Obama’s ‘New’ Economic Advisory Team

You’ve heard the market looks ahead to the economic realities in the future. If expectations are positive, the market rallies. If expectations are negative, it falters. Nothing has changed in recent days. The Bush team does not wield the same power they did before the election. They’re not irrelevant yet. After all, the current government’s bailout of Citigroup stopped a further decline today. However, the outgoing administration is growing increasingly unimportant as we get closer to moving day.

Investors are shifting their focus. Instead of being transfixed on Washington, the market now looks to President-Elect Obama’s Chicago press conferences. Over the weekend, Democrats assembled an economic team to combat the worst financial crisis since the Great Depression. It seems the same sort of optimism that ushered in Franklin Roosevelt’s administration is helping Barack Obama’s team. Whether it’s a genuinely different approach to the crisis remains to be seen.

New Faces, Same Game

Today, Obama announced his pick of New York Federal Reserve President Timothy Geithner to succeed Henry Paulson at the Treasury Department. Not content with the original $700 billion, Geithner will spearhead another $700 billion stash of Federal Reserve notes to shore up the markets. Considering recent history at the Treasury Department, I’m not sure how this pick is fundamentally different from Paulson.

Next up, we have Lawrence Summers, a Clinton-appointed Treasury Secretary as head of the National Economic Council. Summers, formerly a Harvard University President, and protégé to former Treasury Secretary Robert Rubin, was tapped after serving on Obama’s Transition Economic Advisory Board. Summers served at the World Bank and under Clinton during several economic crises. Summers is a familiar face from a bygone administration.

Another important pick was Peter Orszag as Obama’s budget director. Current head of the Congressional Budget office, Orszag will serve in the accounting arm of the new Obama administration.

The More Things Change…

Here’s the interesting thing: the International Herald Tribune noted how each of these pending appointments were protégés of Robert Rubin in precious roles. Rubin, a former Clinton-Treasury Secretary, has been enmeshed in his own problems with the Citigroup debacle. Whether he has anything to do with it is not yet clear, but his presence overshadows Barack Obama’s new appointees.

Here’s the point: Obama’s economic team is a far cry from substantive change at Treasury. Much like his appointment of Joe Biden, Obama is surrounding himself Democrat loyalists in his new administration. It could be a smart tactic. Do we really want unseasoned appointees heading up these institutions at such a critical time? Maybe not. But to call it ‘change’ is not exactly honest. It’s change only insofar as there’s now a (D) next to each person’s name.

But honestly, did we expect anything different?