Management competence is neither partisan nor ideological, but there are symbolic moments that will dog a president's term, and will have consequences. For President Bush it was Katrina and abu Ghraib. For President Obama, the first may be AIG.
Even for enraptured liberals and a compliant press, the management experience question is starting to seep out. So what does management competence look like? I'll give three examples. (Disclosure - I am in the group that prefers governors to senators as presidential candidates.)
1. For one, it means hiring and firing. Ethical failures may not seem too important in Washington - Charlie Rangel; Chris Dodd; etc. - but the tax and other problems of Obama's first round of appointments was eye-popping. Then the reverse - part of the problem in the Treasury is that Obama's personnel team cannot get qualified people to take the key jobs.
2. A second is managing budgets. There is a clear distinction between loans from the government which are intended to be paid back; one-time expenditures for things like bridges and hospitals; and ongoing expenses which will bankrupt our children. The administration has not made the distinction - after all, trillions are trillions - and has put forward a "no hard choices" budget that will result in unsustainable deficits for the next decade. The Chinese call for a new global reserve currency is a response to this profligacy.
3. A third is how you spend money. Every household understands that their criteria for spending are determining what they need, and getting value for the expenditure. The criteria for Obama's stimulus plan are - how fast can we spend it; how many jobs can we create; and how much pork can I get for my district? Hopefully, the American public will catch on.
So, back to AIG - what would have been a solid presidential response:
- Rather than grovelling around with Nancy Pelosi and Chris Dodd, the president should have said: "We honor contracts, but we need transparency about what happened, forward looking rules to prevent it from happening again, and aggressive challenge where there was fraud or wrongdoing." If the administration wants to work with the financial industry to solve our problems, less demonizing and more predictability is a prerequisite.
- But, the bigger question for AIG's Liddy, missed by Obama and the Congress, was "OK, so we gave you $180,000,000 because we felt that the risk to the economy of your failure was unacceptable. So, how's it going? How's your progress in extricating yourself from the mess that you were in? And, in your settlement with counter-parties, how are you negotiating the payments."
For a fiscal conservative, there may be a silver lining in all of this. Obama's proposed trillion dollar deficit budget envisions great expansion of the federal government in managing the health care and energy industries. The public is seeing that the administration is not competent in managing the financial industry which is at the center of our current problems, and perhaps private enterprise is not so bad after all.
This week's YouTube is a short speech given by Daniel Hannan, a British member of the European Parliament, reflecting on the economic policies of Gordon Brown's Labor Party. Would that Republican leaders in the House (John Boehner) or the Senate (Mitch McConnell) were so eloquent.
Bill Bowen - 3/27/09