Geithner Should Go

The Obama Administration appears a bit schizophrenic these days. In California, the President sounded like the pitch perfect voice of populist anger at the AIG bonuses and using – finally – a key word in diagnosing our economic ills, "culture." But, Secretary of the Treasury Tim Geithner still is figuring out how best to shore up that culture and blithely failing to perceive the ways in which that culture revolts most Americans. He should be fired.

President Obama was forthright about the ultimate problem with the AIG bonuses: "And that is a system and culture that made them possible – a culture where people made enormous sums for taking irresponsible risks that have now put the whole economy at risk." He might have added that this culture did not even really produce anything of actual value, that not one of these bonuses went to anyone who invented a more fuel efficient car or a way to more cheaply bring the internet to rural areas or a cure for a pernicious disease. They created derivatives and credit default swaps, bets on hedges and sophisticated ponzi schemes. One of the blind spots of unregulated capitalism is that it values anything someone else is ready to buy.

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The President also tried to tie in his budgetary proposals with the remedy for what ails but, again, one wishes he would go further. The idolatry of the market that previously prevented health care reform could scarcely be in more ill repute. And, while people are generally angry at the rich is not a bad time to suggest higher tax rates, not now, when the economy is still trying to prevent free fall but as part of a long-term plan to genuinely change the culture of greed that has dominated our economic counsels for too long.

Secretary Geithner, alas, is an imperfect messenger for such reforms. He is as much a part of the culture that got us into this mess as it is possible to be unless your name is Hank Paulson. Geithner was at the New York Federal Reserve during the start of the bailouts last year, so he cannot plead ignorance of arrangements like the AIG bonuses: If he did not know, he should have known. Geithner has not once shown any evidence that the problem is not merely one of excess but one of structural limitations, that the government must police the economic world because people cannot be trusted to resist greed in a system that rewards it. Even Alan Greenspan gets that his assumptions were wrong about how capitalists would behave. Did I miss a similar mea culpa from Geithner?

And, of course, anyone who cheats on his taxes is someone who does not take prima facie umbrage at gaming the system.

It is funny to see how the President seems to understand that the "experts" in the economy were wrong or corrupt, that the values of common people are often truer and more moral than the powerful and the smart, that populism need not be ugly. Yet, on an issue like embryonic stem cell research, we have to let the experts decide not "ideology" even though "ideology" is another way of saying values organized into a coherent whole. Of course, with conservative Sen. Orrin Hatch and Nancy Reagan supporting stem cell research, I have given up hope of expecting Obama to see the light on that issue. But, there is still hope that he will translate his populist words into more populist policies that will not bolster the economic culture of yesterday but replace it with an economic culture more responsive to the needs and desires of the common man. He can start be finding a new Treasury Secretary.

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8 years 8 months ago
Let's not lose track of the fact that these bonusses represent a miniscule fraction of the actual money paid out to AIG by the Government. Let's also not lose track of the fact that we have much bigger issues to solve right now. These bonsusses have almost all been paid out. What a waste of time and energy it is to focus on this issue. It is diverting attention from much bigger problems. Go ahead and fire Geitner, but not on this issue, on his general ineptitude But know this, once you fire Geitner, there will be one less Officer at the helm of a sinking ship, the U.S. Economy.
8 years 8 months ago
Mr. Winters, Capitalism is not ''unregulated,'' but it is arguably underregulated. Take heart, though. The pendulum is swinging back. But don't hold any illusions that capitalism is on the wane. The rich will get richer, and the poor we will always have with us. If we are on the verge of a utopian age of enlightened American Capitalism (I haven't seen the evidence yet), it will be due to the Grace of God, not because bloggers fomented rage among the populous against ''the rich.'' I hope that Wall Street becomes a less lucrative place to work (despite the fact that I work there) and that our best minds choose instead careers designing wind or solar energy farms, or electric cars, or bullet trains. But it is their choice. Also, it is a tactic below your considerable talents to libel Mr. Geiner as a tax cheat. A colleague of mine who worked at the IMF attested to me that many IMF employees have difficulty understanding their tax obligations, and there are apparently few professional tax preparers who are familiar with the arcane tax regulations that pertain thereto. Mr. Geithner may be an ''imperfect messenger,'' but only because the populous doesn't know enough about credit and derivatives markets to understand how close we came to economic apocalypse back in September 2008. Mr. Geitner has spent most of his career in public service, and I don't think he deserves to be painted with the broad brush you are wielding at the moment. Finally, while you are inveighing against the ''culture of greed'' on Wall Street, I hope you may reserve some disdain for the broader American ''culture of consumption,'' which has us lining up at WalMart for low prices on plastic trinkets made in China by impoverished workers for slave wages. We are all culpable for its excesses, and our churches are complicit for their failure break through the noise with a compelling alternative vision for the people of the greatest nation on earth.
8 years 8 months ago
The problem may be that there is no one with whom to replace Geithner. There may be no hero who understands the culture, but who rejects it and has a vision for a better version of capitalism. This is because no one really knows how an economy works. All we seem to have are lots of people who can figure out how to exploit various parts of an economy. These are the "experts" we have to draw from.
8 years 8 months ago
Balony and Blarney. The bonus flap was likely caused because someone in the Treasury Office of the General Counsel was trying to protect the government from lawsuit and recommended that past bonuses be exempt. That lawyer probably convinced the program office and the contracting office that nothing could or should be done ex post facto. The Secretary was likely not in the loop nor should have been. You don't bring such technicalities to the attention of the Secretary. I expect better from this magazine than what is obviously piling on. Geitner should stay right where he is. As to the current tax bill - it is dancing on the edge of being a Bill of Attainder - legislating penalties against people specifically. It does not quite land there as it is considered a tax rather than a fine - but it is certainly close.
8 years 8 months ago
I would love to give you a good course in Italian and have you work in the Vatican Press office.This article pierces through the contradictory logic shown not only by the President but also by many media outlets and gives us a glimpse at the neccessity of a guiding principle that does not change with the day.However,to replace him this quickly may be wrong on many counts as it will open the door to every person who makes a mistake being fired and this is not good for anybody.I admired President Bush for sticking with Rumsfled even though he had made mistakes ,the problem was he was too shallow to learn from them.I think the "penitential "option is better.

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