In the end, Obama signed into law only a relatively modest $13 billion jobs program, much less than what was favored by Romer and many other economists in the administration.
“There was this move to exit fiscal stimulus a lot sooner than we should have, and we’ve been playing catch-up ever since,” Romer said in an interview.
Some of Obama’s Democratic allies felt let down. Andrew Stern, former president of the Service Employees International Union, said in an interview that Geithner looks at the world “from his experience, which is predominantly a Wall Street, Treasury, fiscal and monetary policy point of view.”
‘Plan beats no plan’
Even as Geithner stumbled in his first months, Obama stood by him. And they grew closer, their relationship nurtured by daily meetings and occasional basketball games. “They don’t get worked up when things are going wrong. They don’t get worked up if things are going well,” a senior White House official said.
By the middle of last year, Geithner’s fortunes had shifted. Even the gargantuan bailout of American International Group by the federal government wasn’t looking so bad anymore. Last summer, Jim Millstein, an investment banker assigned to oversee Treasury’s rescue of AIG, walked into Geithner’s office with good news: Taxpayers were going to get their investment in AIG back, and maybe a profit.
“Get the [expletive] out,” Geithner responded. “I haven’t had any good news on AIG.”
In reality, this was one in a series of successes Geithner was enjoying. Banks were paying back hundreds of billions of bailout dollars to the government. Ambitious legislation to overhaul financial regulation had finally passed Congress. The financial system was on the mend.
And Geithner’s influence with the president was growing on a wide range of issues, including sanctions on Middle East regimes and policy toward China.
Buoyed by his successes, Geithner felt ready to fire the administration’s first salvos in the debt war last summer.
Republicans were pushing for an extension of tax cuts for the wealthy enacted during George W. Bush’s presidency. It was administration policy to oppose extending them, but neither White House advisers nor congressional Democrats, facing tough midterm elections, wanted to engage in a tax fight.
Geithner, however, believed the tax cuts were a waste of money at a time of growing deficits and began giving speeches about the importance of letting them expire. When the Republicans won the midterm elections, Obama negotiated a deal with GOP leaders to extend the tax cuts in exchange for other measures that would stimulate the economy.
Loading...
Comments
Read about the changes to comment thread appearance, moderation.