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24 Nov 2008 04:01 pm

In an addendum to his article, Noam Scheiber imagines how Geithner and Summers will divide up work:

1.) Substantively, Geithner will have the chief responsibility for resuscitating and reforming the financial markets, an area where he’s developed extensive expertise at the New York Fed. Summers will, in turn, be the guy the administration defers to on broad macroeconomic decisions--how big a stimulus bill should be, how the money should be allocated between unemployment benefits, aid to states, infrastructure projects, tax cuts, etc. (One thing to keep in mind about Geithner: He’s one of the least territorial people ever to work in government, with the possible exception of his old boss Bob Rubin, who was also famous for this. If Geithner thinks a colleague is in a better position tackle something, his impulse is to get out of the way.)

2.) Geithner and Summers will also have complementary procedural roles when dispensing advice to Obama. Summers’s instincts are pretty activist--he tends to favor aggressive government intervention during a crisis. Obama is innately cautious. Even when his head tells him to be aggressive, his gut tells him to slow down. The problem with a combination like this is that it can lead to stalemate: The activist guy pushes and the cautious guy clams up.

Which is where Geithner comes in. Geithner has, over the years, displayed a knack for getting to where Summers is headed, but with less indigestion all around. For example, in the fall of 1997, Geithner, Summers, and then-Treasury Secretary Bob Rubin had to formulate a response to the Korean financial crisis, which was on the verge of spreading around the globe. Summers wanted a huge show of force--accelerating an existing IMF package and kicking in a U.S. bailout to boot--which made Rubin queasy. Geithner helped broker the compromise that won Rubin over. (It involved asking private banks to re-schedule Korea’s debts so the country wouldn’t need as big a bailout.) I can imagine a similar situation arising under Obama.

3.) Geithner will take the lead on all things political. He’s developed strong relationships up and down Wall Street over the last five years, so he shouldn’t have trouble selling his reform agenda there. He also has extensive experience navigating Capitol Hill, having helped advance the Clinton administration’s debt relief agenda there during the mid-to-late ‘90s, over deep conservative opposition. Anyone who can convince the Jesse Helmses of the world to ease up on third-world countries can probably guide a stimulus bill through Congress.

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