Image Taken from Barnes & Noble

Of the entire Obama economic team–perhaps even the entire White House staff–the two men who most embodied the sensibility of President Barack Obama were Timothy Geithner and Peter Orszag. As Obama’s treasury secretary and budget director, respectively, they worked closely with Obama over the first two years of his administration and had an enormous impact on a wide variety of initiatives, routinely triumphing over their usual opponents, Larry Summers and Christina Romer. These four were by far the most consequential members of the initial economic team, with Orszag and Geithner ascendant. The two are nearly alter egos for Obama himself–laid-back, drama-free personalities, uber-technocratic, contemptuous of domestic partisan squabbles. Over the nearly two years they served together in the Administration, they worked in unison to shape the course of the Obama Era.

And, aside from the minor accomplishment of keeping the entire world from outright penury, they performed mostly disastrously. Noam Scheiber’s new book The Escape Artists focuses squarely on Obama’s economic team for the first two and a half years or so, right up until the debt ceiling and its aftermath (of which I have already written more than enough, and won’t say much here). Peter Orszag was the driving force behind the Obama Administration’s shift from fixing the economy to trying to tackle deficits, mainly through the vehicle of healthcare reform, which he alone among Obama’s advisers supported taking on. Nearly everyone else thought the timing was wrong, but Orszag saw the issue as key to taming deficits. He did not, so far as I could tell, see it as having any social justice or moral dimensions. This explains one of my longest-standing questions: why did the White House go about selling health care solely in terms of “bending the cost curve”? Sure, the notion that emergency room-centric care amounts to the least efficient single-payer system imaginable is a strong argument to reform the system, but it’s also one that happens to be wildly out of step with why actual voters would support reform. Well, that question is now answered: because Peter Orszag saw the issue in terms of deficits, and he and Obama were certain that if they kept to that line of argument, they could get a big bill with bipartisan support without too much fuss. Because, hey, cutting the deficit is Republicans’ thing, right? Reading this makes quite a bit of sense, actually. The whole strategy was to try to avoid a partisan bill and/or an ideological struggle. As it turned out, not only was that not a possibility, but by not getting their case out there first and getting it out there loudly, opponents of reform mobilized and defined the law to the public. Obama’s speech to Congress defending his plan is iconic, but it was the opposite of how he wanted to accomplish this goal. And ironically, this would be the debate that turned every subsequent debate into an ideological struggle.

Our other major player Tim Geithner is a more complicated commodity. The book, to its credit, takes him and his concerns seriously, and they’re rarely pointless. Geithner saw the ideas of punishing the banks and rescuing them as a binary choice, which it probably was, and his focus for the rescue was that letting the global financial system deteriorate would be a far worse thing than taking on some domestic baggage politically. But the problem with Geithner, really, was that even after this was accomplished, he didn’t ever start taking notice of the political baggage he was accruing on the Administration’s behalf. Scheiber contrasts Geithner with Commodity Futures Trading Commission head Gary Gensler, saying that Gensler couldn’t run a meeting well but he was an amazing politician, almost singlehandedly reshaping the derivatives debate from a perch atop a small subcabinet agency, while Geithner was great in meetings but a crappy politician who almost killed his political career in his first major speech as secretary. Singularly crappy in fact: he delayed financial regulatory reform, softened numerous provisions of it, transferred more authority to regulators under the assumption that giving them more authority would solve the financial crisis (seemingly ignoring the pervasive reality of regulatory capture) when he wasn’t terrified of harming the financial institutions he considered vital to recovery. Geithner is no crook, but he is biased, though subtly so. His fear of harming the banks is almost pathological and had the effect of insulating them from even the most modest attempts at achieving social justice, and his equal faith in regulators (like himself!) kept Dodd-Frank from being nearly as effective as it could have been. He was captured and didn’t even know it. Funny enough, though, he was one of the few who foresaw the trainwreck that the debt ceiling standoff would become, which gives him some credit in my book, though his relentless focus on deficits was also part of what drove Obama to be so desperate in favor of a deal.

The irony of this situation is that, on paper, Obama has little in common with Geithner and Orszag. They’re both finance guys who never faced a voter between them in their lives. Obama, though, shared quite a bit in common with Summers and Romer: all are former professors and intellectuals. But they never managed to have the breakthrough impact with Obama that the others did for a few reasons. For one, Summers fancied himself as knowing the Ways of Washington since he’d spent quite a bit of time there (he’d previously had Geithner’s job), but he never really figured out the Ways of Obama, and his superiority and occasional bullying made a poor impression on the chief executive. Another reason was that Romer was a complete neophyte to D.C. and didn’t really know how things worked there, and her loudness and persistence in arguing for more attention on unemployment and anemic growth became increasingly shrill and undesirable among the core Obamans. But ultimately, as Scheiber notes, the two found themselves simply pushing against an immovable force. Barack Obama came to office with a phenomenally ambitious agenda, which remained entirely intact after the ’08 financial collapse, it just had a few more things thrown atop it. Faced with one clique encouraging him to push forward with what he wanted most to do (health reform) and one clique that wanted him to stop, go back and re-do item number one on the list, I guess it’s not surprising he didn’t do it. Especially since that clique weren’t quite able to click with Obama in the way that Geithner-Orszag did.

And so, finally, we wind up with Obama, who is a minor but obviously important character in the book. I’ve decided that we should be a bit more charitable to Obama. According to the definitive book on the subject, it took Tony Blair about three years to figure out exactly what kind of government he wanted to run, spending the intervening time with fuzzy notions of centrism and reform before deciding to actually take on a real philosophical identity: social democracy. If Obama has in fact figured out who he wants to be–I’m not quite prepared to say the case is closed–it wouldn’t have taken him as long as it took Blair. Actually, he and Blair are remarkably similar characters–young, charismatic, longtime legislators who won huge elections and were in over their heads immediately after taking office. Both had grand dreams of changing the very nature of their political systems–Tony Blair’s “new settlement” vs. Obama’s “new foundation”–as well as a similar distaste for old orthodoxies and old fights. But the problem Obama made was in dismissing all this Washington claptrap while not really understanding the nature of these fights. He preferred to see Republicans as being just as exhausted with pointless bickering as he was, when they were typically the ones starting the bickering. His trust of John Boehner ranks up there with G.W. Bush’s trust of Vladimir Putin, but more broadly he trusted the system that he once called broken–he trusted opposition leaders to be responsible and clearheaded, he trusted the media to faithfully report what was going on, he trusted his party and base to trust his intellect and experience in running a technocratic process, even while he ignored their views and contributions. The truth is that technocratic government is only possible in an environment when there is broad agreement on the issues. For better or worse, we live in an ideologically polarized environment, and to act as though it were possible to somehow sidestep that dimension of our moment in history is doomed to failure. That is where Orszag and Geithner tripped up time and again, from the Gang of Six to handling the banks–and it’s the one lesson Obama couldn’t and wouldn’t learn, at least not until after the debt ceiling. This misreading led to political pyrrhic victories that contributed to an increasing sense that the president was out-of-touch, too focused on transformative visions at a time when people were out of work, and furthermore they were visions that only policy wonks really understood because of all this “cost curve” business being at the forefront. Which, for the record, was a worthy goal, but not the one to use to sell the public with. The irony is that listening to the academics–Romer and Summers–would have actually lessened his Ivory Tower perception during this time. We would have seen more economic assistance, more jobs, and a more balanced view of economic and ideological conflict (admittedly an assumption, but honestly it couldn’t have been any worse). Instead, the disconnect between the president’s focus on cutting health care costs and his other goals created an enormous distance between himself and the public, one which turned out to be somewhat latent (his poll numbers stayed up), but which would be filled by the Tea Party.

Scheiber’s book is well-written and scrupulously thorough. He has a point of view but does everything he can to explain why these people thought what they did, and you do get a sense of them from the book. This is a book that expresses a certain level of criticism of the White House during the bleakest days of the Obama Era but I find it hard to find someone who was obviously the target of a hatchet job. Really, the closest thing this narrative has to a villain is David Plouffe, Obama’s former campaign manager and eventually one of his top White House aides and almost certainly not an economist, who was one of the big proponents of the disastrous debt ceiling negotiations undertaken by the Administration, justifying it by insisting that “independents” demanded huge spending cuts, and quickly. Say what you will about the hollowness of deficit madness, but at least it’s an ethos.