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Obama Tasked With Vetting Economic Policy Team’s Competing Ideas

November 28, 2008 at 6:45 PM EST
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Analysts Mark Shields and David Brooks examine President-elect Barack Obama's new economic team and the challenges he may face in evaluating their views on the financial crisis.
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JUDY WOODRUFF: Finally tonight, the analysis of Shields and Brooks. That is syndicated columnist Mark Shields and New York Times columnist David Brooks.

Good to see you both on this day after Thanksgiving.

The president-elect, Mr. Obama, has, Mark, he’s rolled out his economic team earlier this week. What do you make of them?

MARK SHIELDS, Syndicated Columnist: I guess, first of all, you have to take them separately. I think Paul Volcker is literally, figuratively, historically a towering figure. And his position in — he’s an icon. His position is already secure.

I don’t know Christina Romer from Berkeley, except by reputation, which is quite good.

The other three we’re more familiar with. Peter Orszag was the head of the congressional Budget Committee. He’s smart — Congressional Budget Office. He’s smart. He’s knowledgeable. He’s fair and open. The question is, can he be Doctor No? That’s what a budget director will have to be with this budget deficits that he’s facing. That’s going to be tough.

But the other two are, I think, more intriguing and probably more controversial, Tim Geithner as secretary of the treasury and Larry Summers as the economic czar in the White House, and for this reason. They both come from an administration that — and they were among the champions of it, in particular Summers, of deregulation of the financial world and institutions.

And I think it’s incumbent upon the Senate Democrats, at the confirmation hearings, to ask them what they would — what they’ve learned from the past eight years from deregulation. And we’re now at the point where the people in the United States are committed to $7 trillion in obligations as part of this bailout just in the past eight months.

And, you know, what they would do differently, what they would have done differently, what they’ve learned, where they were wrong, I think that’s a responsibility — the Democrats now are in power. And they’re to be held accountable.

JUDY WOODRUFF: Is that what’s going to happen, held accountable? And what do you make of the team?

DAVID BROOKS, Columnist, New York Times: Well, first of all, on the team, it looked like Barack Obama hired every economist in the United States, divided them into 697 different committees, and they’re going to live out in tents behind the Oval Office.

What he did was stockpile brains. Larry Summers, no one doubts his intelligence, Christina Romer. He created this new committee with Volcker and Austan Goolsbee, his longtime economic aide.

And so what’s interesting about the organization is that traditionally you’ve had these only two groups without the White House, the National Economic Council, which is more Wall Street people, more hands-on, the Council of Economic Advisers, which is more academic economists. Now there’s just overlap.

And, really, there’s overlap now between four groups, Treasury, the Volcker, Romer, and whatever the other one I’m forgetting at the moment is, so you’ve just got this tangle of people here. And they’re all very smart, and they’re all extremely evidence-based.

Peter Orszag at the Budget Office, if you ask Orszag a question on any policy issue, he will give you an absolutely honest description of the pros and cons of any policy. So they’re all extremely impressive from that front, but how they’re going to coordinate policy is the question.

Brilliant team, many viewpoints

David Brooks
New York Times
Well, first on his ability. It's a sign of his extreme confidence that he thinks he can handle this group. And I celebrate him for it. I mean, he's picked tremendous people.

JUDY WOODRUFF: How are they going to work together, Mark? I mean, do we have early clues of how President-elect Obama is going to make this work?

MARK SHIELDS: Well, I think, first of all, the most encouraging thing to me is that -- and I would remind David that we went through the best and the brightest at one point and we had Vietnam as a consequence.

DAVID BROOKS: They're literally using that phrase, the Obama people, "the best and the brightest." They didn't get to the Vietnam part of the book...

MARK SHIELDS: Yes, they have no sense of history when they use it. I mean, but -- and I don't -- they've got blue-ribbon resumes. They've got credentials that are polished and burnished.

The question you raise is a good one. I do think it's a tribute to President-elect Obama that he has about him these strong, competing and self-confident voices.

And, Judy, they aren't clones. They don't adhere to a single ideology. They don't adhere to a single point of view. And it's going to be the job of his chief of staff at the White House, as well, to be an honest broker, but it's going to be the president's.

I mean, he recognizes, I think, based upon his attention to this, that this is where his administration will be judged, is on the economy and what he does to remedy and correct.

JUDY WOODRUFF: But two things, David. Are you questioning his ability to make this team work by raising these questions early on? And then the second thing, I'm hearing nicer things about this team from conservatives than I am from liberals.

DAVID BROOKS: Right. Well, first on his ability. It's a sign of his extreme confidence that he thinks he can handle this group. And I celebrate him for it. I mean, he's picked tremendous people.

But if Paul Volcker walks into his office one day on an arcane matter of economics and says one thing, and Larry Summers says the opposite thing on an arcane matter of economics, what is any normal human being supposed to think about that? That will be a challenge.

And then, on the who admires these people, I think it's true of the entire administration, whether it's National Security Council -- or national security or economics, that conservatives are extremely pleased.

Now, having said that -- because they're pragmatic, the people are well respected by Republicans as well as Democrats. Having said that -- and this goes back to something Mark said earlier about the fights about regulation -- people like Larry Summers have moved. People in the Robert Rubin camp have moved.

And there is at least a consensus in the Democratic Party on a lot of issues, like health care and education and energy. I do not think there's a consensus on financial regulation.

But a lot of these people have moved left in the intervening eight years. And so I think there will be fights. But I doubt they'll come in the first two years, because they're going to try to spend $500 billion. There's money for everything.

Enormous sums, few conditions

Mark Shields
Syndicated Columnist
They've got big questions to address. I mean, $1 trillion is a thousand billion. I mean, George Bush exercised his first veto of a spending bill the seventh year into his presidency on an argument over $30 billion over five years, $30 billion.

MARK SHIELDS: They've got big questions to address. I mean, $1 trillion is a thousand billion. I mean, George Bush exercised his first veto of a spending bill the seventh year into his presidency on an argument over $30 billion over five years, $30 billion.

And that was for children's health insurance. It would have covered children of the working poor in 8 million families. And he said we didn't have the money for it. We're now at $7 trillion.

World War I, World War II, Korea, and Vietnam, according to the Library of Congress, totaled a total cost of $3.14 trillion. I mean, we're talking an obligation -- and there are no conditions.

This week, we had Citigroup, Robert Rubin's company, these guys were supposed to be geniuses. We all knew they were being paid. Now we ask to find out -- they asked no questions. They had no answers. They were uncurious.

And this money is going out, Judy. We wouldn't give money to a welfare mother without restrictions. They're getting all of this money without restrictions. I think there are just enormous questions that have to be considered.

DAVID BROOKS: If I could just underline that, because the economists all agree we need to do this. They're dithering about. But one does have the feeling we're entering extremely dangerous territory.

The spending, some of it is just spending. Some of it is guaranteeing loans, which is either $7 trillion or $8 trillion. Somehow we're taking these gigantic decisions on a scale that is unimaginable. And those of us who are not economists are not fit to judge, but it seems to me extremely dangerous. I just hope they know what they're doing.

JUDY WOODRUFF: But are you saying you think President-elect Obama is not vetting these people sufficiently, that he's not asking the tough questions...

DAVID BROOKS: Well, this is over the past year.

MARK SHIELDS: No, I'm not faulting him. I'm simply saying we're doing this as a country, sort of blithely and uncritically. I mean, we assumed -- the responsibility of $306 billion of Citigroup this past week, all right?

Were there any boards of directors members held accountable? Were they questioned? Were there any restrictions? Did we ask anybody?

I was in Washington, D.C., when Lee Iacocca was head of Chrysler. He came for a billion dollars -- $1 billion -- in loan guarantees to ask the Congress. Jimmy Carter was president.

Before he came, the first thing he did was get $2 billion in concessions from his own workers, both white-collar and autoworkers, and from his suppliers and dealers, Judy, and he took a dollar a year himself in salary.

Now, these guys are still sitting there, they're all living like it's 1929, and they're living large, and they're expecting their bonuses. And I'm just looking for a little bit of patriotism and a little bit of obligation imposed for this money.

JUDY WOODRUFF: So essentially you're saying, even with a new team coming in, there's not yet the confidence they're going to be doing things differently?

DAVID BROOKS: Well, I'm just daunted by the scale.

MARK SHIELDS: The scale is...

DAVID BROOKS: We used to debate over $5 billion. Now it's $700 billion this week, it's $800 billion the next week. It's just a gigantic scale.

And this is not Obama or Bush. It's both. It's the entire economic consensus in this country, including the academic economists, the Treasury people, like Geithner, who's spanning the administration. We're just taking such big moves. You know, as I say, I just hope they know what they're doing.

Obama remains calm, visible

David Brooks
New York Times
And that's why I'm a little concerned with just the traffic jam of brains. In the tough times, will they really be able to work together? And who will coordinate all this, really?

JUDY WOODRUFF: Well, what's it going to take, Mark, to make -- to give people confidence that the right people are there and that they are starting to ask these tough questions?

MARK SHIELDS: Well, I think the face -- I think the face of the administration -- I mean, we're in an interregnum now. The face of the administration is definitely the president-elect.

And I think he did the right thing this week. He showed confidence, as we mentioned, in the selections themselves that he's willing to have this team of vipers, these intellectual vipers sniping at each other, and all the rest of it.

They're not going to be consensus; they're not going to be unanimous; they're not going to come in with a single opinion.

But I think the other thing he did in those three press conferences he had was he was a reassuring figure. He was calm. He was confident. He was informed. He was Barack Obama. And I think that was about the best he could do economically at this time.

JUDY WOODRUFF: And, in fact, by being there three days in a row, David, he's chosen to make himself more visible. Somebody said he's sort of a quasi-co-president, although obviously that's not legally true.

DAVID BROOKS: And the only thing I would say is enjoy these moments. I went back and read some of the pieces, including by me, that were written in 2001 about the Bush team. And they were all about what a star Paul O'Neill was and how Dick Cheney was so flexible.

And sometimes we get these things so wrong, and so that this is like spring training. Everyone's a star. But you've got to build in for the tough times.

And that's why I'm a little concerned with just the traffic jam of brains. In the tough times, will they really be able to work together? And who will coordinate all this, really?

Bush administration still active

Mark Shields
Syndicated Columnist
They're cooperating. The Bush administration has been really singular in its cooperative attitude and collegiality. They want it to work. They want it to be as seamless as possible. But it is sort of a limbo-like period.

JUDY WOODRUFF: How much are you worried, Mark, about this interregnum, or whatever word you want to attach, this transition period, where you have a very lame-duck president and a president who's been elected, but who isn't going to take office for another 55 days?

MARK SHIELDS: Well, I think we're very lucky that the president who is leaving was not defeated by the president who's coming in. Then there's bitterness oftentimes.

I mean, there was in 1980. There was in 1992. I think that how everyone feels about him, the Bush...

JUDY WOODRUFF: They're cooperating.

MARK SHIELDS: They're cooperating. The Bush administration has been really singular in its cooperative attitude and collegiality. They want it to work. They want it to be as seamless as possible. But it is sort of a limbo-like period.

DAVID BROOKS: But at the same time, we've had more domestic policy action in the last eight months than in the previous 80 years. It's not as if nothing is happening.

Hank Paulson is announcing one thing after another. The Fed is doing this.

MARK SHIELDS: Yep, that's right.

DAVID BROOKS: And so there's a lot go on. So, in one way, Bush is a lame-duck, but in many ways this is the most activist period of his administration.

JUDY WOODRUFF: And at some point, they'll run out of money to give away.

DAVID BROOKS: Well, they can always print more, which they seem to.

MARK SHIELDS: That's the terrifying thing, until they run out of paper and ink, they can continue to print it.

JUDY WOODRUFF: I guess that's what money is made out of, right, paper and ink? OK, Mark Shields, David Brooks, thank you both.