The Magazine

Geithner Lays an Egg

And that's only one of the problems with the Obama economic strategy.

Feb 23, 2009, Vol. 14, No. 22 • By LAWRENCE B. LINDSEY
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The Geithner announcement was repeatedly put off while each of the options was publicly discussed. In the end the political decisionmakers decided there was no politically acceptable decision. But expectations had been building, stoked higher with each postponement of the speech. When Geithner finally spoke and by omission essentially admitted that the Obama administration hadn't come up with a solution, the stock market plummeted.

But it wasn't only the stock prices of America's publicly traded companies that collapsed. So did the stock of the Obama administration. A discredited stimulus package followed by an overly hyped but largely vacuous bank-rescue speech proved to be too much. The mainstream media, which had given Obama a free ride since the election, turned on their choice. In the space of just over three weeks, Obama and company squandered the greatest stock of political capital any president since Lyndon Johnson had inherited from an election.

It is certainly not too late for Obama to create a sensible government policy and assist in an American economic recovery. But he has to stop campaigning and start governing. This means fewer speeches (his strong point, and something he evidently enjoys) and more noodling through wonky decision trees and detailed analyses in concert with expert advisers on both the inside and the outside. All presidents in my experience--and I have served four different administrations--have to learn the difference between campaigning and governing. Obama, whose vita contains lots of campaigning for high offices but remarkably little tenure in such offices, has a bigger challenge than most in making this transition. But he is a smart and well-intentioned fellow. Most important, he has a strong survival instinct. Perhaps he'll sense that unless he makes a rapid transition, he will be a one-term president as the economic catastrophe he warns against so often comes to pass.

Lawrence B. Lindsey, a former governor of the Federal Reserve, was special assistant to President Bush for economic policy and director of the National Economic Council at the White House. His most recent book is What a President Should Know .  .  . but Most Learn Too Late (Rowman and Littlefield).