The Biggest What-If Hovering Over Obama’s Presidency

by William Galston | November 17, 2011

Senior officials don’t define administrations; presidents do, by making the strategic decisions that reshape events. For the latest confirmation of this age-old truth, we need look no farther than Jackie Calmes’s excellent article on Tim Geithner, the one economic advisor Obama “fought to keep.” Toward the end of her piece, she reports the following, which occurred on a conference call shortly after the 2008 election:

Mr. Obama spoke of the transformative domestic policies he had promised and now would pursue. Mr. Geithner, say people familiar with the exchange, cautioned that the crisis Mr. Obama had inherited was so severe that it would constrain him.
“Your legacy is going to be preventing the second Great Depression,” Mr. Geithner said.
Vexed, Mr. Obama replied, “That’s not enough for me.”

And there you have it: an advisor giving the president-elect wise advice, which was instantly rejected as insufficiently transformative. The rest is history.

From the moment he was elected, Obama had two agendas—the agenda of choice, on which he had waged his campaign, and the agenda of necessity, forced upon him by events. In effect, Geithner was arguing that the latter would require the president-elect to defer much of the former. Obama responded by deciding to do both, simultaneously. That is the choice that led to a year spent on measures such as health insurance reform and cap-and-trade legislation. While the former was successful and the latter failed, both initiatives no doubt measurably contributed to the Democrats’ 2010 mid-term debacle.

We will never know what would have happened if Obama had taken his Treasury Secretary’s advice, any more than Stephen King knows what would have happened if JFK had lived. Still, the possibilities are intriguing. Would the president have insisted on tougher treatment for miscreant financial institutions, starting with Citigroup, despite his Treasury Secretary’s evident misgivings? Would he have demanded a serious response to the housing crisis, despite his National Economic Council director’s belief that all the policy options were counterproductive and stupid? Would he have pushed to redeem his campaign promise to create a national infrastructure bank? Would he have traded additional stimulus for a long-term agreement on fiscal stabilization? Would he have figured out how to end the Bush tax cuts as part of comprehensive tax reform? Would he have broken the logjam on trade much earlier in his term? Would he have exerted more pressure on the Chinese for a comprehensive rebalancing of our economic relationship?

Of course, many of these moves would have required a modicum of cooperation from Republicans, something that was evidently in short supply during Obama’s first term.  But he might have gotten them to go along with a tougher stance toward the banks, as the nascent Tea Party revolt was demanding, and perhaps a firmer policy toward China, which even Mitt Romney is now advocating. Many liberals probably would be unwilling to trade the administration’s accomplishments in extending health insurance (however flawed they see it as being), for any of the economic options I’ve listed. But if growth doesn’t pick up over the next year and Obama ends up as a one-term president, his supporters will long ask themselves what might have been—if he had accepted the logic of his situation and played the hand he was dealt. 

William Galston is a senior fellow at the Brookings Institution and a contributing editor for The New Republic. 

Source URL: http://www.newrepublic.com//article/the-vital-center/97526/geithner-obama-advice