Ten Miles Square


August 15, 2012 11:39 AM Who Should be the Next Treasury Secretary?

By Jonathan Zasloff

Four days ago, Ezra Klein reported that Erskine Bowles is the front-runner for Treasury Secretary in a second Obama Administration. It’s hard to think of any plausible Democrat who would be a greater disaster. Bowles has a man-crush on Paul Ryan; his chairman’s mark for his eponymous commission was simply an embarrassment on both political and policy grounds; a managing director of Morgan Stanley, he is Wall Street’s creature. He has no business running Treasury any more than I do. Take a look:

But if that is the case, then assuming (in best chickens-counting style) that there even is a second Obama Administration, who should the next Treasury Secretary be?

This isn’t merely idle blog talk (although I am under no illusions about RBC’s awesome policy influence). One great failing of progressives is that after the 2008 election, we simply celebrated. Wall Street did not: it got to work making sure that its people were in key positions, and that Barack Obama’s agenda would never challenge the financial industry’s power. That’s how we got Timothy Geithner at Treasury, Larry Summers at NEC, Ben Bernanke reappointed at the Fed, Bowles himself appointed to an absurd “deficit reduction commission”, Christy Romer sidelined at CEA, and ditto Elizabeth Warren.

So if, as anyone not committed to entrenched plutocracy should hope, President Obama wins a second term, the very next day should be devoted to making sure that President Obama does not make such disastrous picks again. That means being prepared to push very hard against rancid appointments like Bowles and in favor of someone else. I would hope that the day after Obama’s re-election, Al Franken and re-elected Senator Sherrod Brown call the White House and make it very clear that if they have anything to say about, Bowles will never be confirmed.

But who should be? A couple of notes: 1) at this stage, we should not worry about confirmability too much. The Republicans will seek to block anyone (whether by filibuster or otherwise), and at some point progressives will have to press President Obama to make a recess appointment; and 2) for what it’s worth (and it may not be worth much), there has never been a woman or a minority heading Treasury.

There are a few I can think of offhand: former FDIC chair Sheila Bair, former CFTC chair Brooksley Born, Paul Volcker (too old?), Gary Gensler, Christy Romer, Jared Bernstein. Hillary? I would be very wary: the Clintons created the Wall Street Democratic party, all of her advisors will be Rubinites, and if she wants to run for President in 2016, negotiating with Wall Street potential campaign contributors provides dark incentives. Still, she could be more progressive as a way of attracting primary support.

Paul Campos wants The Shrill One: that would be great, but I think that’s a little too far-fetched even at this stage. Nevertheless, Campos is asking the right question.

By the day after Election Day, progressives should have an answer. Because Wall Street sure will.

[Cross-posted at The Reality-based Community]

Jonathan Zasloff is a professor of law at the University of California, Los Angeles.


  • paul milbauer on August 15, 2012 9:04 PM:

    Fine article. But I take strong exception to the favorable comments about Christina Romer. True, she correctly warned that Obama's 2009 stimulus was too small. But that hardly took great prescience. She merely looked good compared to the even more obtuse neoliberals who surround Obama. Romer is unquestionably a "New Democrat" rather than a traditional Democrat. She supports the awful and unnecessary Simpson/Bowles plan. In her frequent NY Times guest columns, she constantly call for cuts in future Social Security and Medicare benefits for those not yet retired. (Although retirees themselves don't escape unscathed under Simpson/Bowles.) Additionally, Romer regularly urges the Fed to intentionally and aggressively try to raise the inflation rate. So, in Romer World, middle class older Americans would not only lose retirement benefits; whatever savings they might have would be eroded through inflation. And, they'd have little hope of recouping these losses by working longer; corporate America won't hire them and they're being laid off in droves. Romer goes light on the class/inequality explanations for our economic woes and instead regularly emphasizes the odious, wrongheaded "generational equity" arguments made by the likes of Tom Friedman. Romer's approach can be summarized thusly: Throw the Baby Boomers under the bus for the greater good. As someone in his late 50s and with family members in their late 50s, I say to hell with Christy Romer.

  • JM917 on August 16, 2012 11:18 AM:

    Paul Krugman. Robert Reich. Joe Stiglitz. Peter Diamond... It's an embarrassment of riches.