Obama Administration

I hate the idea of salary freezes.  In one sentence:

If you freeze salaries, then only the people who don't deserve a raise get the raise they deserve. 

Everyone else gets less, and the discrepancy is widest for the most productive people.  Who decided this was an effective personnel policy?  Why is it that when institutions are strapped for cash, they pay less attention to how they allocate their resources?  When cash is scarce, we should spend our money more intelligently.  What is intelligent about a compensation policy that fails to differentiate based on performance?  Reduce staff.  Set the baseline raise at a negative number.  Do something, but don't force those who merit additional compensation to subsidize those who don't.

Here's the relevance today.  The first two paragraph's of Scott Wilson's Washington Post article on the freeze on bonuses are these:

You don't have to like the climate bill that was approved last night by the House to be impressed by the White House's ability to get it passed. The bill 219-212, with eight Republican votes in favor.

The margin was narrow but isn't the big story.  The ultimate political value for the White House is that it was able to get the bill adopted at all but still allow 44 Democrats to vote against it.  Not asking Democrats to walk a political plank will pay huge dividends later this year and in the 2010 elections because those members who needed to vote against it were able to do so.  And, of course, the White House didn't have to use up huge favors in the process.

Having voted against the administration's climate change bill on the record means that at least some of theese House Democrats will be able to vote for what emerges from a House-Senate conference later in the year.  Therefore, the chances of a climate bill being enacted this year is now much greater than it was 24 hours ago.

Some parts of the President's press conference (transcript here) came as quite a surprise.  Consider his response to the first question about whether there needs to be a federal regulator for companies like AIG:

Well, keep in mind that it is precisely because of the lack of this authority that the AIG situation has gotten worse. Now, understand that AIG’s not a bank, it’s an insurance company. If it were a bank and it had effectively collapsed, then the FDIC could step in, as it does with a whole host of banks -- as it did with IndyMac -- and in a structured way renegotiate contracts, get rid of bad assets, strengthen capital requirements, resell it on the private marketplace.

We've all been there.  Stuck in a highway traffic jam, we hear an ambulance approaching from behind.  We do our best to squeeze over to make room, finally connecting the traffic jam to an accident up ahead that we can't quite see.  We are grateful that we're not the ones needing the ambulance, and then grief turns to anger as we see that one jerk who decides that it is just fine to sneak into the wake of the ambulance to drive ahead of the rest of us. 

This is how I view the legislators who have loaded up the stimulus bills moving their way through Congress with giveaways, whether useless projects or unnecessary tax cuts.

Here's my "Fiscal Fitness" column from this week's Roll Call.

Obama Could Be Most Fiscally Responsible President in History

January 27, 2009

One of my first stops in cyberspace after the inauguration was www.whitehouse.gov.  It was nice to see the layout of the new site, with links to all EOP offices and cabinet departments readily accessible.

Of course, the toughest part about a website is keeping it current.  I note that at 9:54 p.m. on January 20, this page claims that "The President has not yet issued any proclamations."  But, as everyone knows, including those who have read the first post at the White House blog made over 7 hours ago:

Moments ago, in his first official act since taking the oath of office, President Barack Obama issued a proclamation, calling on Americans to serve one another and our common purpose on this National Day of Renewal and Reconciliation. Check it out below, or read it on the WhiteHouse.gov proclamations page.

[...]

Readers of CGG since the election will note that in my advice to the Obama administration for what to do first, I have steered clear of Medicare and Social Security.  His immediate objectives should be to build coalitions and achieve some tangible success on whatever scale he can manage. 

Entitlement programs don't allow that to happen.  Entitlement programs are social insurance, the point of which is to redistribute resources across the population.  Reform will mean less redistribution -- less of something for someone.  A president needs not just goodwill to do that, he needs a track record of being able to implement policies in which he has held up his end of a bargain.  He doesn't have that yet.  When he gets it, he can take on the big challenges that will emerge over the next couple of decades.

Friday's Washington Post contained an article with a very provocative headline, "Obama Pledges Entitlement Reform."  Here are the first two paragraphs:

Continuing the series, we are, using the subtitle of Andrew Bacevich's book, "seduced by war."  It seems like an obvious proposition that we could reduce our military spending without compromising our national defense.  Plenty of that spending goes to expand our empire, not to protect our citizens.  For the right words, I'll turn to page 215 of the book:

A better approach [than pegging military spending as a percentage of GDP], one more likely to limit adventurism abroad while still meeting essential U.S. security requirements, would be to peg U.S. expenditures in relation to what others are spending.  To stipulate, for example, that the United States should match the next ten most lavishly spending powers combined would assure U.S. military capabilities not only far in excess of any potential adversary but also in excess of any remotely plausible combination of adversaries.  The budgetary impact of such a stipulation--one that if made by another country Americans would view as evidence of rampant megalomania--would be to reap substantial savings.  Indeed, at present the United States could earmark for defense as much as the next ten largest military powers combined and still reduce Pentagon outlays by tens of billions of dollars per year.

Continuing the series, it is all well and good to talk about switching from fossil fuels to renewable energy, but little progress will be made if the electricity cannot be transmitted from the location of the renewables (sun in the Southwest, wind in the Midwest) and the location of the electricity demand.  From an interesting article in the Jan/Feb issue of Technology Review:

Leon Panetta, former House Budget Committee chairman, former OMB director, former White House chief of staff, and former California congressman has been nominated by President-elect Obama to be the next director of the CIA.

I've known Leon for more than two decades.  If you're looking for someone from outside the agency who is an honest broker, a great inside player, and as good at dealing with Congress as there is, Leon absolutely is the right person for the job.

But Leon will add one more thing to the Obama administration: yet another very strong budget expert inside the cabinet room.  While his primary responsibility will obviously be the CIA, we shouldn't discount the additional expertise he'll bring when he sets up shop again in D.C., or in this case Langley, VA.