:: Govind Talwalkar

Obama Cabinet is old wine in a new bottle

By Govind Talwalkar

US President-elect Barack Obama has announced most members of his Cabinet. Looking at the nominees to the main portfolios, it can be described as old wine in a new bottle. This is not objectionable per se but since Mr Obama came down heavily on Washington’s old ways during his campaign, it has raised many eyebrows.

As there is a terrible economic crisis, it was proper to give priority to the appointment of an economic team, which consists of old hands. The new treasury secretary would be Tim Geithner, while Larry Summers would be the chief White House adviser. Paul Volcker is to preside on the economic advisory board.

These three are experienced Washington hands. Mr Geithner held a junior position when Mr Summers was the treasury secretary in the Clinton administration, and later became the president of the Harvard University. Mr Volcker is a well-respected economist who, as the Federal Bureau Chief under Ronald Reagan, brought down inflation by raising taxes and other methods. Mr Geithner became the governor of the New York Fed. He is one of the directors of the Central Fed.

They are expected to find a solution to the present economic mess. Ironically, these were the same officials who implemented the policies that have led to the meltdown. Under the Clinton administration, Bob Rubin and Mr Summers ushered in the deregulation policies. Deregulation was the need of the hour but it needed oversight. Neither the administration nor the Congress took precautionary measures.

It is also noteworthy that none of these financial wizards could anticipate the meltdown and are now at their wits end to find a solution. The first bail-out plan was very tardy. It had to be followed by a larger one in September. In all these measures, which have not brought the economy out of the tunnel, Mr Geithner was involved as one of the directors of the Fed. One must also remember that Mr Rubin and Mr Summers were the ones who pressurised some Asian nations, such as Malaysia, to liberalise their economy on a very large-scale and have thereby ruined it.

Now these same "world-class experts" have been selected by Mr Obama. It is ironical that those who went the whole hog for unchecked liberalism would have to change the course; and while keeping the economy free, they would have to provide for some oversight and checks. It is hoped that Mr Summers and his team would think twice before advising or pressurising other nations to set their house in order.

On the national security front, Mr Obama has selected Hillary Clinton as the secretary of state, Robert Gates as the secretary of defence and General James Jones as the national security adviser. Susan Rice (no relation of Condoleezza Rice) would be the ambassador to UN. Ms Susan Rice is not as experienced as the other three. Mr Robert Gates is an old hand with wide experience and even though he currently holds the same portfolio, he is a realist, not a neocon.

There was much speculation about Ms Clinton. The Obama camp, and especially the media, mounted a campaign against her. The media has become swollen headed as it thinks it brought victory to Mr Obama. As most of them hate the Clintons, they did everything in their power to obstruct Ms Clinton’s appointment. They warned Mr Obama that Ms Clinton had a hidden agenda and would undermine him. They had no doubt that she would compromise Mr Obama’s position with husband’s active participation. This unsolicited advice was given not only by the US media but came from across the Atlantic. Thus, the Times, the Guardian and the Economist did not lag behind the New York Times and the Washington Post.

But Mr Obama did not oblige them. He pricked their bubble of arrogance. When Ms Clinton was appointed, the same worthies started praising Mr Obama for his generosity and confidence for appointing his rival. The fact is that Mr Obama only accepted reality and opted for the lesser risk. Ms Clinton’s critics forget that in the primaries she had won 18 million votes and had almost trounced Mr Obama; she could not win because of the complicated rules of the democratic primaries. With such a solid backing of the Democratic party voters, Ms Clinton would have been a formidable senator. As the rules of legislature in the US permit a senator or Congressman to oppose his or her own party without inviting any disciplinary action, Ms Clinton could have made most of this freedom.

Though Mr Obama has cast aside his campaign rhetoric and has put together a team of old Washington hands, he still talks of changing Washington, and the whole world. Of course, when he launches his administration, he would have to scale down his rhetoric because he would find that the country, which borrows left and right and has isolated itself in the last eight years, has very little leverage to influence today’s complicated world.

Mr Obama had promised to tax the excessive profits but these days he does not mention such measures. He seems to be firm about universal healthcare. But his hands would be tied by the extraordinary economic meltdown. Financial aid to students and unemployed would also have to be put on hold or restrained.

The agreement with the Iraqi government about troops withdrawal would overshadow Mr Obama’s promise to bring the troops back in 16 months. He has to give priority to Afghanistan and Pakistan as the terrorist activities in both these countries are on the rise and the governments there are terribly weak. Without checks, an enhanced monetary aid to them would help the terrorists and not the people.

It is strange that when discussing the situation in Afghanistan and Pakistan, Mr Obama rarely mentions India. If he thinks that he would be able to deal with this problem without including India, he is in for a rude shock. Some of his official and non-official advisers tell him that the US would have to mediate and help solve the Kashmir dispute. This would just recoil on the new administration.