Will Hillary Sink Her Campaign by Picking a Pack of Big-Bank Loving Economic Advisors?
Ever since she faced a stronger than expected challenge from her left, Hillary Clinton has been sounding more progressive than expected on economics. Let's hope she means it.
She has come out against the Keystone Pipeline, against the really dubious Trans-Pacific Partnership, in favor of substantial debt relief for college students. Her July speech on economic issues at the New School, calling for significant increases in public investment and regulation of corporate excesses was exemplary.
However, there is one key area that could undercut all of what she has offered. That is her choice of a senior economic team. The recent history of Democratic presidents is not reassuring on that score.
Ever since the administration of her husband, senior economic posts have been given over to Wall Street Democrats. The financial deregulation that collapsed the economy in 2008 was the work of the Robert Rubin economic team that worked for (and on) Bill Clinton.
After that collapse helped propel Barack Obama into the White House in the 2008 election, he disappointed supporters by naming many of the same people or their protÃ©gÃ©s as his senior economic officials -- Larry Summers as top economic honcho, Tim Geithner as Treasury Secretary, more Clinton ex-budget staffers to the Office of Management and Budget. Paul Volcker, useful as a symbol, proved too left wing for the rest of the Obama crew because he was serious about breaking up the big banks. The key economic post in the campaign went to another Robert Rubin protÃ©gÃ©, Jason Furman, now head of Obama's Council of Economic Advisers. The top trade job went to yet another Rubin ally, Michael Froman.
With this team, it's hardly surprising that Obama opted for propping up rather than breaking up the big banks; and that he embraced budget balance and deficit reduction long before the economy was in full recovery. These moves proved disastrous politically -- they validated much of the Republican agenda.
Defenders of Obama say that as a novice, he had no choice but to appoint reassuring voices of experience. But that is nonsense. Other, equally experienced experts on the economy were available who differed in two key respects. They were not interested in defending the Wall Street status quo or in fighting for fiscal discipline over economic recovery. These people were squeezed out or given secondary posts.
The one progressive on the senior economic team, Jared Bernstein, was given the relatively second-tier job of chief economic adviser to Vice President Biden. He became a player only through force of argument and personal appeal.
But others who had the stature and experience to play a top economic role, such as former chair of the Counsel of Economic Advisers Joseph Stiglitz, or FDIC chair Sheila Bair, were not invited to play.
Until the summer of 2008, Obama had insisted that he was taking advice from both the Wall Streeters and the progressives -- from "both Bobs" -- Reich and Rubin. But when he picked his team, it was clear that Wall Street had won.
Hillary looks to be playing something of the same game. In 2008, her advice came from the same people who had staffed her husband's administration. Today, she likes to say that she has been in touch with more than 200 economic experts, representing a broad spectrum of views.
But assuming she gets the nomination, who will the power players be? And who will she appoint if elected?
Progressive leaders and organizations have been thinking in terms of extracting commitments from Clinton on the issues. But even more crucial are the senior appointments: Who she will name to key positions -- and, more importantly, who she will not appoint.
My American Prospect colleague, Harold Meyerson, likes to recall a key moment from early 1933 when FDR was appointing his economic team. In those years, the financial power player was J.P. Morgan and Co., located at 23 Wall Street. One of Roosevelt's aides suggested that if might be good to name a Morgan man to a top economic post. But FDR demurred, with the words, "Nobody from 23." As Meyerson writes, the equivalent today is nobody from Goldman, or from the too-big-to fail Wall Street mega-banks generally.
Can Hillary take that pledge? If she rules out the usual suspects, are there enough progressives with expertise and experience to fill out a senior economic team?
Yes, there are plenty of people. Nobel Laureate Joseph Stiglitz is the elder statesmen of this group. Virtually all of his warnings have proven prophetic. He has senior government experience, both as chief economist of the World Bank and as chair of the Council of Economic Advisers under Bill Clinton, where he and Bob Reich became the opposition to the orthodoxy, and proved themselves to be astute players.
The Clinton campaign talks to Stiglitz and to other progressive economic thinkers. But it would take a minor miracle for Clinton to appoint him to a power position.
Also worth considering for top posts are Sheila Bair, a Republican who served as chair of the FDIC during the most acute phase of the financial crisis and who proved far more knowledgeable and public minded than the most senior of Obama's appointees; and the progressive remnant of the Obama team, such as Daniel Tarullo, now a governor of the Fed; Sarah Raskin, now deputy treasury secretary; the aforementioned Jared Bernstein; and Richard Cordray, director of the Consumer Financial Protection Bureau.
Clinton's movement on the issues is welcome. A commitment to appoint a truly progressive economic team would be even more significant. Given the huge financial support she has gotten from Wall Street, it seems to me that she will only take such a pledge if the voters and activists prove stronger than the funders.