Our Foreign Policy Minsky Moment

If there can be any kind of silver lining to our ongoing “Great Recession” it might be that it has elevated the level of economic discussion, at least slightly. For instance, when’s the last time you heard anyone talking about the “magic of the marketplace?”  On the contrary, a fair number of writers and economists seem to have experienced recovered memories of things the country once used to know – like that a capitalist economy is cyclical and inherently prone to crises such as the current one.  In this, the ninth year of our Afghanistan War, the discussion of our foreign policy cries out for similar flashes of enlightenment.

The most interesting economic concept to emerge from recent obscurity is the “Minsky Moment,” Hyman Minsky having been an economist who described a type of social amnesia that occurs as people will themselves into believing that business cycles are things of the past as they engage in riskier and riskier financial activity.  Admirers of Minsky, who died in 1997, named the point when the dream comes crashing down into the nightmare of the next financial crisis after him.  Minsky saw several stages to the process, as gradual societal memory loss of past depressions and recessions leads to something of a state of euphoria when we may hear arguments, such as heard only a few years ago, that transformative innovations like computerization and the Internet have created a “new economy” of permanent prosperity.

Looking at the course of American foreign policy from the Vietnam War to the current day, it is hard to miss a similar dream cycle playing out there.  After Vietnam, a new sense of modesty came over American foreign policy.  Yes, our military could unleash destruction upon southeast Asia that was in some respects unmatched in world history.  And, yes, we might be able to keep it up indefinitely – we would not be “defeated” in the conventional sense.  But the ultimate message of that war was No: No matter what our military might, we could not impose our will on a country that did not wish to have its system dictated by foreign armies from halfway around the world.

Not every one approved of this national dose of humility, of course.  The “Vietnam Syndrome” was roundly denounced in interventionist circles, as the new reticence toward foreign military intervention steered policymakers toward subversion rather than invasion.  Nicaragua can probably thank the Vietnam Syndrome for the fact that Ronald Reagan merely funded its government’s  political and military opposition rather than engaging in full scale invasion.

But slowly the memories faded and were replaced with new ones.  The first George Bush’s Gulf War did not turn into a quagmire. And Bill Clinton’s bombings of Somalia, Bosnia, Sudan, Afghanistan, and Yugoslavia sort of returned the country to its old habits. The euphoria stage surely arrived with the second George Bush when a senior adviser to the President could inform a reporter that he was merely ”in what we call the reality-based community” who ”believe that solutions emerge from your judicious study of discernible reality,” while the White House recognized that ”We’re an empire now, and when we act, we create our own reality.”

We have left that stage, clearly. A statement like the above now seems as unimaginable as it did in the first decades after the Vietnam War.  Yet the turnaround is obviously far from completed; the country has not really shed the omnipotence illusion.  For, while the rationale for the Iraq War may now be widely understood as farcical, the Afghanistan War remains on the upswing.

Every war is different, to be sure, and at one point the Afghanistan and Vietnam Wars appeared to have little more in common than the fact that they were on the same continent.  After all, who could be further apart than the communist Viet Cong and the fundamentalist Taliban?  But as time has passed an overwhelming resemblance has come to the fore: Both wars are attempts to “create our own reality” in countries that have many times demonstrated that they will not allow this to happen.

Our foreign policy Minsky Moment, if there is to be one, will certainly not originate in the White House or the Pentagon, though. The White House would be too afraid of the political consequences of facing the facts and the Pentagon would be too embarrassed to do so. We will have to figure out how some other way to wake the country from its dreams.

Sex Scandals and Politics: A New Norm?

In light of David Vitter’s political survival and the apparent political comeback of Eliot Spitzer written on the wall, I began to think back to a simpler time, a time when sex was taboo and charlatans claimed a 100,000 Dow was possible.

When thinking about such a time, I also remembered chuckling a few years back when I saw a particularly astute bumper sticker that read:

When Clinton Lied, Nobody Died

In the midst of the many abuses of power by the Bush administration, not seen since Watergate (and probably Teapot Dome before that), it seemed funny in retrospect how obsessed many had been in the late 1990s, just a few years before, about President Clinton’s zipper problem with the infamous Ms. Lewinsky.

Many of the popular defenses of Bill Clinton’s behaviors during the aftermath of the Lewinsky affair seemed to be based on two lines of thought:

1. This sort of behavior was nothing new among American Presidents.

Popular icons such as FDR and JFK were anything but faithful during their days in the White House. While no evidence exists about oral favors in the Oval Office per se, speculation about JFK makes Clinton’s behavior look like an ABC Family Special. Granted the press also conveniently never mentioned that FDR was in a wheel chair or that Kennedy was in ill health. In addition, for anyone who has watched the television series Mad Men knows, it was a different time. It was before the sexual revolution, it was before Watergate and the loss of trust between the public and its politicians, and most importantly, it was before the rise of the popular press and cable news (not to mention the internet). There wasn’t the competition we see today, and those in power were good friends with those in the media. For good or bad, it was a good old boys club with respected boundaries.

2 . This sort of thing was not a big deal elsewhere in the world.

This line of thought was especially interesting to me as at the time when I was studying European politics. It seemed that all of the institutional factors that had arisen in the US, such as the popular press, the internet, and the devolution of the good old boys club, had all occurred in Europe as well. However, unlike the US, despite the fact that the public now knew about the personal faults of their leaders, it seemed that the public didn’t give a damn. The easy explanation for this at the time was that Europe didn’t have the same evangelical and fundamentalist tradition as the US and was far more secular. As such, they didn’t see their politicians as moral role models and therefore could properly separate their actions as individuals from their policies which actually affected their pocketbooks.

As I read a Newsweek snippet that claimed that Bill Clinton’s survival was the exception to the rule of death by sex scandal, I began to wonder whether or not Bill Clinton’s scandal was not an exception, but rather an inflection point in the ethos of the politics of sex scandals. The more I thought about this hypothesis, the more it seemed to make sense. If this were true, what then could be the reasons for this new dynamic?

The Moral Crusaders Went Too Far

This argument goes on the assumption that politics works like a pendulum in the sense that one side often goes too far, which then causes a big backlash that moves the pendulum swinging back in the other direction. From a cultural perspective, this argument would start somewhere back in the middle of the 20th century. Out of the economic and war torn family unit of the Great Depression and World War II emerged a period from the late 1940s to the early 1960s that is sometimes referred to as the neo-Victorian era. This period of unprecedented economic prosperity enabled a return the one worker per family norm that hadn’t been seen in several generations. However, “hi honey, I’m home” had run its course by the mid-1960s, and the pendulum swung far back to the cultural left with the rise of the sexual revolution, the flower children, and a general destruction, for good or bad, of the morals and cultural norms of the previous period. This period in turn ran its course with the excesses of the 1970s, and by the early 1980s the new “moral majority” had risen to power and catapulted conservative California governor Ronald Reagan (who was once deemed far too conservative to ever be elected president) to power. This backlash/pendulum argument would then speculate that this moral majority movement had gone too far, starting with the Lewinsky affair and ending with the assault on homosexuals and immigrants in the years to follow.

Generational Changes

Tied to this previous explanation is the fact that just as the moral majority was stepping too far, new generations began to come of age who cared little for the wedge politics that defined their parents and grandparents generations. Many in these new generations X and Y had grown up in broken families, had a parent who had strayed, and had had friends of different races and sexual orientations. To many in these new generations, things weren’t as black and white or as us versus them. Simply put, most young people don’t care about consensual adult sex.

Context is Everything

Finally, as hinted at before, in the light of Bush’s abuse of powers and the overall failure of a presidency, all of 1990s’ political scandals seemed so feeble in comparison. Dear God, how naïve were we back in those roaring 90s? This argument is not only the easiest to explain, but is also needed by default to even begin to explain and/or justify the previous arguments. This would also seem to imply that any movement of the past decade in cultural norms is anything but nonreversible. If history is any guide, there is likely to be at least one step backward before we can necessarily begin to move forward. Conservative cultural forces in the United States are too strong and too entrenched to simply fade away.

What’s Next?

Granted, it will be years before we will know for sure whether the recent cases of David Vitter or Eliot Spitzer are evidence of a new dynamic or confirmation that our cultural pendulum has not swung much after all. Perhaps in the context of American evangelical traditions, American politicians with loose zippers can now finally be born again.

Blowback: The Economy or the Military?

During the long years of the Cold War, not many dared to question the US military budget. Since then, however, the budget has continued to expand, often sending troops overseas to situations that were created by previous diplomatic blunders. Some of those blunders have directly created the morasses that we attempt to extricate ourselves from today. As such, let’s take a look at some of the history of what the CIA refers to as blowback for the U.S.

Brief Blowback History

In 1953, Iran, or Persia as it was then called, had a functioning democratic system. A successful coup by the CIA and British Intelligence overthrew the democratically elected government and replaced them with the hereditary Shah of Persia. His abuses and misrule led directly to the Islamic Revolution and the problems we have encountered with their Islamic government ever since. In the early 1980s, Iraq thus was encouraged to invade Iran, by the US in a fit of pique, and was supplied with arms in the resulting war. This assistance helped solidify Saddam Hussein’s military ambitions and indirectly encouraged his invasion of Kuwait in 1991, all of which led to the mess in Iraq today.

Meanwhile during the 1980s, the military assistance given to the tribes opposing the Russian occupation of Afghanistan led to the Taliban taking over the country. These people, who were responsible for 9/11 (despite what the Bush administration’s claims to the contrary), are whom we continue to fight today in Afghanistan. In addition, they also have brought the war on terror to the nuclear-power country of Pakistan.

Bill Clinton didn’t help matters, when he, in the midst of the Monica Lewinsky affair, launched Tomahawk missiles against suspected Al Qaeda munitions facilities at a site in Sudan and the Bora Bora site in Afghanistan where Osama Bin Laden was thought to be. This was in retaliation after US embassies in Kenya and Tanzania had been previously bombed. One of Tomahawks destroyed a human and veterinary manufacturing plant in Sudan, killing at least 20 Sudanese and putting many out of work. The Sudanese government immediately cut off all ties with the U.S. and released an important Al Qaeda suspect they had been about to hand over to the U.S. The Tomahawks in Afghanistan missed Bin Laden totally–he was in Kabul at the time. He in turn sold an unexploded Tomahawk to the Chinese for 10 million dollars. Worse, almost all of Africa, who had been outraged over the Embassy bombings by Al Qaeda, swung against the US policy after the bombings. Sound familiar?

In addition, it is clear to most of the world, though rarely reported in the US, that huge military assistance to Israel keeps them so dominant that they often disdain from entering into meaningful dialogue with the Palestinians or other nations in the region. Without meaningful legitimate political channels, arguably, that may have in turn indirectly led to the cult of the indefensible and grotesque suicide bomber.

Similar situations of blowback have occurred on all continents. It is alleged that the policy of supporting vain, immoral megalomaniacs as leaders in the more unstable areas of the world could be summed up as, “We don’t care if he’s a bastard so long as he’s our bastard”.

In too many situations today, previous meddling in the internal affairs or politics of other countries has led directly or indirectly to these messes that we may now face. If intervention leads to revolution or serious instability in the country involved, it is often inevitable that the beneficiaries of the situation will be the worst possible choices. It takes many generations for the situation to settle down and for the voices of reason make headway over the radicals who are always the initial power base. The French Revolution, The Russian Revolution, and the Persian [Iranian] Revolution are all cases in point

To return to the end of the Cold War, there was at that time, along with a feeling of relief that we were all suddenly safe, a hope that the troops could come home, and be discharged. That of course never happened. Why not?

The Military Industrial Complex

Today the US spends 46% of the total world’s military budget. The next 4 nations, the UK, France, Japan and China spend between 4-5% each. The US military budget has risen from 250 billion dollars in 2001 to over 700 billion in 2008. Thus, the sensible solution to help our failing economy would logically have to be to cut the military budget and bring everyone home. Wouldn’t that give us iron clad security at home? Maybe we could even make our inner cities safe and bring down the horrendous murder rate from the 17,000 yearly victims it is today.

Of course that is about as realistic as overall world peace. But why?

The answer to why that apparently sensible solution is currently a pipe dream was first given by President Eisenhower in 1961. Eisenhower was the first President, as a former General, to recognize the power of the Military Industrial Complex.

That term refers to an over friendly relationship between the government, the military, munitions manufacturers, and defense contractors. All in this relationship benefit financially, and unfortunately peace can get in the way. Eisenhower as a military man saw what could occur when future Presidents without military experience tried to go up against this Complex. They would be easily maneuvered by the military to react where no reaction was necessary, and to keep the US military equipped with constantly updated equipment and every new technology. Today, there is a defense contractor in every State of the Union. If there are cutbacks, you can be sure these workers will be out in force rallying senators and representatives at every level. The President will be lambasted across the nation and the Republicans will make hay. Any President to take on this issue will be lauded by history, but unlikely to win a second term.

Will Barack Obama be able to break this endless cycle to prevent the never ending cycle of blowback? If recent history is a good predictor, it certainly won’t be easy. For the sake of the rest of the world, let’s hope for the best.

Obama’s Progressive Street Cred

The selection of Rick Warren for the invocation at Barack Obama’s inauguration is troubling, to say the least. Many progressives are rightly outraged at the selection of a man who is virulently anti-choice and homophobic. Yet, this is only the latest in a series of Obama decisions that has left many progressives wondering who it was, exactly, they voted for. Apparently, “change” looks a lot like the Clinton administration. Rahm Emanuel is back. So is Eric Holder, formerly Deputy Attorney General. Most conspicuous of all, Hillary Clinton will be Secretary of State. A bevy of liberal-but-not-quite-progressive apologists have tried to explain away all of Obama’s decisions. Here is a list of some of their justifications:

• Obama is pursuing Abraham Lincoln’s “team of rivals” approach. Authors of this justification also cite Lyndon Johnson’s phrase: it’s better to keep one’s enemies “on the inside, pissing out” rather than “on the outside, pissing in.” By keeping his enemies in the White House, those enemies are not in Congress or on K Street trying to defeat his plans.
• Remember how we all said for six months that Obama’s qualifications don’t matter? Not so much. As such, he’s surrounding himself with a group of people who have experience working in a presidential administration, and the last Democratic presidency was Bill Clinton’s, so it only makes sense that he would choose people from there.
• Obama is sneakier than he seems (think I, Claudius, I suppose). He’s putting a lot of center-left (and, in some cases, center-right) Washington establishment politicians in key positions to pay lip service to that establishment. Don’t worry, it’s only a front. The real reforms are going to happen, but from behind a veil of mainstream non-reform. That’s the only way he can get things done down there.
• Obama does not want to continue the divisive politics of George W. Bush. Even though it might anger those on the hard left, Obama would rather heal and reconcile than punish.  Turn that cheek!

Some of these justifications are disturbing. The last one, that Obama should be conciliatory instead of punitive, is put forth by people who believe that the crimes of the George W. Bush administration should not be investigated. The country needs to heal, they say. It’s time to get on with the business of the United States, where “business” is defined so as to exclude investigations of the previous administration. Of course, this logic ignores the fact that the law has been broken. As Glenn Greenwald has observed, politicians are more than ready to throw the full force of the law at marijuana dealers, but when it comes to prosecuting their own, politicians are equally ready to be lenient, even though the marijuana dealer harmed no one and the politician may have, oh, I don’t know, been responsible for torture, extraordinary rendition, and warrantless wiretapping at the least. When crimes are committed, they should be investigated and prosecuted – not just for poor people, but for everyone, including politicians. For Barack Obama to suggest that Bush administration criminals should go free is to suggest that politicians live in a special class above the reach of the law. It also encourages more illegal activity in the future, once it is known that the government won’t prosecute those activities.

Furthermore, it’s not even up to Barack Obama to decide what is or is not investigated. The cult of personality surrounding him is great (in fact, it contributed to getting him elected), but even though we like him we must not forget that, as the president, he has constitutional limitations. It was irresponsible for the media to even ask what Barack Obama thought about Joe Lieberman being kicked out of the Democratic caucus. On November 5, Obama’s life as a senator ended, even though he didn’t officially resign the position until three weeks later. The president has absolutely no say – none! – in the operation of Congress. It would be different if Obama were acting in his capacity as a senator, but after winning the presidential election, especially in a nation eager for a new leader, any notion of Obama acting solely in his capacity as a senator would be extremely naïve. Obama must repudiate the unconstitutional powers that George W. Bush has claimed for himself, either through complete fabrication or malicious misreading of constitutional law.

Given his opinion of things like same-sex marriage (he tactfully says that same-sex couples should not be allowed to “marry” as such, but then says that they should have the same rights as heterosexual couples), NAFTA/CAFTA, and Israel, no one could confuse him for a true progressive. Obama’s apologists rationalize his decisions by pointing out that Obama never claimed to be a progressive at all!

Or could they? George W. Bush’s method of saying-without-saying is well-documented. While he never explicitly said that Saddam Hussein was behind the September 11 attacks, there is definitely a reason why, in 2001, virtually no Americans thought Saddam Hussein was responsible, but in 2003, one third of Americans thought Saddam Hussein was responsible.

Could it be that Barack Obama, whose campaign P.R. was spectacular, performed the same saying-but-not-saying function? Yes, it is entirely possible that Obama clothed himself in the cloak of progressivism while still wearing the mainstream Democrat’s clothes underneath. He has suggested massive new spending on entitlement programs, but he wants to increase the size of the military. He wants to let the Bush tax cuts expire, but he voted in favor of retroactive immunity for telecommunications companies that assisted the administration in warrantless wiretapping. His foreign policy goals consist of using real diplomacy instead of threats, but he voted in favor of NAFTA. He wants to provide government health care for people who have no health care, but he stops short of suggesting a universal-payer system like Canada’s or Great Britain’s. Obama’s positions are a wash: for every progressive-sounding idea, there is another conservative-sounding one to balance it out.

Or, on the other hand, it could be that Obama never suggested anything, but that he was forthcoming about his non-progressive credentials. It could be that we, the progressive Americans, were so thirsty for a change that we latched onto the only candidate (outside of Dennis Kucinich) who even brought up the issue of health care reform (at those early Republican primary debates, not a single candidate brought up the issue of health care), social reform, and getting out of Iraq (Hillary Clinton and John Edwards failed on at least one of these). We projected onto him the candidate we wanted him to be, ignoring the fact that he was not that candidate. Did we set ourselves up for disappointment? Yes, that is possible, too.

And then there’s the argument that all this complaining is pointless, that Obama isn’t even the president yet, and we should all just wait and see what happens on Jan. 20. Well, Rick Warren will happen Jan. 20, and that gives me even less optimism that, at noon on that day, Obama will suddenly throw aside his centrist mask and shout, “You fools! You thought I was just like Bill Clinton! But you were wrong! Free health care for everybody!” Agreeing to take part in Warren’s Saddleback (which sounds dangerously like “bareback”) debate with John McCain, Obama could conceivably have been seen as paying lip service to evangelical Protestantism, just like every president since Nixon has had to do. But putting Warren on the bill for Inauguration Day? Imagine if George W. Bush had hired Hillary Clinton to give a speech at his second inauguration. Yeah, it’s like.

Most troubling in my opinion, though, is Obama’s own insistence, ever since March of 2007, when he announced his candidacy, that he is not an ordinary politician. His grassroots, fifty-state strategy was unparalleled in its success. His speech about the Rev. Jeremiah Wright was intelligent and it treated the American people as though they, too, could understand long speeches that contained nuanced thoughts, as opposed to the Manichean sound bites of George W. Bush. His political maturity happened after the Vietnam War era, and, as Andrew Sullivan has suggested, the very core of his being is not instilled with a reflexive fear of Republicans and conservatism.

Conservatism demands the acknowledgment of a false dualism in every aspect of life, with the promise that conservatism will lead people to the correct side of this duality. Democrats buy into this framework and then try to argue the opposite side. The true progressive would never let the Republicans frame the debate and then proceed to work within their ill-conceived framework. To the progressive, there is no debate about whether or not health care should be free, or if there should be a premium for minimum services, or if the government should control it. The answer is: the current system of privatized health care doesn’t work and it should not be repaired, it must be rebuilt from the ground up. Obama appeared unafraid to work outside the existing framework and create a new framework that works in the interests of everyone. “Should it be a public solution or a private solution?” is not the correct question. “What solution is best for the country?” Now that’s the right question. It’s a question that Obama appeared to be asking during the campaign, but one that is being substituted by justifications for increasingly conservative behavior.

Whither Reaganomics?

Author’s note: Today’s is the first post in the Blue Economist column on the subject of “Blue-State Economics: Viewing Our Most Important Policy Debate Through Progressive Eyes”

On one level, there’s little shock value to be derived from the near total absence of Republican mischief making in the current, lame-duck session of Congress: They did, after all, just get their watches wound in the national election. However, taking a slightly longer view, it’s not clear that this same measure of electoral defeat has stopped them before. Past democratic transitions have been marred by a bull-headed intransigence on the part of the defeated. This has been born of equal parts denial, ideological certitude, and base whipping. Just ask Bill Clinton.

If all is quiet on the right flank in Washington these days, it may just be that the Republican agenda makers, especially on the domestic side of the ledger, have awakened to the bankruptcy of their ideas. However, it is a far more likely scenario is that the right is lying in wait for the sort of substantive policy shifts that Barack Obama has already promised and was assailed for during the campaign. Once this assault has whipped their own base into a frenzy of disdain, Republicans can renew their time-tested formula of overwhelming the national agenda with catch phrases and vitriol. This will inevitably cast the Democrats in a weak light, despite their power.

It is worth considering how things got this way.

The modern discipline of economics is surprisingly neutral on questions of political discourse: Progressive income taxes may be defended on the principal of “diminishing marginal utility,” by which a dollar taken from a wealthy person and given to a poor person has a net-beneficial effect on all of society’s collective happiness, to pick one random but unusually topical example. Another example is where environmental regulations may be defended on the principal of “internalizing social costs,” wherein the non-monetary repercussions of a firm’s activities are converted into monetary ones through fines and regulations. In addition, minimum wage laws may be defended as having negligible effects on the employment of unskilled labor, since the unskilled labor in question is already being used in its smallest possible quantities by the firms employing them.

However, as adaptable as such progressive claims would seem to be to the underlying principles of modern economic thought, the academy is at the same time populated by individuals so ubiquitously and inflexibly conservative as to render them the frequent butt of both merriment and derision at the hands of their would-be colleagues in the other social sciences. “An economist engages someone else’s ideas about the way the world works,” wrote one columnist in a recent edition of The New Yorker, “the way a bulldozer engages a picket fence.”

This phenomenon is largely attributable to the coincidental (and misguided) desire on the part of professional economists to be regarded as objective, physical or “hard” scientists–more like chemists and biologists–and less like their messy-headed brethren down the hall in Psychology and Poly-Sci. If the practitioner has to be clean, then the practice has to be clean too. This in turn means that the rich (progressive) texture of policy debates must melt on contact with the paradigm to prevent it from looking unresolved. The anguish of jobs lost to technological change, the qualitative detriment of polluted air, the elusive tabulation of the spoils of a war on poverty–all of these are matters dismissed with a smug wink and the back of a hand.

As the paradigm has polarized itself to the right, so too has the rhetoric from conservative think tanks been tailored to a world where the cleanliness and simplicity of an answer is its highest virtue. This exists in a perfect synergy with the rank-and-file’s inability to regard any complex idea as anything but a threat. Surely the good people at Americans for Tax Reform don’t really intend for their government to be “drowned in the bathtub”–surely Grover Norquist has been to enough school to know that bridges in the host city of the Republican National Convention will, absent a government that’s just been drowned in someone’s bathtub, fall unceremoniously down. However, with a simple paradigm to claim as their own, the Norquists of the world have all the excuse they need to reduce a messy world to painfully simplistic causes that play perfectly with the low-information voters in swing districts.

It would be tempting to presume a January 20th expiration date on such laments, to believe that some sort of corner has been turned. But the bitter reality of the matter is that Mr. Obama’s performance was at its shakiest when he found himself confronted by a self-appointed Ohio foot soldier so perfect for the slick-sided provincialism of the modern conservative economics that he was drafted by the McCain campaign as its chief spokesman before the sun had set. It won’t get any easier from there.

The Democrats will not win an economics argument in this country on the basis of raw numbers alone; they never do. Now that the electoral battle has been won, the Democrats must take a big-picture approach to winning the larger war. Selling complex, messy ideas like progressive income taxes (to say nothing of the restoration of a modicum of governmental oversight) will require a fresh infusion of street-smart packaging to match such hate-button phrases as “death tax.” To do so will be to fight fire with fire. If the Obama administration dismisses such efforts as quotidian (or, worse, elitist), or if it presumes victory before the fact on the strength of its mandate, they could surely suffer the same fate as wide-eyed Democratic administrations in years past. The good news is that they’re already winning this P.R. battle with cool-headed, pragmatic appointments and centrist views. In other words, they’re winning it the same way they won the election.

Cabinet Rundown: AG, DHS, and HHS

With the exception of the Hillary-Clinton-for-Secretary-of-State flirt tease, the rest of President-elect Obama’s cabinet is starting to take shape. Here’s a look at three of those who have been tapped so far (some pending a background check):

Attorney General–Eric Holder, 57, New York

Eric Holder will become the first African American Attorney General in United States history. He was a deputy attorney general and U.S. Attorney for the District of Columbia during the Clinton administration and teamed with Caroline Kennedy as the lead vetter of Obama’s potential vice presidential selections. Holder seems to be a solid, non-controversial choice. He will certainly have a tough job ahead of him as the various abuses of the past eight years come to light. Hopefully, Mr. Holder can restore some credibility to the job of  top law enforcer. The funny thing about the attorney general position is that this was John Edward’s job for the taking if he would have kept his zipper up. Ah well, he can take solace with Bill I suppose.

Grade: B

Secretary of Homeland Security–Janet Napolitano, 50, Arizona

Governor Napolitano is immensely popular in Arizona and will become only the third secretary in the brief history of the department of Homeland Security. Before serving as governor of Arizona (she is now in her second term), she was a United States District Attorney for Arizona and was Arizona Secretary of State.  Napolitano is Obama’s first high-profile female selection (Hillary is not official yet). It is likely that both the Secretary of State and the Secretary of Homeland Security will be women.  The one downside to this move for Democrats is that Governor Napolitano was polling strongly in a potential Senate matchup with Senator McCain in 2010. McCain has given initial indication that he plans to run for reelection.

Grade: B+

Secretary of Health and Human Services–Tom Daschle, 60, South Dakota

Tom Daschle is a great selection for this post. I wrote a lot about this selection yesterday.

Grade: A

Treasury Secretary Candidates

As President-Elect Obama begins to piece together his administration, the most prominent post will likely be his choice for Treasury Secretary. Given the importance of the Secretary in shaping the course of the Economic Stabilization Act funds ($450 billion left if you are counting), we wanted to run down the most likely candidates:

Larry Summers

A leading Harvard economist, Summer won the John Bates Clark Medal for his research and served as Bill Clinton’s Secretary as well as heading up Harvard during a five year tenure. As a close Obama advisor well respected in academia and the financial sector, Summers is a strong candidate. Drawbacks include the “gender science” controversy that led him to resign from his administrative post at Harvard, as well as his close ties to hedge fund DE Shaw.

Timothy Geithner

Header of the New York Fed as well as Vice Chair of the Federal Open Market Committee which sets interest rates, Geitner has a background in international affairs, earning a graduate degree from SAIS and serving in a variety of positions from Under Secretary at the State Department to the Council of Foreign Relations and the IMF, as well as playing a crucial role in helping to orchestrate recent financial market interventions.

Paul Volker

Part of the “old guard”, Volker is seen as a stable pick who served as Federal Reserve Chairman in the 1980s under Presidents Carter and Reagan, where he helped “tame” inflation and earned respect on both sides of the aisle.

Robert Rubin

Currently a Director at Citigroup, Rubin served as Treasury Secretary in the Clinton Administration and is credited with helping shape “Rubinomics” policies that fostered economic growth and balanced deregulation.

Laura Tyson

A Berkeley economist, Tyson served as Chair of Bill Clinton’s Council of Academic Advisers as well as Dean of the London Business School and a member of the Council on Foreign Relations.

Jon Corzine

Currently serving as Governor of New Jersey, Corzine has a deep background in financial markets stemming from his work as a partner at Goldman Sachs.