The Obama Economic Team: Yes They Can?

Watching President-elect Obama put together his economic team has left me a little nervous. Some, like Lawrence Summers and Robert Rubin, are Clinton retreads who have always been more concerned with corporate interests than with working families. Geithner I'm not as sure about but judging by the exuberant reaction from Wall Street, he probably more one of them than one of the rest of us. I might be wrong; I don't know. That's why I'm nervous-- despite reassurances from even someone as inherently pessimistic as Nouriel Roubini. On the other hand, I do know Rahm Emanuel, another Clinton retread that Obama scooped up, and I know what a disaster that's going to be.

E.J. Dionne, in today's Washington Post writes that Obama's choices are sending a clear signal: "He wants his actions to be big and bold. He sees economic recovery as intimately linked with economic and social reform. And he is bringing in a gifted brain trust to get the job done." That sounds good but I'm not certain it's not 80% Dionne's wishful thinking and 20%... everyone else's prayers. Still, Dionne makes a good case:

Obama is also using the crisis to make the case for larger structural reforms in health care, energy and education-- "to lay the groundwork for long-term, sustained economic growth," as he put it. Obama clearly views the economic downturn not as an impediment to the broadly progressive program he outlined during the campaign but as an opportunity for a round of unprecedented social legislation.

"He feels very strongly that this is not just a short-term fix but a long-term retooling of the American economy," said one of Obama's closest advisers. "Obama has a holistic view of the economy. Health care is going to be part of it," the lieutenant told me, and so will green energy investments, education reform and a new approach to regulating financial markets.

Obama further underscored his decision to tether social and economic policy by linking his announcement of Melody Barnes as the director of the White House Domestic Policy Council to the unveiling of his economic team.

OK, I'm breathing a little easier. And a friend of mine who works on Capitol Hill made me actually feel good when Peter Orszag was named to head the Office of Management and Budget, who Ezra Klein had already assured us means Obama is serious about not putting off health care reform.

Orszag will be coming from the Congressional Budget Office, OMB's legislative cousin. There, he's shown an almost single-minded focus on health care reform. He's added dozens of health care analysts to the staff, reconstructed the health policy division's management structure, and is readying to release two major books on health policy options and CBO's health care scoring models that will be extremely central in how Congress looks at building a health care bill. Amidst all that, he's toured the country giving a slide show about the problems of the health care system, the overwhelming danger it poses to our fiscal condition, the incredible inefficiencies that beset the delivery, and the research that suggests reform could not only save money but also improve care. He's also acted as a powerful and credible counterweight to those who counsel incrementalism, or delay, on health reform. Indeed, when it became common to suggest that the bank bailout should displace ambitious agenda items like health care reform, Orszag took to his blog-- yes, he has a blog, did I mention that?-- to write:

Many ob-servers have noted that addres-sing the probl-ems in finan-cial markets and the risks to the economy may displace health care reform on the policy agenda... Although it may not seem immediately relevant given our current difficulties, it will be crucial to address the nation’s looming fiscal gap-- which is driven primarily by rising health care costs — as the economy eventually recovers from this current downturn. Indeed, our ability to address our current economic difficulties (through both financial market interventions and potential additional fiscal stimulus) would be severely impaired if investors were not so willing to invest substantial sums in Treasury securities without charging much higher interest rates. That willingness reflects the (currently accurate) view among investors that Treasury securities are extremely safe investments.

If we fail to put the nation on a sounder fiscal course over the next few decades, though, we will ultimately reach a point where investors would lose confidence and no longer be as willing to purchase Treasury debt at anything but exorbitant interest rates. If that were to occur, we would lack the kind of maneuvering room that we currently enjoy to address problems in the financial markets and the economy. So if you think the current economic crisis is serious, and it is, imagine what it would be like if we didn’t have the ability to undertake aggressive and innovative policy interventions because creditors were effectively unwilling to lend substantial additional sums to the Federal government…

That left me chanting "Yes, we can, Yes, we can" and thinking that Emanuel might not be as terrible a choice-- or at least one the nation will survive-- as I thought. And that's when my old pal-- and former Emanuel defender-- chimed in that he used to make a point of watching every hearing Orszag testified at. "He was like a human calculator in a way, kind of a ruthless competence, but the calculations were always around how things actually affected working people and those who needed help, had a way of shooting down Republican jibberish that left them slinking off."

OK, OK... I'm back off the limb and remembering how smart Obama is and that I had resolved to trust him. Whew. Cause we're not just talkin' about being a little-- or even a lot-- better than Bush or McCain now.