Ruminations, October 4, 2009

Who’s running Obama’s fiscal policy?

President Barack Obama has put together an outstanding array of talent to advise him on the financial markets and the state of the economy. Consider the following group:

·          Treasury Secretary Timothy Geithner, M. A. in international economics from Johns Hopkins,  Treasury Department 1988-2003, president of the New York Federal Reserve Bank 2003-2009.

·          Director National Economic Council Lawrence Summers, Ph.D. in Economics from Harvard, Council of Economic Advisors 1982-1983, Chief Economist World Bank 1991-1993, Under Secretary for International Affairs 1993-1995, Deputy Secretary of the Treasury 1995-1999, Treasury Secretary 1999-2001.

·          Chair of the President’s Economic Recovery Advisory Board Paul Volker, President of the New York Federal Reserve 1975-1979 and Chairman of the Federal Reserve 1979-1987. He is largely given credit for ending the runaway inflation of the late 1970s and early 1980s which then contributed to the economic growth of the 1990s.

·          Council of Economic Advisors member Austan Goolsbee, Ph.D. in Economics from MIT. 

·          Deputy Director of the National Economic Council Jason Furman, M.S. from the London School of Economics, Ph.D. in economics from Harvard.  

With all this experience, all these credentials and all this talent in Washington, seemingly the Obama team is well on the way to fiscal probity and future growth. There is one problem.

Members of the Obama financial team have been complaining that no one is paying attention to them. They say that the Obama policy team politely listens and then ignores them. If that’s true, then maybe we should be concerned with who is setting the nation’s fiscal policy. Is anyone in charge?

Obama: making friends and influencing people

It’s nice to be liked and have friends. But being nice and having friends is neither a necessary nor sufficient condition for influencing people. Some of those who believed the President Barack Obama’s charisma would win the day are now beginning to be concerned.

During the meetings of the world leaders in the United States last week, it was reported that British Prime Minister Gordon Brown sought to meet with Obama five times and was rebuffed.. It is to Brown’s credit that though the Obama Administration seems to not like him, for reasons of state Brown continues to want to work with the United States.

Last week, French President Nicholas Sarkozy was critical of Obama and Obama’s performance at the United Nations saying, in effect, that his nice words had accomplished nothing and were concealing a policy of shallow thinking. In the past, Sarkozy has called Obama’s disarmament positions “naïve.” Bret Stephens, a columnist for the Wall Street Journal, described a conversation that he had with a member of the French press, in which the “thesis seemed to be that [Barack Obama’s foreign policy was in] … shambles.”

We have previously addressed the negative reaction to Obama’s cancelation of the missile shield in Poland and the Czech Republic. Poland has been a staunch ally of the United States but now, according to a recent poll in Poland, 13 percent of the people said that Poland should continue its relationship with the United States while ten percent said it should develop new relations with Russia instead. Let’s put those numbers in a historical perspective:

·          From 1795 to 1918, Russia ruled Poland, often harshly.

·          From 1918 to 1921, Poland fought a war with Russia to maintain its independence.

·          In 1939, Russia launched a surprise attack on Poland. Russia then deported thousands of Poles to Siberia.

·          In 1940, Russia murdered 22,000 Poles in what is known as the Katyn Massacre.

·          In 1944 though heavily outnumbered and with few weapons, Warsaw rose to fight the Germans while the Russians camped across the river, watched and refused to help the Poles fight a common enemy.

·          From 1945 to 1989, Poland was under Russian domination and control again.

·          A joke I was told that supposedly typifies the attitude of Poles toward Russians goes like this: If Poland is attacked by Russia and Germany at the same time, who should they shoot first? The Germans; business before pleasure.

 If the Poles have a strong distrust and dislike of Russians, looking at their history it is understandable. Given that a plurality of only three percent of Poles would rather do business with the United States than with Russia, it speaks volumes on how attitudes have shifted in Eastern Europe.

We don’t know what the rest of the world leaders think of Obama. They probably think he is nice and like him as a friend. But as to his influence, so far it’s hardly something for which we had hoped.