Confirm Geithner; Approve The TARP Funds, and Get The Stimulus Right
Flying back to California from D.C. last night on Jet Blue I watched a few hours of the panels on the financial stations chewing over the dispiriting retail news from December, the illness of Steve Jobs, the vote today on the second release of the TARP funds, and of course the confirmation troubles of Treasury nominee Timothy Geithner. Because I had spent part of the morning in the Oval Office with other broadcasters and President Bush reviewing the past eight years, the contrast between what I had heard the president describe and what I heard the commentators churn out was immense. The outgoing president, like the president-elect who will soon follow, doesn’t have the luxury of endless debates about what to do. Unlike the talking heads of which I am one, whose job it is to mull and opine, presidents have to decide. President Bush has had to act on limited options with incomplete information to make concrete choices in the here and now. The pace of the modern presidency is simply incredible, and it requires extraordinary balance not to be overwhelmed by the continual rush of decisions, the vast majority of which have extraordinary consequences attached to them.
Which is why the Senate should move quickly to confirm Timothy Geithner. A president deserves his cabinet choices because he has won the election and been charged with executing the laws. From next Tuesday forward, it will be the president-elect who faces the incredible velocity of decision making at 1600 Pennsylvania. Barack Obama will need every advisor he can rely upon to be in place and working from the moment he assumes office. Absent a truly disqualifying lapse in judgement by a nominee, a president –especially one just taking office and especially at a time of great economic uncertainty– deserves the team he has chosen to rely upon. The markets reacted psoitively to the choices of Lawrence Summers and Timothy Geithner when they were announced for the key reason that these are very bright men with experience and knowledge of how the economy works. They believe in markets and in the soundness of the American economy. These choices reassured Wall Street and Main Street that the new president would be guided in his key economic decision making by genuinely talented senior advisors.
Timothy Geithner’s mistakes are not small things, but neither are they remotely the sort of character or judgment flaw that should prevent his quick confirmation. He was paid in an unusual way by the IMF and his accountant gave him bad advice. When the IRS caught the error, Geithner did not apply that lesson to earlier years. He has now paid the money owed. There is no pattern of tax evasion beyond this single, confusing set of circumstances, no suggestion in a very public career of the sort of character flaw that would give senators pause. Instead, the Senate has before it a very bright and experienced nominee for a critical post at a time of pressing issues. Get on with it, senators, and mark the maturity of the Republicans against the excesses of the past (John Bolton.)
Similarly the Congress should move quickly to approrpiate the second half of the TARP funds. There was bound to be some waste in the expenditure of the first $350 billion, and there has been. But the panic of the fall has subsided, and a bottom was reached. Liquidity has begun to return to the credit markets. Now the bottom is being tested and the worst of ’08’s news is being absorbed. What a terrible time for the Congress to throw another wrench into the works, just as it did when it shot down the first TARP package in October. Markets sunk then because of the recognition that truly the Congress was full of grand-standers with almost no sense of the urgency of that moment. I thought legislators had learned then the lesson that confidence is easily lost and difficult to rebuild. Today will tell us whether October’s very expensive tutorial has to repeated.
As I wrote yesterday, the real focus should not be on Geithner or the TARP funds, but on the massive stimulus plan that will follow: What is in it? What will we have to show for it down the road? It is not an emergency fund for the shoring up of distressed financial institutions, but a massive surge of public spending that can either be put to extraordinary beneficial uses or be wasted on gimmicks and giveaways. The GOP should be putting all of its (limited) power into doing what it can to make the stimulus package genuinely productive, especially of nuclear power production and energy grid improvements. A much-reduced minority has to be very careful in the management of its limited political capital. Shooting at Geithner and sniping at the TARP are not wise uses of that small supply of influence.