CEO in chief
If Obama's new industrial era bears a telling resemblance to the policy dilemmas facing F.D.R. in the 1930s, his critics fear he is already making some of the same kinds of choices that worsened the Great Depression. "I'm worried sick," says Charles Calomiris, a financial historian at the American Enterprise Institute, a conservative think tank. "I've seen this play before, and it doesn't have a good ending."
The critics in this corner worry that Obama and a Democratic Congress's push for card-check legislation - ending secret ballots in unionization efforts - will lead to higher wages and a dangerous drag on job creation, just as F.D.R.'s union efforts did during the Great Depression. They say Obama's opposition to pending free-trade agreements - exemplified by fierce attacks on NAFTA during the campaign - suggests a bent for the same kind of protectionism that lengthened the Depression. They fear a heavy regulatory hand on the financial markets that lacks nuance and quashes innovation. They fear a tax policy that penalizes the largest job producers in the economy.
"If Obama would say, 'I won't pass any tax increases in the first year,' that would have a substantial impact on the markets," said Calomiris.
Presidents can be judged by the company they keep, as Obama learned when he was attacked in the campaign for his past associations with antiestablishment radicals in Chicago. But if we judge the President-elect by his associations during his Senate term and a long presidential campaign, a different pattern for governance emerges. Obama's team is deep and experienced, and suggests a more centrist sensibility than his own campaign rhetoric.
"I've been very impressed with the caliber of people around Obama," concedes John McCain's top economic advisor, Kevin Hassett, adding, "There's great hope they won't fall down a partisan path."
It's been a remarkable evolution of counselors that began with two young friends, Harvard's Jeffrey Liebman and the University of Chicago's Austan Goolsbee. The two men were close from their days as graduate students in Cambridge, Mass., so when a former student of Liebman's who was working as a policy aide for Obama - then a little-known state senator - asked for advice on Chicago-area economists his boss could turn to, it was natural that Goolsbee's name should come up. The pair was joined by other academics, including Harvard's David Cutler on health policy, Georgetown's Daniel Tarullo on trade, and Bernstein of the liberal Economic Policy Institute on the middle-class squeeze, among others. A respectable crew, but hardly household names.
Obama's aggressive outreach continued, however, and a year into his presidential campaign, the Senator was soliciting advice from former Federal Reserve chief Paul Volcker, who coached the candidate for a well-timed speech on financial regulation. Around that time Obama started a phone dialogue on tax and finance policy with another heavyweight: billionaire Warren Buffett, "one of my favorite people - one of those rare people who is exactly how you hope he will be," Obama told Fortune last summer.
In the heat of the Democratic primary, it was hard to distinguish Obama's views from the liberal agenda of organized labor. But early on there were hints of more complexity among the advisors he tapped. Even as Obama was railing on the stump against free-trade agreements, Goolsbee took a more nuanced view, creating a scandal when news broke that he had reassuringly whispered to Canadian officials that the candidate's "protective [rhetoric] is more reflective of political maneuvering than policy," according to a memo summarizing the meeting. Obama condemned NAFTA as a "mistake" during the primary while he battled Hillary Clinton in manufacturing states, but in the June interview with Fortune he backed off his earlier language, calling it "overblown."
