I’ve been thinking a lot and talking to a lot of people about the Elizabeth Warren appointment, which we can expect officially tomorrow. And I think something Jon Cohn wrote, which incidentally references me, makes me far more comfortable about it.
One potential bonus of the appointment is that, as a special assistant, Warren could consult on issues besides consumer protection. As critics like FDL’s David Dayen have pointed out, Obama’s economic team could use some more ideological perspectives. Virtually every key policy adviser represents the same, relatively narrow swath of center-left thinking. (That’s even more true with the departure of economist Christy Romer.) The team could also stand to have a few more people from less privileged backgrounds. Warren, who is a more unabashed populist and comes from a working-class family, would provide that diversity.
As I said in that article referenced above, Warren has a different worldview than virtually all of the economic policy advisers that have the ear of the President. Sure, there are a couple progressives with the title of Assistant to the President, like Melody Barnes of the Domestic Policy Council or Political Director Patrick Gaspard. But when it comes to financial policy, nobody with the stature or intellectual weight of Warren is anywhere close to the President’s inner circle. And Warren’s role puts her even closer.
This is what many of us have been calling for since the beginning of the Presidency, for someone to break the Geithner/Summers stranglehold on marcoeconomic policy. Warren will at least have a chance to take her concerns right to the President, and not just on consumer protection. She would have the Assistant to the President title, the top access level at the White House, at the same level as Rahm Emanuel and only a dozen other advisers, and arguably more access to the President than cabinet members have. We don’t know exactly what meetings she will be in on and what she won’t, but at a very fundamental level, she gets an entryway into the White House’s inner circle and will have a presence there. In other words, this is the “team of rivals” that Obama has been claiming but hasn’t existed on macroeconomic policy. It has the potential to move the center of gravity in the Oval Office away from the banks. Here’s what I wrote before:
Obama came in promising to set up a “team of rivals” in his cabinet and his government. But on macroeconomic issues, that really hasn’t transpired. Geithner and Summers have the upper hand and basically present their narrow worldview. The problem is that just isn’t enough in these particular times, with mass unemployment and low growth. Their ideas have been good for the banks, which they saved, and corporations, which they allowed record profits. It’s even true that they averted a Depression. I have no problem believing that. But we’re at a new stage, and zombie banks, corporate profits and depressed workers makes for a terrible concoction of economic stagnancy.
Can Warren alone pull us out of that? Of course not. But she does have a different mindset, one that will at least give consumers a fair shake, and force the banks to compete on service and quality rather than how well they can rip off their customers. The rules exist in the FinReg law to end predatory lending (it’s a really good anti-mortgage fraud bill), and on the rest, the data gathering and research possibilities for the CFPB alone are enough to whip the banks in line. But only if the right leader forces that on them. And I think she understands that fraud – not cleverness, not ingenuity or innovation – sits at the heart of Wall Street, and rooting out that fraud is the only way to let the markets function again.
Paul Volcker ran the President’s Economic Recovery Advisory Board, but was never an Assistant to the President. Neither is Jared Bernstein, the Vice President’s economic adviser. Warren will have the top access level as well as her position of prestige and a constituency outside the White House willing to back her up.
The CFPB position is obviously a bit more muddled. We’ll see how Obama explains it in his announcement, but as I understand the deal, and as others have explained in reports, she’ll basically be in charge of standing up the agency. She will not be under the same roof as Geithner, and he will not have day-to-day management over the operations of the agnecy. This will be as close to an independent position as you can get under the law. In addition, this doesn’t take the possibility of an appointment down the road off the table (Barney Frank is spinning with the “she doesn’t want the appointment anyway”; I don’t believe that for a second); I wouldn’t argue this enhances that, but having her set the course and the vision for the agency is plenty important.
Here’s my caveat on this. I remember in 2008 being very excited that Samantha Power was connected to the Obama campaign. She was a forceful opponent of genocide and a brilliant Harvard professor, and having her inside the inner circle on human rights and national security decisions was a major point in then-candidate Obama’s favor, in my book. Then she called Hillary Clinton a monster, got somewhat demoted, is stuck in a midlevel job at the National Security Council, and now the Administration has no debate over the legality of extrajudicial assassinations of American citizens. So there’s a lot that can go wrong here.
But I’m willing to agree with Robert Kuttner; this looks pretty good, especially the Assistant to the President part. It’s a job that Professor Warren wants and will carry out with her same aggressive advocacy for the middle class. We have a voice in the inner sanctum, I would say for the first time ever.