Obama Tips His Hand With Tim Geithner.

President-Elect Barack Obama is moving forward at an extremely accelerated rate to form his cabinet. Obviously, with the number and severity of major challenges the nation faces, this atypical haste makes some sense. First and foremost on virtually everybody's mind is the financial crisis. The situation took decades to erode to its current point, but people are hoping for a quick fix. It's clear to anyone with even a cursory understanding (like me) that solutions will neither come easy nor fast. Our economy is in shambles, and our public and private debt is out of control. If done correctly, it could still take a generation to work out of the mess that we are in. There likely won't be any miracles.

I've seen and heard a lot of folks discussing what they perceive as unreasonable expectations among Obama supporters. This perception has been no doubt fueled by the Republican-formulated meme that people view our next president as a "Messiah". They believe that he has promised everything to everybody, and that the public will hold him to ridiculously high standards. The reality is that Obama is no extremist, despite what we heard during the election out of the McCain camp. If anything he is a centrist. Leaving aside the center-right or center-left characterizations, we can expect the former Senator from Illinois to take a pragmatic approach to governance. "Better than Bush" is as far as I'm willing to go in my speculations.

If you still fear (or hope) that our new federal executive is a "socialist", you should take a good, hard look at the team he's built so far. Last Friday, it was announced that Timothy Geithner (president of the Federal Reserve Bank of New York since 2004) will be the next Treasury Secretary. The markets responded by jumping ahead 500 points. Geithner is a Brooklyn native, and has attended Dartmouth and Johns Hopkins University. He is a world-traveler, having lived in India, China, Thailand, and Indonesia. It's notable that Geithner is not a "professional economist". His first job in government was with the US Treasury Department in 1988. He served as Under Secretary of the Treasury for International Affairs in the Clinton years, and then moved on to the Council on Foreign Relations and the International Monetary Fund.

Geithner is particularly known for dealing with crisis. This past March he engineered the rescue and sale of Bear Stearns, but also helped make the decision to let Lehman Brothers fail. He is also credited with managing serious troubles in Brazil, Mexico, Indonesia, South Korea and Thailand. During the current debacle in the US, he's had a close working relationship with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. He's an establishment guy, with ties to Clinton advisers like Lawrence Summers and Robert Rubin. His philosophy is no doubt in line with the architects of the $750+ bailout that was recently approved by Congress. He's succinctly encapsulated his working philosophy by saying, “Most consequential choices involve shades of gray, and some fog is often useful in getting things done.” (The Wall Street Journal, Feb. 20, 2007).

On a personal level, it is said that Geithner is avowedly non-partisan, and a registered independent. He's known for his willingness to challenge authority, self-deprecating humor, and vast resources of energy. But he's also reportedly even-keeled and conciliatory. He's likely to maintain his close associations with Bernanke and Summers (who was pegged by Obama to be Chairman of the National Economic Council / Assistant to the President for Economic Policy*). It's evident that Geithner is an advocate of applying a robust activism in order to "save" the markets. Whether that means "business as usual" is yet to be seen, but the scuttlebutt is that Geithner wants even more power to search for solutions in order to avoid another Great Depression.

* Some suspect that Summers was offered this position instead of Treasury Secretary in order to avoid tricky confirmation hearings. Summers is known as an advocate of unfettered "free markets" and deregulation. This article, however, suggests that Geithner has been arguing for more consolidated supervision over the banking and financial industries.

There is also speculation that Lawrence Summers will be groomed to become the next Fed Chairman when Ben Bernanke's term expires in 2010.

"Socialism" Vs. Progressive Taxation.

In my earlier post about "Joe the Plumber", I wrote about how his elevation (by the McCain campaign and the Right Wing media) to the status of "middle class everyman" obscured the very real arguments being made about taxation in America. Apparently the majority of Americans are secretly seething about Obama's proposal to suspend the Bush tax cuts to the very wealthy. We are supposed to believe that 95% of America thinks that the richest 5% is overburdened by progressive taxation. Evidently no one realizes that we have reached the point where the interest on our national debt is approaching the amount we spend on our federal budget. How we are supposed to finance the government is increasingly an underexamined question.

We are in the midst of a financial crisis that is about to hit the American middle class with the force of a category 5 hurricane, and the GOP and its cronies have been trying to make the "socialist" brand stick to Barack Obama and his fiscal and domestic policy platform. I think that (once again) it's time to get our definitions straight. "Socialism" is "any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods". Progressive taxation obviously doesn't fall within the parameters of the definition. But this is what the extreme Right is referring to when it talks about its opponent's "socialist" policies.

Republicans would have you believe that the core principal of Socialism is income redistribution- "Take from the haves to give to the have nots." Not only is this crudely simplistic, but it is a Cold War-based lie that's been repeated since Ronald Reagan's presidency. Perhaps that's why the GOP is running on an anti-intellectual and anti-academic platform- because careful analysis exposes their argument for what it is. The US has been traditionally referred to as a "Capitalist" country. It is therefore illuminating that the vast majority of American economists (81%) support progressive taxation (SOURCE) and Obama's policy positions (SOURCE). But why should you bother listening to the experts when you have "your own" strong opinions?

What does a study of history tell us? If you are dead-set in changing the definition of the word "socialism" to include progressive taxation, then you have to accept that the USA has been socialist since 1862, when the first progressive income tax was passed in this nation (SOURCE). It is therefore an AMERICAN VALUE that has carried us through the years and helped us become a superpower. If you are against this tax policy, the case can be made that you are ANTI-AMERICAN. Naturally a "free market" idealogue is going to attempt to fight this conclusion using any means necessary. But the reality is that their alternative is a fantasy- "free markets" have never existed anywhere except in theory. It's a grand "utopian" fairy tale that wealthy people (and sycophants) have used to put the masses to sleep.

You often hear the "free market" dictum that “wealth creates wealth”. It’s not that there’s no merit to this argument. That’s why I don’t necessarily support “socialism”. But on the other hand, entrenched wealth creates obstacles to competition and innovation. The ideas that make men wealthy eventually become outdated with the changes in the environment. Yet wealthy men often have little incentive to adapt to those changes, because they risk losing their competitive advantage. They are more motivated to protect their wealth artificially by working to maintain the status quo. They have the resources to set the conditions to attain that end. Progressive taxation works against that stagnation.

Thomas Jefferson said, “"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants." I’m not in favor of class warfare or anarchic revolution. I believe in incremental social change. By shifting the tax burden on to the wealthy, you free up the middle class to provide new ideas to adapt to a changing society (and to put their own money behind these ideas)- something that the entrenched wealth of the upper classes has proved itself incapable of. Entrenched wealth stifles innovation and competition the same way ruling classes have in so-called "socialist" nations. Progressive taxation doesn't "punish" achievement. That's a ridiculous notion. It fosters enhanced economic class mobility, which is crucially necessary in encouraging the adaptation necessary over the long run.

Condoleezza Rice Tries To Re-ignite The Cold War.

I can't tell you how many times in the last few weeks I have had people suggest that I am a "communist" because I disagree with them about the proper direction of our county. This would be completely understandable if I was advocating the common ownership of all property in the United States, or if I wanted a single, self-perpetuating political party to control all aspects of the nation's social and economic spheres. If I was stating my support for such a situation, then it would be fair to accuse me of communist tendencies. That's clear because those are the definitive conditions necessary for that type of government. But I've never been in favor of those things. No, instead my opponents are reacting to my support of Barack Obama- who coincidentally has also never called for the aforementioned measures.

How long is it going to be before the McCarthy-ites in the extreme Right Wing abandon the tired and ignorant tactic of branding all those who disagree with them as "communists", "socialists", or "Marxists"? Never mind that these terms are used interchangeably as if they were truly communicating the same thing (a "socialist" is in favor of the government assuming control over the country's "means of production", and a "Marxist" is someone who follows the philosophies of Karl Marx*). Never mind that I've never actually met an American who seriously aligns himself with these views. These are simply outdated labels that have lost any connection to the reality of the world. Someone needs to remind "conservatives" that employ these labels that the Soviet Union collapsed nearly two decades ago.

Still the spectre of our former "superpower" rival seems to loom large on the periphery of GOP perception. I was frankly dismayed to hear about Secretary of State Condoleezza Rice's comments to an audience at the German Marshall Fund on September 18th. If you aren't familiar with what she said, here are some highlights:

“Our strategic goal now is to make it clear to Russia's leaders that their choices are putting Russia on a one-way path to self-imposed isolation and international irrelevance. (...) Russia's international standing is worse now than at any time since 1991. And the cost of this self-inflicted isolation has been steep.”

In typical Red-baiting fashion, the Bush Administration's reigning "Sovietologist" called out the world's largest nation (and the world's largest exporter of natural gas, the second largest oil exporter and the third largest energy consumer) in one of the most provocative manners possible.

Besides the fact that Rice's position betrays the essential hypocrisy of the Bush administration, it exposes the decreasing relevance the United States has on the international stage. Bush can send out his surrogates to deliver veiled warnings to rising powers all he wants- but the sad truth is that the policies put in place by this presidential administration (with the fawning assistance of Republican legislators) have consistently eroded our ability to be respected (or even feared) by would-be competitors. Given our inability to stabilize a third world country such as Iraq, I don't think Rice is fooling anyone. She is merely inflaming any two-bit opponent that dreams of giving the United States a hard time.

I believe it's time for us to take a good hard look at our new standing in the world. No matter what you might hear from Rush Limbaugh, Sean Hannity, Ann Coulter, Bill O'Reilly or John McCain- our self-image as the dominant force in the international realm is becoming nothing but a delusion. Our economy is on the brink of collapse. The free market system that we've been trying to forcibly impose on the rest of the world is in dire need of re-evaluation. More and more we are being seen as a "paper tiger". And as far as "socialism" is concerned, the Bush administration is embracing that approach with its proposal to nationalize the home mortgage industry. It's time to abandon previous assumptions.

*Characterized by a "system of economic and political thought developed by Karl Marx, along with Friedrich Engels, esp. the doctrine that the state throughout history has been a device for the exploitation of the masses by a dominant class, that class struggle has been the main agency of historical change, and that the capitalist system, containing from the first the seeds of its own decay, will inevitably, after the period of the dictatorship of the proletariat, be superseded by a socialist order and a classless society."

- Dictionary.com