Although most of Washington has functioned in crisis mode for the last few months, the transition of Barack Obama, from President-elect to President, has gone ahead with the calm professionalism that characterised his long presidential campaign. Less than six weeks after the election, more than half of the 24 most important positions in the new government have already been filled. At the same stage, the Carter and Reagan administrations had each filled two of these spots, George HW Bush’s administration, eight (many of them hold-overs from the Reagan years), Clinton and George W Bush one each. Several of these appointments have already had an impact on the political and economic landscape. Within an hour, the appointment of Timothy Geithner as Treasury Secretary was greeted with a six per cent surge in the stock market. In foreign policy the reappointment of Robert Gates as Defence Secretary and the choice of Gen. Jim Jones as National Security Adviser have widely been taken as reassurances that old hands will guide the early months of Obama foreign policy, minimising fears of the new president’s supposed “inexperience.”
The choice of Hillary Clinton for Secretary of State has been less controversial than might have been expected, but her appointment has stranded a number of rising stars who stood up to the Clinton faction of the Democratic party many months ago. Now, unless the President-elect makes a point of intervening on their behalf – unlikely, except for a select few like Samantha Power, who was dismissed for disrespectful remarks about Mrs Clinton during the campaign – they will find themselves unable to get a job in the new administration: a shameful reward for months of loyalty. This is of the less well-known consequences of the widely praised “team of rivals” approach to government that the new president seems to have chosen, but it is one that is bound to have lasting repercussions. If it does nothing else, Mrs Clinton’s appointment will teach a generation of young idealists that there are very strict limits to the sort of “change you can believe in.”
Unquestionably, the Obama administration has put together an outstanding economic team, and much has been written about the prospects of a “new New Deal.” This sounds promising but does not square too well with the facts. Recent crises have certainly put the idea of active government intervention back on the political map, but even the massive bailouts that Congress has signed on for have been negotiated with neoliberal assumptions. The economic historian Steve Fraser has pointed out that “As things now stand, the public supplies the loans and the investment capital, but the key decisions about how they are to deployed remain in private hands.” The high-handedness that often goes with this approach was much in evidence when CEOs from Detroit’s Big Three recently flew in on private jets to beg Congress for their own bailout. In the New Yorker, Elizabeth Kolbert recalls that: “During two days of congressional hearings the CEOs were unable to answer the most basic questions, such as how they had arrived at the sum they were asking for – twenty-five billion dollars − or why it would be better to give it to them rather than their customers, or whether, if they got it, it would be enough to keep them solvent.” Shortly afterwards the figure had increased by several billion dollars, even though analysts still believed even this would not suffice.
The “Washington Consensus” of the Clinton and Bush years, bred this sort of arrogance, and although they might be among the first to ridicule those CEOs, Obama’s economists share many of the neoliberal assumptions that helped to create them. Even so, the economic situation constrains their room for manoeuvre. Letting America’s auto makers die a natural death is not economically or politically advisable, but it is not clear how the government can add them to the list of other bailouts and still create a genuine economic stimulus package. Also since the federal government is essentially broke, and hampered by an enormous deficit, the new administration’s room for radical innovation will be limited.
Another under-reported part of the transition is the retention of the “senior adviser to the president” slot that Karl Rove used to fill. David Axelrod − the strategist who presciently understood that Obama could win the nomination if the Democratic campaign lasted far beyond Super Tuesday − will fill this post. Axelrod has not shown any of Rove’s darker qualities so far, but Obama could have found another, less obtrusive way to get advice from him. Rove skewed the Bush presidency towards too much strategy and not enough governance, an error that Obama can ill-afford to repeat.
While there is no denying the intellectual strength of the new administration, intelligence alone will not get America out of its many dilemmas. New York Times columnist Frank Rich has wisely observed that taken together, Obama’s brains trust looks a lot like the “brightest and best” (originally, an ironic phrase) who led President Kennedy into Vietnam. There, the disconnect between academic intelligence and the greyer realities of policy-making proved disastrous. Perhaps Obama’s team will not suffer from the same hubris, but that may all depend on how well the president copes with his immediate crises. So far, his transition has shown an impressive grasp of the challenges that lie ahead, but it has also shown that he has no illusions about the political calculations he will have to make. ‘Hope’ and ‘change’ are fine words on a campaign trail but Washington deals with ‘realism’ and ‘old hands’ − or as Donald Rumsfeld might have put it, “known knowns” instead of “known unknowns.”