The Biggest What-If Hovering Over Obama’s Presidency

Senior officials don’t define administrations; presidents do, by making
the strategic decisions that reshape events. For the latest confirmation
of this age-old truth, we need look no farther than Jackie Calmes’s excellent article on Tim Geithner,
the one economic advisor Obama “fought to keep.” Toward the end of her
piece, she reports the following, which occurred on a conference call
shortly after the 2008 election:

Mr. Obama spoke of the transformative domestic policies he
had promised and now would pursue. Mr. Geithner, say people familiar
with the exchange, cautioned that the crisis Mr. Obama had inherited was
so severe that it would constrain him.

“Your legacy is going to be preventing the second Great Depression,” Mr. Geithner said.

Vexed, Mr. Obama replied, “That’s not enough for me.”

And there you have it: an advisor giving the president-elect wise
advice, which was instantly rejected as insufficiently transformative.
The rest is history.

From the moment he was elected, Obama had two agendas—the agenda of
choice, on which he had waged his campaign, and the agenda of necessity,
forced upon him by events. In effect, Geithner was arguing that the
latter would require the president-elect to defer much of the former.
Obama responded by deciding to do both, simultaneously. That is the
choice that led to a year spent on measures such as health insurance
reform and cap-and-trade legislation. While the former was successful
and the latter failed, both initiatives no doubt measurably contributed
to the Democrats’ 2010 mid-term debacle.

We will never know what would have happened if Obama had taken his
Treasury Secretary’s advice, any more than Stephen King knows what would
have happened if JFK had lived. Still, the possibilities are
intriguing. Would the president have insisted on tougher treatment for
miscreant financial institutions, starting with Citigroup, despite his
Treasury Secretary’s evident misgivings? Would he have demanded a
serious response to the housing crisis, despite his National Economic
Council director’s belief that all the policy options were
counterproductive and stupid? Would he have pushed to redeem his
campaign promise to create a national infrastructure bank? Would he have
traded additional stimulus for a long-term agreement on fiscal
stabilization? Would he have figured out how to end the Bush tax cuts as
part of comprehensive tax reform? Would he have broken the logjam on
trade much earlier in his term? Would he have exerted more pressure on
the Chinese for a comprehensive rebalancing of our economic

Of course, many of these moves would have required a modicum of
cooperation from Republicans, something that was evidently in short
supply during Obama’s first term.  But he might have gotten them to go
along with a tougher stance toward the banks, as the nascent Tea Party
revolt was demanding, and perhaps a firmer policy toward China, which
even Mitt Romney is now advocating. Many liberals probably would be
unwilling to trade the administration’s accomplishments in extending
health insurance (however flawed they see it as being), for any of the
economic options I’ve listed. But if growth doesn’t pick up over the
next year and Obama ends up as a one-term president, his supporters will
long ask themselves what might have been—if he had accepted the logic
of his situation and played the hand he was dealt.