'MY GOD, this is a hell of a job." Thus the 29th president of the United States, Warren Harding, summed up his role more than 80 years ago as he led the country out of the ravages of the First World War.
It is difficult to imagine such language from the preternaturally composed Barack Obama, but the new President is no doubt thinking along those same lines as he prepares to shoulder the lead in hauling the US, and the world, out of financial chaos.
Although he won't take office until January 20, Obama is racing to put together his economic team in a show of continuity amid the current crisis.
Some key appointments have been made, and other names look certain to feature prominently. However, the members of this brain trust do not line up into neat ideological rows. This, plus the possibility of further financial trauma during the next 10 weeks, makes it difficult to predict the precise shape of Obama's economic battle plan.
With hundreds of billions of dollars already committed to financial bailouts, a stable transition is regarded as paramount.
"It is absolutely key," says Paul Ashworth, senior US economist with Capital Economics. "Obviously, you want the transition to look like it is going smoothly, but there is real work that needs to be done as well.
"The Treasury secretary is a vital role. Whoever is the next Treasury secretary is going to need a lot of sway and influence, and I am sure he will get it."
Following two straight days of huge losses on Wall Street – with further grim economic data outweighing any post-election euphoria – Obama held his first meeting with his Transition Economic Advisory Board on Friday. This 17-strong team of economists, businessmen and policy experts includes Lawrence Summers, who served as Treasury secretary under Bill Clinton; Robert Rubin, Summers' predecessor and now an executive at Citigroup; and Paul Volcker, chairman of the Federal Reserve during both the Carter and Reagan administrations.
The men believed most likely to take over at the Treasury department are either Summers or his former protégé, Tim Geithner, who is now president of the Federal Reserve Bank of New York. Battered stock markets are likely to react strongly one way or the other when Obama confirms his choice, as investors, industry and financial leaders are keen to see this role filled by someone with clout and credibility.
Blunt-speaking Summers, who succeeded Rubin to serve as Treasury secretary from 1999 to 2001, is said to have a deep understanding of global economic issues.
Though Geithner has never held the top job at the Treasury, he spent 13 years at the department between 1988 and 2001, where he worked in three administrations for five different Treasury secretaries.
He eventually left to join the International Monetary Fund, and after nearly three years there, Geithner was appointed president and chief executive of the Federal Reserve Bank of New York. That has put the youthful-looking if somewhat nerdy 48-year-old at the epicentre of the current financial crisis, meaning he could hit the ground running if selected by Obama.
Another rumoured to be under consideration for the top Treasury post is Volcker, who has advised Obama on economic matters in the latter stages of the presidential campaign.
While one of these men grapples with the new and complex financial relationships between government and industry, others will have equally important yet lower-profile jobs in helping to shape future policy.
Two men certain to be at the centre of this universe are Jason Furman and Austan Goolsbee, academics who contributed to the Obama offensive despite holding positions on certain issues that appear contrary to the President-elect's campaign stance.
Goolsbee, a professor in Obama's home state at the University of Chicago Graduate School of Business, first advised Obama when he ran for the Senate in 2004. Goolsbee is linked to the "Chicago School" of economics established by Milton Friedman, which favours market forces in preference to mandates and regulations.
However, 37-year-old Goolsbee's work is more commonly referred to as part of the "new social economics". In a nutshell, he believes inequality should be addressed through support for education, an agenda he would pursue if, as expected, he lands the top post at the Council of Economic Advisers.
Furman, who has taught at both Yale and Columbia universities, has a long history of marrying economics with Democratic politics. He has worked for Bill Clinton, Al Gore and John Kerry, and is now predicted to head the National Economic Council. Prior to becoming director of economic policy for the Obama campaign, he was head of the Hamilton Project, a pro-trade policy research group founded by Rubin.
Described as a free-trader who supports a robust social insurance safety net for displaced workers, 37-year-old Furman also favours Reagan-style reforms to broaden the tax base by lowering corporate rates and limiting exemptions.
"These guys are not the sort of protectionist, left-wing, anti-outsourcing names that you might expect," Ashworth says of Obama's advisers. Although the US financial community is not yet fully convinced, Ashworth believes there will likely be a tilt to the left under Obama, rather than a full-scale shift.
Meanwhile, Rubin has said he will not give up his highly paid position at Citigroup to return to a government post. However, the influence of the 70-year-old executive can be clearly traced throughout Obama's economic brain trust. Leftist commentators have speculated that this could lead to the kind of policy shifts seen when Rubin worked with Clinton during his transition into office.
In the weeks before his inauguration, Clinton met then-Goldman Sachs chief Rubin, who persuaded the president-elect to embrace a more austere spending programme together with further market liberalisation. By the end of his two terms in office, Clinton had signed the largest capital gains tax cut in history and had also reduced spending as a share of GDP by an unprecedented three percentage points.
Such luxuries will not be within Obama's purview, as US government borrowing is set to explode in the coming months.
Overhauling the healthcare system, changes to environmental regulations and more stringent labour laws may have to take a back burner. Further spending to prop up beleaguered consumers and battered sectors such as the building and automobile industries looks all but certain. Tighter regulations on Wall Street and shifts in personal income tax rates are also on the cards.
"The destruction of US household wealth has no post-war precedent," says Andrew McLaughlin, chief economist with the Royal Bank of Scotland. "An important job of the new President will be to recalibrate expectations around what it is possible to do with policy alone.
"This looks like being an awfully long haul, and he will have to catch a few breaks along the way."
The full article contains 1159 words and appears in Scotland On Sunday newspaper.
