Watching Geithner I recalled that the president had declined to take questions about the new financial stability plan at his press conference on Monday. He didn't want to steal the spotlight from the Treasury secretary on Tuesday, he said. He jokingly urged the press to turn up for that: "He will be terrific." Well, he wasn't, and I'm not just talking about the anxious hesitant delivery.
What Obama said on Monday struck me as a bit odd at the time, as though he was most concerned about the performance aspect. Now it seems odder. The president knew what we now know, that the next stability plan does not yet exist. The breathless build-up for today's announcement had led everybody to expect an actual plan. When the Treasury said, "We're still working on it," Wall Street recoiled, and the White House should not be surprised.
On the substance I agree with most of what Martin Wolf says--though I think he greatly underestimates Obama's difficulties. Martin finds it astonishing that Obama failed to dictate the terms of the fiscal stimulus to Congress, or that his team is looking for a way forward that avoids (at some cost in added timidity) the need for new Congressional approvals. I recommend a reading of the constitution. It is very short and very clear. Obama simply cannot do what Martin wants him to. This is not the UK. Obama cannot dictate the law as though Congress were not there.
Public opinion is a big problem too. US politicians have a terrible habit of paying attention to it. If the country is set against Obama's remedies, getting those policies enacted will be extremely difficult. This is why nationalising insolvent banks, and acknowledging the costs upfront, is a nettle the administration is not yet willing to grasp. On the other hand, if Obama can get the country behind the bolder measures that Martin and I think are necessary, Congress would go along. But this step of persuading the public cannot be skipped. If Obama stakes it all and projects the uncontained sense of alarm that Martin feels (as do I), and the public chooses not to go there, he has lost them and his presidency is over--and we still won't have the right policies.
It is true that the biggest mistake the administration can make is to do too little. The point is, it may have no choice but to do too little.
Which brings me back to reservations I have already expressed about the economics line-up in the administration. Obama is not at home with financial and economic policy. On these issues, for all his talents, he does not speak authoritatively. His posture is, "I rely on my experts." I don't think that's going to work. There are too many of them, and nobody has so far emerged as the principal spokesman. Geithner was up for that part, of course. His troubled confirmation set him back, though. While he is an exceptionally able guy, this morning he did not look as though he has the necessary salesmanship. Meanwhile, the man regarded as the dominating intellect--Larry Summers--has been keeping a lowish profile.
If economists outside the administration weren't so busy squabbling among themselves, perhaps they could help. I watched Paul Krugman and Ken Rogoff on the PBS News tonight. They were excellent; they were clear; they made the same criticisms of the plan that I just did: that Geithner forgot to bring it. Consensus! More of that could do some good. (There, Paul, my hysteria has subsided.)