Obama transition teams wrestles with fiscal policy
Behind the scenes, Barack Obama is busy putting together “the largest and most disciplined presidential transition team anyone can recall,” says Edward Luce in the Financial Times. Obviously this is important for any incoming president, but with so many crises converging, it takes on particular salience this time around.
Obama’s team is deep in the weeds on issues previous presidents haven’t addressed until in office. One of the big fights shaping up is “whether to shoehorn Mr. Obama’s promised long-term investments in healthcare, energy, education and infrastructure into [the coming stimulus] package,” or more broadly, Bob v. Bob Round II:
In 1992, the Clinton team was consumed by a battle between Bob Reich, future Labour secretary, who argued for redeeming the campaign’s spending promises, and Bob Rubin, future Treasury secretary, who argued for deficit reduction. Mr. Rubin won. A similar debate is now taking place within the large universe of Obama policy advisers. “No decisions have been taken on anything yet,” said one.
Now, that may be true, but remember the seminal David Leonarhdt piece earlier this year, which took a close look at Obama’s economic thinking. Obama realizes that circumstances have basically converged the Bobs — the surpluses of the Clinton years may rightly have been directed toward deficit reduction, but with today’s stagnant wages, crumbling infrastructure, and historic inequality, it’s time for investment in future growth.
The financial crisis only heightens the need for economic stimulus, but there will be immense pressure on Obama to make some high-profile cost-cutting gestures. He appears to be actively assuaging those concerns already:
Mr. Obama has also already had conversations with “blue dog Democrats”– fiscal conservatives — about the potentially painful budgetary decisions he would have to make well before taking office on January 20.
As Luce says, with the deficit next year pushing $900 billion, “the Rubin-Reich battle could be replayed on a far grander scale.”
Obama has said several times in response to this kind of question that he will seek to cut spending (through ending the war, bureaucratic efficiency, and the like), but he plans to maintain his commitment to his core investments: energy, health care, and education.
Shortly after (if! I mean if!) he’s elected, Obama will send some important signals, with transition team and cabinet choices. They will reveal a great deal about his fiscal intentions.