Why Does Obama Need Turbo Tim?

When the president ducks out of a star-studded White House party with the Treasury secretary’s wife, The New York Times concludes that the Treasury secretary gets to keep his job. 

Jackie Calmes tries to get the official story of Tim Geithner’s bewildering durability, with partial success: 

The question for outsiders as varied as Tea Party Republicans and liberal Democrats is why Mr. Obama would be so insistent that Mr. Geithner stay. As Treasury secretary, he was the highest-ranking member of a team that underestimated the depth of the downturn, and he has managed both to anger Wall Street firms and to be a target of criticism at Occupy Wall Street rallies.

For Mr. Obama, however, Mr. Geithner has emerged as the indispensable economic adviser who has outlasted every other member of the original inner circle and whose successes easily outweigh his missteps. 

So what’s to like in a 9 percent unemployment rate, a weakening dollar, record deficits, plummeting tax collections, and persistent economic stagnation that either resists or is fueled by trillions of dollars in Keynesian stimulus? Calmes advances several theories: 

Europe’s troubles, perhaps more than anything, highlight what Mr. Obama likes about Mr. Geithner, because they help show how the effects of the financial crisis could have been worse in this country.

After a rocky first few weeks in the job, Mr. Geithner managed to stabilize the country’s troubled banks by forcing them to own up to their problems and seek additional funds from both the government and the private sector. The Treasury has even earned a profit for taxpayers on the still-reviled bank bailout program.

European leaders — defying repeated advice from Mr. Geithner, by phone and in five trips so far this year — have taken a much less aggressive approach, applying one Band-Aid after another to address their mounting debts and ailing banks, only to discover they must do more.

The claim that the Treasury "earned a profit on the...bank bailout program" is only true with heavy manipulation of the definitions of "bank," "failing," "repaid" and other basic English vocabulary – and it requires that you ignore the Obama Administration’s use of TARP funds for the auto bailout, an expenditure that is unlikely to be repaid at all. 

Calmes’ second explanation is that everybody else was doing it: 

Officials say that Mr. Obama does not blame Mr. Geithner either for the persistent housing problems or for the administration’s miscalculations of the slump. Many underestimated the crisis, they note, and Congressional Republicans’ opposition has limited the administration’s options. 

Another theory: Geithner still has whipping boy value: 

“To the extent people aren’t happy, you’d rather have the secretary of Treasury be the spear-catcher instead of the president himself,” said Geoffrey Garin, a Democratic pollster. “And if Geithner were a liability, they’d have let him go when he wanted to go.”

This last theory sounds most convincing. Every cabinet official eventually becomes meat the president throws out to keep his pursuers occupied. The U.S. economy since Barack Obama took office has been a catastrophe to which the Hoovervilles of the Occupy movement bear grime-tattooed witness. I can't say I think much of the tactic of holding Geithner’s sacrifice in reserve to soothe the public's wrath in 2012, but at least it’s a tactic. 

Keep in mind that the Treasury Department runs the Federal Financing Bank, the corporate welfare office in charge of doling out subsidies for politically favored companies. The FFB’s chief finance officer, Gary Burner, had to testify on Solyndra a while back.  I make no predictions, but when Geithner’s sacrifice does come, it may take the form of having Turbo Tim take a fall over Solyndra, should Energy Secretary Steven Chu’s head prove insufficient. 

That Geithner appears to have been one of the few members of the president’s inner circle who argued against Obama's green-loan-guarantee program would make the sacrifice all the more poignant – as it was when Colin Powell threw away his honor and his "Powell Doctrine" for the sake of the Iraq invasion. 

In any event, I say again that it's always a good day to fire Geithner:

[S]uccessful presidents replace Treasury Secretaries all the time. And Obama needs to send a feel-your-pain signal to Americans. This is a nearly cost-free way to repudiate a failed Keynesian policy and burnish the reputation for non-ideological pragmatism Obama covets.

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  • wareagle||

    Obama is insistent that Geithner stay because Timmy is all too willing to act like the Junior Senator from Incumbistan in promoting any and all administration initiatives. The guy is better suited for DNC Chair that Debbie Badhair is. Best of all, Timmy is a distraction and POTUS values those above all else. If you keep your eye on Timmy, you miss all the executive orders.

  • Slap the Enlightened! ||

    Timmy must have a helluva collection of pictures....

  • chris||

    Look Tim,

    how can Obama accomplish his goal of being The Worst President Ever if he starts behaving sensibly and fires Tim. Lyndon Johnson is right there with his 56,000 war dead and the ruins of his Great Society legacy smoldering around us just mocking Obama's efforts.

  • ¢||

    "Why does Geithner persist in allowing his dipshit buddy to be President?" is a more pertinent question.

  • ||

    Looking for anything even marginally reasonable from this administration is like trying to find the gold at the end of the rainbow -- you can keep trying, but you won't find jack-shit.

  • Almanian||

    Timmeh!

  • ||

    Timmy = The Gang of One in the not so distant future. It can't be Obama.

  • Hugh Akston||

    Firing Timmeh might be a good policy if Obama's goal was to acknowledge that his prior efforts at economic rainmaking had failed.

    But if he wants to sell the message that the only problem with the stimulus was that it wasn't big enough, he needs to hang one of the central architects of that policy.

  • ||

    To call any of Obama;s policies
    Keynesian is to show You've never actually read Keynes. He never claimed that you could fix the economy with just stimulus when there were underlying structural problems, which there are in abundance. He was very against trade deficits, just to take one example.

  • Britt||

    The central message of Keynesian stimulus is that the government, through deficit spending in times of economic downturn, can restore economic growth.

    The problem with this is that periodic times of recession are absolutely necessary. Recessions are when we stress test investments and institutions, when the market finds out which ones are fit and which ones are not.

    Trying to smooth out the up and down of the business cycle by bailing out failures is asinine because the whole point of a downturn is to shake out the dead weight and reallocate those resources to better ends.

    Just like periodic fires are essential to a healthy forest, bouts of short and sharp creative destruction are crucial to a healthy economy.

  • chris||

    You are simply wrong, Joad. Cash for Clunkers, for instance, is a perfect example of Keynesian stimulus in miniature. You follow its trendline, you'll see what happens anytime Keynesian policy is put into place. Keynesians always miscalculate what their macro policy recommendations will have on the behavior at the micro level which, of course, effect macro in unintended ways. The only substantial difference between Keynesian policy in its purest form, and Obama policy is that personal savings coming into the recession were much lower than expected if Keynesian policy was followed to the letter in the pre-recession economy. However, it doesn't change the fact that Keynesian policy undermines growth by increasing uncertainty. People don't spend especially big ticket items when faced with uncertainty. They begin to save to increase certainty. Keynesian policy is designed to undermine savings. This increases uncertainty, undermines consumer spending, so the economic boost due to Keynesian spending is only temporary and ill spent because consumer spending does not gain traction due to the value of personal savings being undermined by both loose monetary policy and product inflation from the misallocation of resources that occur with public spending.

  • chris||

    product inflation from the misallocation

    product price inflation

  • PantsFan la canuck||

    This angers me.
    So does this:
    http://www.theglobeandmail.com.....le2235009/
    "Prof. Krugman couldn’t have said it better. All the signs are there, he says: A big overhang of debt, a troubled financial industry, weak consumer spending and a political system on the verge of paralysis. Just like Japan. “The nightmare has turned real and now the question is, what on earth can we do to change the political reality to get out of it?”

    A clean sweep by the Democratic Party in 2012 might do it,"

    Also, Gay Ronaldo won today.

  • ||

    From the same paper: Ayn Rand bag infuriates yogis

  • Tman||

    Why Does Obama Need Turbo Tim?

    Obama doesn't even know where he's waking up at this point, being in perpetual campaign mode, and the idea that he would take any sort of executive action at this point seems to be in denial of his current record as a public servant.

    The car is in a ditch, man. Let's go get a slurpee.

  • CatoTheElder||

    Why does Obama need Turbo Tim?

    Because Crooked Corzine got caught.

  • tim tim tim||

    Tim! get it through your thick skull:

    ...is fueled by trillions of dollars in Keynesian stimulus?


    Most of the stimulus (~4 trillion+) is MONETARY [dwarfing the stimulus package and auto bailouts of $1 trillion] - see here: http://reason.com/blog/2011/09.....sian-stimu [read your own fucking blog]
    and here: http://www.forbes.com/sites/ti.....onetarism/

  • tim tim tim||

    see this: http://reason.com/archives/201.....anites-now
    and this:
    http://reason.com/archives/200.....hilosopher
    read your own fucking magazine - keynesian, HA - the stimulus is as keynesian as you are "libertarian"

  • ||

    “To the extent people aren’t happy, you’d rather have the secretary of Treasury be the spear-catcher instead of the president himself,”
    ------------

    Hmmm, well if Timmeh is the spear CATCHER, then that makes Obama... hey, wait a minute

  • ||

    "Mr. Geithner managed to stabilize the country’s troubled banks by forcing them to own up to their problems and seek additional funds from both the government and the private sector."

    LOLs.

    That's not glass half-full. That's preposterous.

    He also forced average Americans to own up to their problems and appreciate the jobs they already have...

    Thank you, Mr. Geithner!

    If the simplest explanation is the one that's most likely to be true? Geithner's probably an ass kisser.

    Add to that, Obama can't dismiss him with a reelection coming up, so he keeps Geithner around so as to keep up the pretense--that everything is going according to plan!

    Here's the perfect analogy:

    http://www.youtube.com/watch?v=vJXU7EVXs2A

  • Xenocles||

    "[S]uccessful presidents replace Treasury Secretaries all the time."

    Well, there's your answer right there.

  • SIV||

    Geithner's Job #1 is to keep our larger bond holders and dealers happy (relatively) and solvent.

  • ||

    ...and it requires that you ignore the Obama Administration’s use of TARP funds for the auto bailout, an expenditure that is unlikely to be repaid at all.

    Wasn't that the Bush Administration? I thought Obama was "cash for clunkers". Bah, who can remember so long ago, it all runs together.

  • ||

    No, that was Obama.

    Bush brought the hell of TARP upon us, but he only used half of it.

    The other half was all Obama. And he squandered a chunk of it on his UAW cronies.

    Also, I think one of the worst parts of TARP. It might not have been so bad--if they had used the TARP money, once it had been paid back, to pay down the debt.

    But nooooooOOOOOOOOOooooo!

    Obama used his leadership, specifically, to avoid using the paid back money to pay down the debt. That was, essentially, the money he used for the stimulus.

    And who's to blame for that, Warren?*

    *˙"uǝɹɹɐʍ" sı ɹǝʍsuɐ ʇɔǝɹɹoɔ ǝɥʇ

  • Masturbatin' Pete||

    It's true that TARP was signed by Bush. But to call it a "Bush program" in an effort to deflect blame for it from President Obama is silly, given that Senator Obama voted for the damn thing.

  • Mo||

    Actually, Warren is correct in this. Bush used executive authority to allow TARP funds to be spent on bailing out auto companies in December 2008.

  • ||

    IN YOUR FACE MONKEY KEN

  • Tim Cavanaugh||

    All the agreements with GM, GMAC, Chrysler and Chrysler Financial were signed by Bush, but the "investments" continued under Obama, according to SIGTARP reports. It's unclear how much has been recovered, because Bush's original Auto Supplier Support and Auto Warranty Commitment Programs were repaid in full, while a larger universe of "general financial assistance" is still outstanding. Also, Chrysler became "New Chrysler" and the U.S. Government became a GM board member (both under Obama), which seems to have made the money even harder to follow.

  • tim tim tim||

    lead skulls are thicker than blood:
    http://www.cnbc.com/id/4385655.....n_From_Fed
    so much for "keynesian" stimulus - doesn't help your "libertarian" cause when you (your magazine) push shit like this too:
    http://reason.com/archives/201.....l-delusion
    how things change in 18 months [see matt welch defending ron paul]

  • Fist of Etiquette||

    They're keeping Tim around because he's mad seksy.

  • ||

    Maybe every single person the Big 0 has approached about taking the job has laughed in his face.

  • ||

    This is a nearly cost-free way to repudiate a failed Keynesian policy

    No Democrat, and very few Republicans, will admit that Keynesianism has failed, because it is the justification for the graft that is the mother's milk of their existence.

  • cynical||

    The Praetorian Guard answers to Timmeh.

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