Shortly after Greek Prime Minister George Papandreou took office last fall, he learned that he’d inherited a massive booby prize: a budget deficit that was twice the amount the previous government had disclosed. But, when Papandreou came clean and promised to address the problem, the financial markets reacted violently. Interest rates soared, adding billions in debt-service costs to an already dire budget picture.
One of the enduring mysteries about White House chief of staff Rahm Emanuel is why he took the job in the first place. At the time he accepted it, he was the fourth-ranking Democrat in the House of Representatives, a position he’d attained with considerable effort. Two years earlier, Emanuel had chaired the House Democrats’ campaign arm and led the party to a 31-seat majority after a decade of futility.
On January 21, in an abrupt change of policy, President Obama announced his intention to take on the big bankers who have brought us so much trouble. “If these folks want a fight, it’s a fight I’m ready to have,” he said with a clenched jaw at a press conference.
Bill Clinton didn’t know he was in big trouble until the very eve of the November 1994 election. Barack Obama knows now, barely a year into his presidency. While the party loyalists can blame Martha Coakley’s defeat on her ignorance of Red Sox baseball, it was clearly a message to the president and his party. Yes, a less inept candidate might have beaten Scott Brown, but if Obama and his program had been more popular in Massachusetts, even Coakley could have won--and by ten points or more.
For the handful of people in charge of saving the U.S. economy, it’s been a grueling season. The last eight months have featured endless back-and-forths, tense stalemates, and spirited confrontations. Larry Summers, the president’s chief economic adviser, has drawn blood with his lacerating quips. Treasury Secretary Timothy Geithner has dropped expletives to signal his frustration. Even their aides have gotten in on the action.
And, in those rare instances when the wonks get a break, they step outside their conference rooms, loosen their ties, and do the same thing all over again. On a tennis court. For years, Summers, Geithner, and a variety of deputies have stared each other down from opposite sides of a three-foot-high net. These tennis relationships have played out on courts from Jackson Hole, Wyoming, to Davos, Switzerland, and on pretty much every flat surface in Washington, D.C. It turns out that tennis is the unofficial sport of the Obama financial team. And, if you want to understand the way its members go at it behind closed doors, it’s worth watching them go at it with tightly strung rackets.
Barack Obama looks like he will succeed where three Democratic presidents, Harry Truman, Jimmy Carter, and Bill Clinton, so famously failed--by passing health care reform. That is an achievement for which posterity will likely reward him. But it may not help him and his party avoid setbacks at the polls.
Long before Martin Wolf became the chief economics columnist for the Financial Times, he wrote the newspaper letters--lots and lots of letters. It was the early 1980s, the height of the Thatcher era, and Wolf was running research at a think tank in London that was sympathetic to the government's pro-trade agenda. The FT's letters section became the ideal place to take to task all those who would stand in the way of the first waves of globalization.
The annals of Sino-American relations have seen more than a few celebrity-diplomats: Henry Kissinger, a young Richard Holbrooke, and, of course, the current secretary of state. But, unless the record has been lost to history, none has ascended to this rarefied plane of geopolitics while running the Office of Management and Budget.
And yet, there was budget director Peter Orszag rushing to a lunch with Chinese bureaucrats on a Monday in late July. To his surprise, when Orszag arrived at the site of the annual U.S.-China Strategic and Economic Dialogue (S&ED), the Chinese didn't dwell on the Wall Street meltdown or the global recession. The bureaucrats at his table mostly wanted to know about health care reform, which Orszag has helped shepherd. "They were intrigued by the most recent legislative developments," Orszag says. "It was like, 'You're fresh from the field, what can you tell us?' "
Simon Johnson, professor at MIT's Sloan School of Management, senior fellow at the Peterson Institute for International Economics, and co-founder of BaselineScenario.com, offers support for Treasury Secretary Timothy Geithner's expletive-laden outburst against financial regulators, arguing that their selfish opposition to Obama's plan is putting us all at risk.
This year, Nouriel Roubini, the economist known to the general public as Dr. Doom, Prophet of the Financial Apocalypse, spent the early hours of Mardi Gras on the floor of the Frankfurt Stock Exchange. It was only 11 a.m., but the party was rollicking. Traders careened around the floor, hooting and honking, dressed as dragons and devils and convicts. Rock music roared overhead, and no one seemed to care that, by the bye, the market had tanked.
Almost four months after his inauguration, President Barack Obama is still riding high in the polls. According to Gallup, 66 percent of Americans approve of the job he is doing. But I expect that Obama’s popularity will begin to fall, even plummet, as the leaves turn brown. That’s not to say he is doing a bad job, but that the tasks he faces in fixing the economy remain daunting, and beyond resolution in his first year or, perhaps, even first term.
