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Is Obama creating an economic “team of rivals?”
By Caren Bohan
Published in The Saudi Gazette on 08 - 02 - 2009

President Barack Obama won praise on Wall Street for enlisting the towering figure of Paul Volcker to help shape economic policy, but analysts wonder if he might clash with other high-profile Obama advisers.
The 6-foot 8-inch Volcker, who was Federal Reserve chairman during much of the 1980s, is known for breaking the back of double-digit inflation through interest-rate increases that also led to a recession and a storm of criticism.
The 81-year-old Democrat has kept a hand in policy ever since, including leading an investigation for the United Nations and serving on the Group of 30, a financial advisory group made up of central bankers and private-sector experts.
Obama, who says he wants to avoid insular thinking, has put Volcker at the helm of a 15-member panel of outside experts from labor, business and academia who will advise his effort to fix the worst economic crisis in decades.
Joined by Volcker at the White House on Friday, Obama announced the bipartisan panel would include Robert Wolf, chairman and chief executive of UBS Group Americas, and other corporate executives.
The board also includes labor leaders and policymakers like former SEC chairman William Donaldson.
But some analysts think frictions may develop with high-profile aides in the administration, including Lawrence Summers, a White House adviser and former Treasury secretary, and current Treasury Secretary Timothy Geithner, a former head of the New York Fed.
Another important Obama aide is Christina Romer, who chairs the White House Council of Economic Advisers and is an expert on the Great Depression.
“I have a lot of respect for Paul Volcker but I'm confused about how many economic advisors seem to be involved in White House decision-making,” said Robert MacIntosh, chief economist for Eaton Vance Management in Boston.
Too many cooks?
MacIntosh said that a time when Obama is working to pass a massive stimulus package, stem turmoil in the banking system and overhaul Wall Street regulations, there might be “too many cooks” in the kitchen.
Known for his flintiness, including a penchant while at the Fed for commuting between Washington and New York in an old Ford car, Volcker became one of Obama's most trusted policy advisers during the presidential campaign.
He and Obama met at a dinner in mid-2007 when Obama went to New York to meet with people on Wall Street. Volcker had read “The Audacity of Hope”, which lays out Obama's political philosophy, and liked the book, according to an administration official.
Over the fall and winter of that year, Obama sought out the former Fed chief's advice and Volcker later boosted his campaign with an endorsement.
The administration official said Obama and Volcker shared a common view, in particular, on the belief that the patchwork system of US regulatory agencies needs to be overhauled and strengthened for the modern era.
Summers also became a key adviser to Obama, though not until later in the campaign.
Geithner is scheduled on Monday to unveil the Obama administration's plan to stabilize the financial system.
Team of rivals
Obama's economic team mirrors the “team of rivals” advising him on national security issues.
That team includes Secretary of State Hillary Clinton, a former first lady who vied with Obama for the White House last year, National Security Adviser James Jones, a former Marine commandant, and Pentagon Secretary Robert Gates, who served in the same role in the Bush administration. The administration official, who spoke on condition of anonymity, played down the prospect of rivalries within the economic team.
The Economic Recovery Advisory Board will take a big-picture look at policy. “They aren't involved in the day-to-day decision-making of the government by design,” the US official said.
Roger Kubarych, economist with UniCredit Markets in New York, said Volcker is known as a “great cross-examiner.”
“He's good at drawing in different points of view and pondering them. That can delay decision-making but it means he is less likely to hopscotch from one idea to the next.”
Obama, who resisted the advice of White House lawyers and insisted on keeping his Blackberry when he took office so he could keep in touch with people in the outside world, is going to lengths to avoid being stuck in a “bubble.”
The decision to set up the panel led by Volcker is another sign Obama wants to avoid a “bunker mentality,” said Stephen Wayne, a professor of government at Georgetown University.
“He's going to make sure he's not going to face the group-think mentality which the Bush administration encouraged,” Wayne said.
But he said the downside of that is that there will be differences of opinion and “those problems will be hyped by the media so it will look like the team is not playing together.”


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