Sunday, July 25, 2004

previous entry | main | next entry | TrackBack (1)

I'll take bureaucratic politics for $300, Alex

Brad DeLong is puzzled by something:

Those of us who worked in the Clinton Treasury have been amazed at the remarkable loss of the U.S. Treasury's power within the U.S. government that took place on January 21, 2001. The Treasury's staff resources--both quantity and quality--are enormous. Its institutional memory is deep. Its links with its counterparts in other countries are strong. And it is not as though there was anyone in the Bush White House with both significant power and strong views on what economic policy should be.

Thus we have been very surprised at the inability of the Bush Treasury to make its mark--either in domestic or in international economic policy.

Brad then offers some explanations -- none of which flatter to the Bush White House.

Having been at Treasury during the transition, and having ruminated about this question, Brad's stacking the deck here. Focusing on international economic policy, what's striking about the second Clinton term is how much of an outlier it looks compared to what took place before and since. This wasn't only because of the strength of the Treasury team, but also a) the extent to which foreign economic policy impacted national security issues; and b) the relative weakness of Clinton's national security team.

Part of the reason Rubin/Summers were heavyweights was how they looked in comparison to Allbright, Berger et al. In December 2001, David Sanger wrote a lengthy New York Times retrospective on Clinton's foreign policy in which one State Department official admitted, "The State Department was simply not equipped to handle the new [foreign policy] challenges, so it stuck to the traditional ones.”

Fast-forwarding to the Bush team, a spate of stories came out pre-9/11 in which Powell, Rice, and Rumsfeld all said we're going to take back some slices of the foreign policy pie from Treasury. Combine that with:

a) A Treasury Secretary who had no, repeat, no grasp of the international dimensions of his job -- or any grasp of executive branch politics, for that matter;

b) A national security team well-versed in the bureaucratic dark arts and with closer personal ties to Bush; and

c) 9/11

It's not that shocking to see Treasury's relative influence waning.

posted by Dan on 07.25.04 at 01:29 AM


Not to mention that Democrats historically focus more on economic policy.

posted by: praktike on 07.25.04 at 01:29 AM [permalink]

“Brad DeLong is puzzled by something...”

I’m also puzzled by the fact that Brad DeLong still thinks he’s a serious player in the Democrat Party. Why does he continue living in the past? Hasn’t anyone told DeLong that Bill Clinton is not running for president in 2004? The latter gentleman unabashedly campaigned for free trade and a non adversarial attitude towards the business community. Clinton could slap the face of left wingers (like in the Sister Souljah incident) and still win the election. This is indisputably not the situation for John Kerry. The Howard Dean types are right there next to the Massachusetts senator. Brad DeLong obviously believes that the Deaniacs will allow themselves to be marginalized if Kerry wins the election. Is anybody else buying this fantasy?

posted by: David Thomson on 07.25.04 at 01:29 AM [permalink]

..he is keeping his options open, looking for 08.Bill knows he must look the part of "onboard"with J&J ,only to torpedo any real chances of winning this election or else...

posted by: Rob..NC on 07.25.04 at 01:29 AM [permalink]

Seems absolutely everything these days is spun into the political realm.

Having been engaged in international finance for thirty years, may I offer another, politically agnostic, reasons for the Treasury's current role?

First there has been an absence of full blown international financial crises over the past four years. Think Mexico by cointrast in the Clinton years, when both as a financial and diplomatic necessity, the US had to intervene to avoid international chaos.

Second, most of our trading partners in Europe (with the exception of the UK) have sunk into a state of economic torpor, and are likely to remain in that state for the forseeable future. Having just returned from two weeks on the continent, I am strongly of that view.

In short, vis a vis the EU, apart from an occasional trade spat, there is little for the US Treasury to do, other than maintain the US dollar exchange rate at levels that contribute to our ability to export, and therefore to continuing to stimulate the domestic US economy.

With regard to US we continue to jawbone China on its exchange rate policies.

Bottom line: the US Treasury has reverted to its traditional role over the past four years, both domestically and, above all, internationally.

The Treasury as an instrument of foreign policy a la Mexico is the exception rather than the rule.

Nothing to do with politics, or the Treasury Secretary, foe example. At least this Secretary didn't find himself in the exquisitely delicate posiiton in which Mr Rubin found himself in the Mexican crisis (vide Goldmna Sachs).

posted by: Leigh on 07.25.04 at 01:29 AM [permalink]

Well, making a war does change things, especially a war U.S. should not have been spending on.

Yes,O'Neill was of the business world. How many dealers with Rubin and the various NY houses and big money boys behind the scenes benefited with their funny moneys and later deals?
An administration of non-relevant experiences and completely out of control and discipline--just like its leader. Gee, which corporation(s) gave the Chinese satellite technology? How many missiles and subs is China has American money bought for them?

We Smart Independents can't haven't decided yet which administration has been worse for this country.

posted by: Alex on 07.25.04 at 01:29 AM [permalink]

Hmm, as of now -- I think we can say that Powell has been castrated -- Albright was far more effective. You yourself have repeatedly said Condi is incompetent. Which essentially means, Rummy andn Cheney have dominated the American political agenda and led us to where we are today.

posted by: Jor on 07.25.04 at 01:29 AM [permalink]

"Albright was far more effective." The Wicked Witch of the West, also known as Mad Maddy, accomplished exactly what? Kosovo? North Korea? Anyone? Beuller?

posted by: Lee on 07.25.04 at 01:29 AM [permalink]

The relative waning of Treasury's influence is bad in itself? For what reason?

posted by: Assistant Village Idiot on 07.25.04 at 01:29 AM [permalink]

As a journalist, I got the chance to interview both Bob Rubin and Larry Summers, and would say that both these men made the Treasury count because they were a: incredibly smart; b: had lots to do (handling the Mexico issue, WTO issues, Russia's debt-default fallout, etc). Yes, today's Tsy is perhaps overshadowed by foreign policy issues, but then Rubin and others had the Kosovo issue to compete with. Summers, by the way, has gone on to shine at Harvard.

Personnel matter. Bush has chosen to put relatively unassuming, quiet folk at the helm. O'Neill was out of his depth, while I don't know enough about Snow to evaluate how good he is, but he doesn't seem to have the same fizz as his Democrat predecessors. I guess it doesn't help if the White House is spending money like LBJ.

On a broader front, the most influential finance ministry right now is probably the British one, given the relative success and duration of Gordon Brown, at least on macroeconomic stability - a feat not seen in Britain for years.

posted by: Tom on 07.25.04 at 01:29 AM [permalink]

Brad DeLong is puzzled by something:

Dan, Frankly, DeLong is puzzled, as you put it, bu things more complex than breathing... and sometimes that gives him a problem, too, apparently. Of course that lack nevers eems to hurt his ability to attack Mr. Bush, or for that matter, anything to the right of, say, Che'.

Certainly, 9/11 refocused our attention.

And consider that with the Foreign policy types....(Powell, Rice, and Rumsfeld, et al) taking over their rightful domains again, Snow was the ideal fit for the job, for precisely the reason you mention. It strikes me as interesting that one of the things Clinton ran on was his lack of Forign policy expereince. I subit it was that lack of experience that caused him to misassign such weight to Treasury in the first place.

As for domestics...The reason for DeLong's confusion is as much political as anything else he does. Delong, being what he is politically, thinks the Command economy the way to go. Mr. Bush and his people do not.

And so, as you say...It's not that shocking to see Treasury's relative influence waning.

posted by: Bithead on 07.25.04 at 01:29 AM [permalink]

Post a Comment:


Email Address:



Remember your info?