Prepare to say goodbye to the highly touted economic and political teams that President Barack Obama put together to rescue the nation from the mistakes of the George W. Bush administration. These experts were assembled to give the relatively inexperienced new president the centrist policies that disappointed the eager voters who had jammed the polling stations to support the apostle of change.
Among the departing economists, please find Lawrence Summers, Director of the White House Economic Council, Peter Orzag, Head of Management and Budget and Christina Romer, Chair of Council of Economic Advisors. They will be followed by the political team led by hardnosed centrists, Rahm Emanuel, White House Chief of Staff, and David Axelrod, architect of the winning strategy in the presidential election. Watch for the retirements of Secretary of Defense Robert Gates and Gen. James Jones, National Security Advisor, both holdovers from the Bush presidency.
This multi-faceted shakeup is an admission of failure to solve the problems of the nation. It promises a new approach, a new beginning closer to the expectations generated by Obama's charisma.
Some would blame the failures on the economic collapse and the administration’s political difficulties in passing corrective national legislation. But the Obama appointees, selected for their knowledge of capitalism's booms and busts as well as the difficulties of managing change in a nation of 300 million seemed to lack a coherent plan.
• They miscalculated the political effect of joblessness, of government spending, of the federal deficit, of the national debt.
• They came to power with the biggest public goodwill in decades but squandered it in delays and false starts.
• They proved unable to deal with the strategies of the Republicans in Congress
despite almost total political control of the House and Senate. Instead of winning compromises with elements of the GOP they settled for a media victory over “The party of NO”, forgetting that every compromise is made with opponents whose negotiation position is NO, until they agree. Hey failed to remind the electorate that the Bush administration launched two wars and a new entitlement – Medicare prescription drugs – while cutting taxes.
• They were unable to use the powerful financial and industrial institutions they saved from bankruptcy to pressure the Republicans in Congress even while they were bailing out these companies with trillions of dollars.
• They were unable to organize the committed army of Obama supporters in the presidential election into a grassroots organization to act as a pressure group on members of Congress and the media.
If the Obama administration is to survive the presidential election of 2012 giving Obama a second term, the replacements of the teams that struck out need to develop a relevant strategy. Unfortunately the new appointments will be made in the shadow of the 2010 congressional elections, almost sure to result in Democratic defeats. If history is the guide, replacements will be even more centrist than the original team. After Bill Clinton’s political defeat in the election of 1994, his policies swung further to the right but benefited from a business boom. Business and financial interests will demand looser regulation, fewer prosecutions, and lower taxes. Obama is already under pressure to appoint business executives, as though his outgoing aides Lawrence Summers and Robert Rubin had not already worked for Goldman Sachs and Citigroup. Rest assured that neither Paul Krugman nor Joseph Stiglitz, both liberals, Keynesians and Nobel Prize winners, will be appointed.
The likely results: current policies will continue with new leaders, policies of mild economic stimulation, based on the political hope and prayer that another boom/bust cycle begins in time for the 2012 presidential election as it did for Bill Clinton and Ronald Reagan when they got into trouble. Good luck.