Today we have simultaneous reports of the lack of oversight and continuity of focus by the Bush Administration's Treasury Department. Treasury has displayed the potential to squander any real, positive impact on the economy that its $700 billion financial bailout plan may once have had.
The New York Times reports on the massive lobbying effort by major financial institutions to acquire most if not all of the Treasury's bailout allocations.
Secretary Henry Paulson, the Times reports, has now shifted away from his original focus on buying up troubled assets in favor of direct infusions of Treasury allocations into major financial firms themselves. Who can right this ship?
Draft Paul Krugman for Treasury Secretary!
Update: Krugman gaining on Geithner in NYT poll!
Make your voice heard after the fold...
You can make Paul Krugman your pick for Treasury at this interactive NYT Cabinet Selection page, where Paul Krugman is (as a write-in!) already #4 on the list of reader picks. Write-in Paul Krugman! Do it now!
Progressive economist and recent Nobel Prize winner, Paul Krugman wrote a stirring endorsement for an aggressive economic recovery program in his regular column on Monday. The column, under the title "Franklin Delano Obama" is excerpted below.
Suddenly, everything old is New Deal again. Reagan is out; F.D.R. is in. Still, how much guidance does the Roosevelt era really offer for today’s world?
The answer is, a lot. But Barack Obama should learn from F.D.R.’s failures as well as from his achievements: the truth is that the New Deal wasn’t as successful in the short run as it was in the long run. And the reason for F.D.R.’s limited short-run success, which almost undid his whole program, was the fact that his economic policies were too cautious.
About the New Deal’s long-run achievements: the institutions F.D.R. built have proved both durable and essential. Indeed, those institutions remain the bedrock of our nation’s economic stability. Imagine how much worse the financial crisis would be if the New Deal hadn’t insured most bank deposits. Imagine how insecure older Americans would feel right now if Republicans had managed to dismantle Social Security.
Can Mr. Obama achieve something comparable? Rahm Emanuel, Mr. Obama’s new chief of staff, has declared that "you don’t ever want a crisis to go to waste." Progressives hope that the Obama administration, like the New Deal, will respond to the current economic and financial crisis by creating institutions, especially a universal health care system, that will change the shape of American society for generations to come.
But the new administration should try not to emulate a less successful aspect of the New Deal: its inadequate response to the Great Depression itself.
He continues:
The political lesson is that economic missteps can quickly undermine an electoral mandate. Democrats won big last week — but they won even bigger in 1936, only to see their gains evaporate after the recession of 1937-38. Americans don’t expect instant economic results from the incoming administration, but they do expect results, and Democrats’ euphoria will be short-lived if they don’t deliver an economic recovery.
The economic lesson is the importance of doing enough. F.D.R. thought he was being prudent by reining in his spending plans; in reality, he was taking big risks with the economy and with his legacy. My advice to the Obama people is to figure out how much help they think the economy needs, then add 50 percent. It’s much better, in a depressed economy, to err on the side of too much stimulus than on the side of too little.
In short, Mr. Obama’s chances of leading a new New Deal depend largely on whether his short-run economic plans are sufficiently bold. Progressives can only hope that he has the necessary audacity.