Taylor Marsh – TaylorMarsh.com – News, Opinion and Weblog on Progressive Politics

BY TAYLOR MARSH
–updated–

Laura Tyson

An interesting piece at TNR runs down the Summers – Tim Geithner relationship, as the thinking on Treasury revs up. Two people on my short list do not include either of these men.

Adding a personal note… on Larry Summers:

“It’s very important that whoever is in key positions understands the importance of women to this economy — and that the impact of wage inequality for women has bearing on the overall economic inequality in our society,” Gandy told the Huffington Post. “I don’t see [this] on the agendas of most of the candidates being suggested. While Larry Summers has talked about income inequality, he doesn’t seem to get it that a lot of that is related to the wage gap between men and women.”

One choice is Jon Corzine, (former) junior senator of New Jersey (now governor). But my first pick is Laura Tyson, someone I’ve watched, read and respected since her days as chief economic adviser in the Clinton administration. From a piece she penned in 2004, entitled “A Squandered Legacy”:

[...] Despite their disagreements, Stiglitz and Rubin are united in their criticisms of the economic policies of the Bush administration – criticisms that I wholeheartedly share. Both believe that the large budget surpluses projected at the end of the 1990s should have been used to pay off the debt of the federal government and so prepare for borrowing needs that will arise when the baby boom generation begins to retire in significant numbers. They identify the 2001 and 2003 Bush tax cuts as the major factor behind the unprecedented reversal in the nation’s fiscal fortunes – from a projected ten-year surplus of more than $5.6 trillion in early 2001 to a projected ten-year deficit of over $5 trillion today, according to several independent analysts. They question both the Keynesian and the supply-side logic of these tax cuts, arguing that they do not deliver much “bang for the buck” in stimulating demand in the short term and do not act as an incentive on saving and investment in the long term. Indeed, as Rubin points out, the congressional budget office and the joint committee on taxation – both with leadership appointed by the congressional Republican majority – recently concluded that the Bush tax cuts, including the deficits that they have created, are likely to reduce rather than increase the economy’s growth over the next decade. Stiglitz is more outspoken than Rubin about the distributional consequences of the Bush tax cuts, while Rubin devotes more attention to the possible negative effects of fiscal disarray on market confidence. But both believe that the long-run fiscal outlook is bleak and could trigger a sharp fall in the dollar and a spike in interest rates if foreigners lose confidence in US economic policies. Stiglitz may believe that the Clinton administration took deficit reduction too far in the 1990s but, like Rubin, he is convinced that the Bush administration has taken deficit creation to new and unsustainable heights. Apparently Paul O’Neill, who served as Bush’s treasury secretary until he was asked to resign in late 2002, agrees with this assessment. According to Ron Suskind’s recent book, The Price of Loyalty, O’Neill repeatedly warned Bush that the country was moving towards a fiscal crisis. But O’Neill’s warnings were dismissed by Vice-President Cheney, who argued that “Reagan proved deficits don’t matter.” O’Neill paid for his unwanted advice with his job. But under realistic assumptions, large budget deficits – more than 5 per cent of GDP, excluding the social security and medicare trust funds – are projected every year through the next decade, right up to the time when the first baby boomers begin to retire. Future budgetary imbalances will be so large that the risk of severe adverse consequences – including a sharp loss in investor confidence in US economic policies, a sell-off of US securities, a precipitous decline in the dollar, a sharp rise in interest rates and a rapid contraction in economic growth – must be taken seriously. And even if these risks do not materialise, large budget deficits will require a combination of lower private investment and greater indebtedness to the rest of the world. Either way, Americans’ claims on the nation’s future output and their future living standards will be reduced as a result of Bush’s budgetary profligacy. …

Steve Clemons adds:

Tim Geithner who is the smartest, most unassuming financial markets technician among the lot. Geithner is probably the closest thing we have to a modern version of John Maynard Keynes. I also like Laura Tyson who I think could be useful in launching a campaign of “Tysonomics” which values some elements of industrial policy in a national economic plan vs the manic neoliberalism of “Rubinomics.” Finally, Corzine — who understands better than the other contenders that America’s social contract at home must be dramatically changed — would be a fantastic choice. His only blemish is that he worked for Goldman Sachs — though I think Corzine thinks that was the low point of his working career and wishes he hadn’t spent much time there.

Obama meets with his economic advisors tomorrow.

President-Elect Barack Obama and Vice President-Elect Joe Biden To Hold Meeting With Transition Economic Advisory Board - Press Conference Will Follow the Meeting Chicago – President-elect Barack Obama and Vice President-elect Joe Biden will hold a meeting with the Transition Economic Advisory Board tomorrow, Friday, November 7, 2008. There will be a pooled photo spray for the meeting. The press conference will be held at 1:30pm central at the Hilton Chicago following the meeting. The members of the Transition Economic Advisory Board are below and all will participate in tomorrow’s meeting. · David Bonior (Member House of Representatives 1977-2003) · Warren Buffett (Chairman and CEO, Berkshire Hathaway)-will participate via speakerphone · Roel Campos (former SEC Commissioner) · William Daley (Chairman of the Midwest, JP Morgan Chase; Former Secretary, U.S. Dept of Commerce, 1997-2000) · William Donaldson (Former Chairman of the SEC 2003-2005) · Roger Ferguson (President and CEO, TIAA-CREF and former Vice Chairman of the Board of Governors of the Federal Reserve) · Jennifer Granholm (Governor, State of Michigan) · Anne Mulcahy (Chairman and CEO, Xerox) · Richard Parsons (Chairman of the Board, Time Warner) · Penny Pritzker (CEO, Classic Residence by Hyatt) · Robert Reich (University of California, Berkeley; Former Secretary, U.S. Dept of Labor, 1993-1997) · Robert Rubin (Chairman and Director of the Executive Committee, Citigroup; Former Secretary, U.S. Dept of Treasury, 1995-1999) · Eric Schmidt (Chairman and CEO, Google) · Lawrence Summers (Harvard University; Managing Director, D.E. Shaw; Former Secretary, U.S. Dept of Treasury, 1999-2001) · Laura Tyson (Haas School of Business, University of California, Berkeley; Former Chairman, National Economic Council, 1995-1996; Former Chairman, President’s Council of Economic Advisors, 1993-1995) · Antonio Villaraigosa (Mayor, City of Los Angeles) · Paul Volcker (Former Chairman, U.S. Federal Reserve 1979-1987)