Friday, August 10, 2012

Will Erskine Bowles Replace Geithner at Treasury?

Tim Geithner has already announced he will leave the Treasury sometime after the election.

We now have the first speculation as to who might replace. WaPo columnist Ezra Klein, who is the go to columnist for many econ insiders who need to leak, writes: of today, I’m ready to name a frontrunner, at least if Barack Obama is re-elected: Erskine Bowles.
Klein continues:
For the Obama administration, Bowles has a number of qualifications. For one thing, Republicans adore him. Ryan has called him “my favorite Democrat.” Appointing Bowles to be Treasury Secretary would ensure a smooth confirmation, and it would be interpreted as a sign of goodwill and “seriousness” both by Republicans and by the media. Coming after a bitterly partisan election and at the outset of a hugely consequential series of negotiations, that could have real appeal to the White House.

One reservation you often hear when playing the “who will be the next Treasury Secretary” guessing game is, “but they have no market experience.” For better or worse, it’s considered crucial that the Treasury Secretary understand, and be capable of working with, markets. Bowles was an investment banker before he entered politics, and he currently serves on the board of directors for both Morgan Stanley and GE. He’s also personally beloved by Wall Street, where “Simpson-Bowles” has deep and fervent supporters, including many who have no real idea what’s in it. Appointing Bowles would be a signal to them that Washington is getting serious.

The question for the White House is whether Bowles can be trusted to be a team player when it counts. After all, he’s Ryan’s favorite Democrat for a reason. And you can’t have your Treasury Secretary undercutting your negotiating strategy.

Which gets to why I’m writing this post today, as opposed to a week ago. This morning’s Washington Post included an op-ed by Bowles entitled “Romney’s tax plan wouldn’t cut the deficit.”
Here's the real danger with Bowles, if he his named in a second Obama administration, it will all be about raising taxes. Klein writes:
If you talk to the administration, they’ll tell you that the budget negotiations will ultimately revolve come down to one issue: Will Republicans agree to raise taxes? What Bowles did in this morning’s Washington Post is prove that he’s willing to bring the capital he’s built among Republicans, among the media, and among businessmen to the fight over that question. What Bowles wrote is little different than what the Obama White House has been saying for some time. But it’s an argument that has more force coming from Erskine Bowles, co-chair of the Simpson-Bowles Commission, than coming from them. And that could be a game-changer when it comes to negotiating the final deal.
On top of that, Bowles is a, naturally, total elitist insider. He is a member of the board of directors of General Motors, Morgan Stanley, Norfolk Southern Corporation and Facebook.


  1. Hahaha, these people crack me up. I mean, a party that constantly bemoans the plight of the middle class is completely beholden to the "elitest insiders." I am ashamed to admit the Bowles is the most famous alumus of my high school.

  2. Bowles is a PEU