explanations must be credible."

As the Times reports elsewhere, though, "several tax experts" say that "it is an easy mistake for an employee of an international organization to make." Even the Politico admits this: "Should the U.S. treasury secretary know how to do his own taxes? Maybe not, say payroll lawyers, accountants and tax professors, who consider Timothy Geithner’s failure to pay four years of Social Security and Medicare payroll taxes to be a fairly common mistake — even for a top economist chosen to run the Treasury Department, including the Internal Revenue Service."

And while media outlets like CNN are similarly making much ado and focusing on all the supposed opposition to Geithner, Republicans, with few exceptions, are pretty much on Geithner's side, dismissing the tax oversight and stressing his abilities and qualifications.

Now, this is not to say that I myself am fully behind Geithner. I have my reservations, but they have nothing to do with his taxes. Rather, they have to do with the fact that he once worked for Henry Kissinger (I'd like to know more about what he did for Kissinger & Associates), that he's another Rubin-Summers (who were both enablers of the banking crisis back when they were at the Treasury in the '90s under Clinton), that he has been very much part of the problem with respect to the financial meltdown, and that he's an enthusiastic cheerleader for the ever-growing financial bailout.

Still, I'm not against him -- I trust Obama on this -- and, despite these concerns, I do not necessarily oppose his confirmation. Indeed, as Robert Kuttner (via Benen) noted last September, Geithner is actually quite progressive with respect to regulatory policy. And Paul Krugman likes him, which is, for me, very much in his favour, even if Frank Rich makes a strong and persuasive case against him for being "no less tardy [than Rubin] in discovering the reckless, wholesale gambling that went on in Wall Street's big casinos, all of which cratered while at least nominally under his regulatory watch."

Regardless, it looks like he'll be confirmed. Thankfully, the stupid matter of his taxes won't be his undoing.