In last week’s Swamp Notes, I wrote about the Dream Team shaping up at Treasury. Since then, Joe Biden has announced several more economic appointments. A few of them (Jeff Zients, Brian Deese and Adewale Adeyemo) are getting pushback from the far left part of the party, because of their ties to finance and Big Tech. What to make of this?
First, it reflects the natural and quite understandable worry among progressives that the Biden administration could end up being a repeat of the Obama Brunch Club, as journalist and former Bernie Sanders press secretary David Sirota has put it. He and leftwing politico Andrew Perez summarised the risks of that very nicely in this piece, which makes important points about how the Obama administration didn’t really walk the walk when it came to supporting things such as labour rights and financial reform. For those who are interested, Sirota is always a good weather vane for what the labour-oriented left is thinking.
I agree there has been huge hypocrisy among Democrats when it comes to economic policy for the past two decades. As FT readers will know, I think the Democratic sellout to corporate interests over that time is a key reason that we got Donald Trump. Those interests live and work on the coasts, which is a big reason that you now have a huge urban/rural divide in American politics. It’s as if the country was a blanket and someone pulled it up the middle over the past 40 years and all the wealth and power poured to the edges.
In order to stay ahead of the midterms, Democrats need to show that they are now putting the interests of work before wealth. And I think that by and large, the key appointments so far — particularly Janet Yellen at the Treasury — show that they are. If you have any doubts that this is a woman who cares about average people, listen to her nomination speech here. When was the last time any Treasury secretary spoke about dock workers, union labour, and how her dad put his business by a bus line so that average people without cars could reach it?
Which brings me back to where I started — should we worry unduly about a handful of appointees with private equity backgrounds? Not yet. Individual appointees should be judged on their own merits. If we didn’t let anyone from either the finance or technology industries into the administration, we’d be the poorer for it — witness how former Goldman Sachs alum Gary Gensler, now Biden’s chief markets adviser, cleaned up derivatives trading while at the Commodity Futures Trading Commission during the Obama years.
That said, it’s also true that we need more rules and disclosure about any conflicts of interests that could be leveraged by the revolving door. Appointees should, for example, put any business assets in blind trusts. There should also be tough rules about how and when they can return to the private sector, and on what terms, so as not to have a repeat of something like the Robert Rubin era in which a Treasury secretary can deregulate Wall Street and then go to Citibank and profit wildly from it (don’t worry, Yellen won’t).
This is a crucial moment for the new president to send a signal about how he plans to reset the economy, and the country. We have seen a very diverse and heterodox mix of appointees. That’s a good thing. The key now is making sure that policies, not just people, are truly different than they have been in the past. Ed, what’s your bet that this will be the case?
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As per the above, I am watching closely the Biden administration’s efforts around smart cities. They are a good idea, but only if any data collected is put in publicly accessible trusts, and not owned entirely by Google or any other Big Tech group.
I shared more of my views on the Biden economic team and the road ahead during a recent episode of NPR’s On Point. Listen to the podcast here.
And in the FT, Michelle Seitz is entirely right that the US must address the savings crisis for workers.
Also, don’t miss my colleague Claire Bushey’s lovely personal essay on loneliness in the time of Covid.
Edward Luce responds
As I’ve said before, the most critical determinant of the Biden administration’s fate will be settled by who controls the Senate. If I were given a choice between your dream team of progressive economists, Rana, and a Republican Senate, or a bunch of Goldman Sachs alums and a Democratic Senate, I would choose the latter without hesitation. All of Biden’s nominees, left or centrist, agree on America’s desperate need for a large fiscal stimulus. None would disagree with what Larry Summers says here. In light of that, I attach little importance to the widespread division of Democratic economists between “centrist” and “leftist”.
A decade ago, the Obama administration made the big error of endorsing the Simpson-Bowles commission, which recommended fiscal contraction of about 4 per cent of GDP, mostly in the form of spending cuts. Had Simpson-Bowles been enacted, it would have been a catastrophe for the US economy at that tender stage of its post-2008 recovery. I don’t know of a single Democrat of any background who opposes the $2tn relief package that Biden wants. I don’t know of a single Republican who supports it. Whether it gets passed is the central question of the coming three months. It is also the key variable of whether the US can generate the public investments, social protections and strategic prioritising that would undergird a strong post-pandemic recovery. To that end, my focus is on what happens in Georgia on January 5, rather than the CVs of various White House staffers.
And now a word from our Swampians . . .
In response to ‘The great wall between Canada and America’:
“The problem with Americans is we have a tendency to put our individual rights ahead of collective rights, whereas in Canada there is a greater sense of social responsibility . . . .As a dual citizen of the US and Canada with family north of the border, it saddens me that my brother will spend Christmas alone in Toronto rather than joining us in Connecticut, but we respect what the health authorities are advising . . . The bigger issue that you allude to is the disfunction of our government in the US, where the GOP is putting their personal electoral prospects ahead of the need to support our fragile democracy. It is the specter of Mitch McConnell and his do-nothing henchmen preventing the Biden-Harris team from governing that leads me to dust off my Canadian passport and wonder if we shouldn’t move north to what is clearly a much more sensibly run country.” — Janet Lewis, Westport, Connecticut
“We actually make a virtue out of boring. Shortly after he was elected for the first time, in 1968, Pierre Trudeau — whose election campaign had given rise to Trudeaumania — was asked by a reporter why things were now so boring. ‘Good government is boring’ was the reply.” — Bill Singleton, Ottawa, Canada
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