- Obama's picks for key economic Cabinet positions are experienced economic and political veterans—the usual suspects—rather than free-wheeling radicals or faces new to the Beltway.
- Obama's appointees all have academic backgrounds in economics, and most have considerable political experience working with both Republican and Democrat administrations.
(Editor's Note: As always, MarketMinder is politically agnostic. Our political analysis is rooted in understanding politics' direct effect on markets and the economy, no matter which side of the aisle it comes from.)
President-elect Barack Obama has so far named 12 of 28 Cabinet positions, and though his campaign rhetoric focused on change, there are more than a few familiar faces among his lineup.
Given today's economic tumult, of particular interest are Obama's economic Cabinet nominations. This week's recession announcement coupled with a fresh spate of weak economic data reports mean the next administration's attention will be on the economy. Perhaps it's not surprising then Obama's picks are experienced economic and political veterans—the usual suspects—rather than free-wheeling radicals.
Obama's appointees all have academic backgrounds in economics. And aside from Christina Romer (appointed by Obama to be Chair of the Council of Economic Advisers), they also have considerable political experience working with both Republican and Democrat administrations. Timothy Geithner (named Obama's Secretary of the Treasury, but subject to confirmation by the Senate) worked in the US Treasury Department for over a decade and at the International Monetary Fund before serving as the president of the Federal Reserve Bank of New York. Lawrence Summers (appointed to head the National Economic Council) served on the Council of Economic Advisers under President Reagan and as Secretary of the Treasury under President Clinton. Obama even tapped ex-Federal Reserve chairman Paul Volcker (who served as Fed head under Presidents Carter and Reagan) to lead a newly formed President's Economic Recovery Advisory Board.
Current ongoing economic and financial troubles are only part of the challenge for Obama's economic team. The team also needs to decide how to tie the loose ends created by existing federal aid and bailout programs (for example, TARP) and deal with last-minute policy changes and plans from the outgoing administration. This transitional period no doubt poses some uncertainties for the market—especially if the new administration were to radically change the focus and direction of government policies.
Geithner's close familiarity with the Treasury and Fed's liquidity and bailout programs could make for an easier transition. But let's be blunt: Geithner has been a leader in architecting many of this year's scatterbrained and inconsistent financial institution interventions. Through this financial crisis, Geithner has been for all intents and purposes Treasury Secretary Paulson's right-hand man. This makes him a somewhat troubling candidate in our eyes—maybe he's learned something from those experiences, but he's certainly no agent of change.
That said, it's too soon to know how Obama's appointees will act once in office. It's somewhat reassuring they have a history of supporting markets and free trade. At the very least, Obama's economic appointees suggest he is more interested in continuity and experience, not radical changes.