Beyond the Election: Who Controls Presidential Policy
Who will be the next president of the United States? Hillary Clinton? Jeb Bush? Maybe some unknown candidate that has yet to hit the national stage? It’s two years out from the 2016 election and we’re already speculating about it, knowing that endless polls and the will she or won’t he questions will soon consume more and more of the national political conversation with each passing month. And yet despite all of the focus on the horse race, we rarely spend time to ask, how much does the outcome really matter? The answer is, maybe not much, or at least a lot less than we might think.
Certainly, Congress and the courts are more important than we often give them credit for but perhaps the most overlooked aspect of our government is the presidency itself. By the presidency, I simply mean the advisers and administrative apparatus supporting the president for any particular policy area. For the issue of public finance, this includes the Treasury, Federal Reserve, Office of Management and Budget, Council of Economic Advisers, and National Economic Council. While the next president will have memorized a list of talking points on every issue – a requirement no doubt for the election – he or she will almost certainly not be an expert on any single one. Instead, the president will appoint a team of principals that all but sets the choice of policy alternatives from which to choose. However, these extremely powerful gatekeepers of information and alternatives are almost never discussed during the campaign. And yet, in a sense, they are the true presidents of their respective policy domains.
Think about the 2008 election and the Obama administration from this perspective. The primary campaigns were well underway by the start of 2007, with funding raising, speculation, debates, and campaign stops. Starting in 2008, the two Democratic candidates battled for months in a heated competition and the outcome essentially turned on the ability of the Obama campaign team to outmaneuver the Clinton team. Finally, Obama and McCain went at it head-to-head in the general election and, after a combined total spending of roughly $2.4 billion dollars and more talk about “change” than perhaps anyone could ever actually believe in, Obama was elected. It was supposed to be a critical election for a number of reasons, one of which was that it marked the transition from an extremely unpopular Republican administration to a new Democratic administration.
But what did our $2.4 billion and two years of attention really give us? It depends on the policy area. If we look at public finance, that is, fiscal and monetary policy, the answer is, not much. In fact, the lack of “change” under the “new” administration seems almost shocking considering the Great Recession and current levels of economic inequality. The conventional response is that polarization, congressional gridlock, or interest groups all played some part. And that’s true to an extent. But perhaps more importantly is that although we got a new president, if we look a little closer we’ll see we never really got a new administration.
Timothy Geithner, the Treasury secretary and a former Republican turned independent, had been the president of the New York Fed during the financial crisis and had worked closely with the Bush administration. And Ben Bernanke, the chairman of the Fed and a Republican appointed by Bush, was retained by Obama and later reappointed. Moreover, despite the contested Democratic primary, two of the other three principals were from the Clinton administration. Lawrence Summers, the chairman of the National Economic Council, was the Treasury secretary under Clinton, and Peter Orzsag, the director of the Office of Management and Budget, was a special assistant for economic policy. The only new adviser was Christine Romer, the chairman of the Council of Economic Advisers, and she appears to have had little influence. Notably, only Geithner and Bernanke stayed on past the first two years of the Obama administration.
Along with the continuation of Clinton and Bush administration officials was a continuation of their policies. The debate in Washington over taxation never moved beyond maintaining the “Bush rates” or returning to the “Clinton rates” and the government shutdown and various debt ceiling crises were like a replay of the 1990s. In the end, one major reason that there was no transformation in public finance was because the Obama administration simply never proposed anything radically new or radically old.
While all of the speculation about the next president will increase following the midterm election, I can’t keep from wondering if the Obama family and the next first family will be the only ones actually trading places in Washington come 2017. Unless we start asking better questions about who’s going to be in the room when the real decisions are made, it might not matter all that much if it’s simply another Clinton or Bush in the White House selecting one policy alternative from a handful of predetermined ones.