Will Timothy Geithner lead us over or around the fiscal cliff?(Read article summary)
Timothy Geithner sees the world through the eyes of Wall Street rather than Main Street, Reich writes, which complicates fiscal cliff negotiations.
Iâ€™m trying to remain optimistic that the President and congressional Democrats will hold their ground over the next month as we approach the so-called â€śfiscal cliff.â€ť
But leading those negotiations for the White House is outgoing Secretary of Treasury Tim Geithner, whom Mondayâ€™sÂ Wall Street JournalÂ describedÂ as a â€śpragmatic deal makerâ€ť because of â€śhis long relationship with former Treasury Secretary Robert Rubin, for whom balancing the budget was a priority over other Democratic touchstones.â€ť
Geithner is indeed a protege of Bob Rubin, for whom he worked when Rubin was Treasury Secretary in the Clinton administration. Rubin then helped arranged for Geithner to become president of the New York Fed, and then pushed for him to become Obamaâ€™s Treasury Secretary.
Both Rubin and Geithner are hardworking and decent. But both see the world through the eyes of Wall Street rather than Main Street.Â
I battled Rubin for years in the Clinton administration because of his hawkishness on the budget deficit and his narrow Wall Street view of the world.
During his tenure as Treasury Secretary, Geithner has followed in Rubinâ€™s path â€” engineering a no-strings Wall Street bailout that didnâ€™t require the Street to help stranded homeowners, didnâ€™t demand the Street agree to a resurrection of the Glass-Steagall Act, and didnâ€™t seek to cap the size of the biggest bank, which in the wake of the bailout have become much bigger.Â In anÂ interviewÂ with theÂ Journal, Geithner repeats the Presidentâ€™s stated principle that tax rates must rise on the wealthy, but doesnâ€™t rule out changes to Social Security or Medicare. And he notes that in the presidentâ€™s budget (drawn up before the election), spending on non-defense discretionary items â€” mostly programs for the poor, and investments in education and infrastructure â€” are â€śvery low as a share of the economy relative to Clinton.â€ťIf â€śpragmatic deal maker,â€ť as theÂ JournalÂ describes Geithner, means someone who believes any deal with Republicans is better than no deal, and deficit reduction is more important than job creation, we could be in for a difficult December.