Cheney-Rumsfeld Replay

by digby

Edward Harrison at Naked Capitalism offers up a convincing look at the dynamics that led Obama to choose the path he’s chosen in dealing with the financial sector. Here’s the conclusion:

When historians look back at the Bush 42 presidency, it will be defined by 9/11 and the wars in Iraq and Afghanistan. While George W. Bush was politically pre-disposed to the Neo-con world view, it was really advice from Dick Cheney and Don Rumsfeld which made Afghanistan and Iraq possible. George W. Bush was famously not well-versed in foreign affairs, having almost never travelled abroad. He was completely dependent on Dick Cheney and Donald Rumsfeld to make foreign policy (although he could have listened more to Colin Powell, his actual Secretary of State; again it goes to predisposition). So, I see George W. Bush’s presidency as having been defined by foreign policy and the War on Terror and, by extension, on Rumsfeld and Cheney. Fast-forward to Barack Obama’s presidency and you have an almost identical situation, this time with the economy instead of foreign policy and Tim Geithner and Larry Summers instead of Donald Rumsfeld and Dick Cheney. But, as with George W. Bush, it goes to pre-disposition. Paul Volcker was a critical member of the Obama 2008 campaign. He also was a key member of Obama’s economic policy team. But, he has been speaking a very discordant message that is not in sync with team Obama. So, as with Bush and his marginalization of Powell, one has to believe Barack Obama has chosen to side with Geithner and Summers over Volcker.

I don’t know about Volcker, whom I always thought of as a shock doctrine sort of guy, but Obama certainly was predisposed to ignore the Krugman camp, which includes a number of other economists, like Harrison, who argued for bank “nationalization” and other more aggressive methods of containing the damage. As the termperamentally thrill seeking Bush threw in with the nuttiest foreign policy elders of his own party, Obama, being a far more deliberate type, threw in with the most staid and establishmentarian economic elders of his.

It’s not all that surprising. When confronted with a crisis, people turn to those with whom they have an instinctive bond. But in both cases, they made the wrong decision for the moment in which they found themselves. It’s an interesting problem but I don’t have an answer for how to reasonably anticipate such a thing, much less change it.

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