Who Said That Treasury Secretaries Have to Come From Wall Street? How About Paul Krugman?

January 07, 2013

Mark Weisbrot
The Guardian Unlimited, January 5, 2013

See article on original website

President Obama hasn’t picked a Treasury Secretary yet for his second term, so he has a chance to do something different.  He can ignore what Wall Street and conservative media interests want and pick somebody who will represent what the electorate voted for.  And not even just the people who voted for him:  There are a lot of Republican voters out there who are also unemployed.

I know what you are thinking: This is impossible.  There is too much money and power on the other side of this idea.  Well, maybe. But Obama has surprised us before. Last June he picked Jim Kim to run the World Bank.  This was unprecedented and a historic change; Kim is practically the only World Bank president in 60 years that was not previously a banker or a war criminal.  On the contrary, he had spent most of his entire adult life trying to help poor people get health care. Now of course the World Bank is not a cabinet appointment, but there is a lot of money that flows from that supposedly multilateral institution to the coffers of U.S. corporations.  You can bet that Jim Kim was not their top choice.

Obama is currently coming under heavy fire for his reported choice of former Senator Chuck Hagel to be Defense Secretary.  Hagel wants to get out of Afghanistan soon, does not want a war with Iran, favors talks with Hamas, and supports cuts in military spending.  Not only the neoconservatives, but some of the most powerful interests in the country, including the right-wing of the Israel lobby, have launched a smear campaign.  But so far, Obama has not backed down.  It could have something to do with the fact that he does not have to run for re-election.

Krugman would be tough to oppose on any substantive grounds.  He has a Nobel Prize in economics (also the John Bates Clark award for best economist under 40).  He is probably the best-known living economist in the United States and perhaps the world.  He has been right about the major problems facing our economy, where many other economists and much of the business press have been wrong. A few examples: He wrote about the housing bubble before it collapsed and caused the Great Recession; he has forecast and explained that large budget deficits and trillions of dollars of “quantitative easing” (money creation) would not cause inflation or long-term interest rates to rise; and that the “confidence fairies” would not reward governments that pursued austerity in the face of recession.

Most importantly, Krugman is on the side of the majority of Americans.  He has written extensively in favor of policies that favor job creation, explained the folly of budget cutting in the face of a weak economy, and opposes cuts to Social Security and Medicare benefits.  Why should the secretary of the treasury have to prioritize the interests of Wall Street and the “criminal enterprise” of big finance, as Charles Ferguson – academy award-winning film maker and political scientist describes it.

The U.S. Treasury Secretary also has an important influence on the rest of the world, as the most powerful force within the IMF, G-20, and G-7 groupings.  Krugman has written extensively about the stupidity of the last few years of economic policy in Europe, which has been a major drag on the whole world economy.  The Treasury Secretary would have only limited influence on Europe through the IMF, but in developing countries the U.S. Treasury Department pretty much is the IMF.  Wouldn’t it be nice to have a Treasury Secretary that favored employment, poverty reduction and development rather than unnecessary austerity in developing countries? 

The whole debate over economic policy in this country is taking place as though it exists in a fictional, upside-down world.  With the federal government paying less than one percent of GDP in net interest on the debt, the lowest in more than 60 years, the loudest voices (backed by the biggest money) are daily trying to persuade people and policy-makers that deficit reduction is our most important priority. Even though most of them know that this will slow the economy and make it more difficult for the 22 million people who need work to find it.

It would be great to have a Treasury Secretary who can cut through all the crap.  And since most of Wall Street’s money went to Romney in the November election, Obama doesn’t owe anything to the people who crashed our economy and are now fighting to make senior citizens, working and poor people reduce their living standards?

The renowned actor and human rights activist Danny Glover has launched a petition to the president for him to nominate Paul Krugman for secretary of the treasury.  It’s worth signing.

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