Politics & Policy

Geithner Goes Over the Edge

Treasury secretaries are not supposed to be political partisans.

Is Tim Geithner the most politically partisan treasury secretary in history? Certainly sounds like it these days. As the government’s chief financial officer, he’s spending a lot of time firing campaign barbs at various Republicans and their policies.

Geithner has blasted Mitt Romney by name on several occasions. He frequently attacks Representative Paul Ryan and the GOP budget. And he recently fired a broadside at top-Romney economist Glenn Hubbard, who is presently dean of the Columbia Business School.

Responding to a Hubbard op-ed in the Wall Street Journal — which calculated that the president’s spending plans would require an 11 percent tax increase on people earning less than $200,000 a year — Geithner said, “That’s a completely made-up, remarkably hackish observation for an economist.”

Hubbard a hack?

Besides running a highly respected Ivy League business school, he was the chairman of President George W. Bush’s council of economic advisors. He also earned his Ph.D. in economics from Harvard.  

#ad#But Hubbard is advising Romney, and before that he counseled Bush, so the very political Mr. Geithner blasted him as a hack.

By the way, all Hubbard did was calculate that even after all of Obama’s proposed tax hikes on millionaires, investors, and upper-end business people, revenues would rise by about $150 billion a year. But Obama’s budget schedules spending to rise by $500 billion a year. So Hubbard concluded that an across-the-board tax hike of 11 percent for everybody — including below-$200,000 earners — would be required.

You can disagree with Hubbard’s point, but the arithmetic gap between spending and revenues per year is unmistakable. It’s not a hackish statement. It’s merely an informed opinion.

And let’s face it: A condescending put down by Mr. Geithner is a political statement.

Now let me pause here. I know Tim Geithner personally, and I like him. Always have. While I disagree with him on many issues, we have good relations. But treasury secretaries are not supposed to be political partisans. That does not come with the territory.

The statesmen-like, high-office cabinet departments like defense, state, and treasury are typically managed in relatively nonpartisan ways simply because the nation’s finances and security require bipartisan efforts. Policy disagreements? Yes. Name calling? No. I would add the Justice Department, but unfortunately Eric Holder has been incredibly partisan on Fast and Furious and other issues.

But to go back to Tim Geithner, he’s going to have to negotiate another debt-ceiling bill at the end of the year, and he’s going to need Republican support to get it done. The same is true for the coming tax cliff, where all the Bush-era tax cuts expire. Geithner will need Republican support there, too.

And on matters like the IMF, the World Bank, the dollar, and other international financial issues, there may be policy differences, but treasury secretaries are supposed to work with both sides of the aisle.

You could think back to Republican treasury man Hank Paulson during the financial meltdown. He desperately sought bipartisan support. You can even go way back to Republican James Baker, who was a tough political fighter as Ronald Reagan’s first-term chief of staff. But when Baker became treasury secretary, he took his political hat off and negotiated a bipartisan tax-reform bill. And I don’t recall Clinton treasury secretary Robert Rubin blasting Republicans by name.

The point is, my friend Tim Geithner has gone over the edge, and he oughta pull back . Let President Obama and his campaign team handle the politics. That’s the way it works. The Treasury Department is not supposed to be a campaign arm. The U.S. has enormous financial vulnerabilities. And it seems to me that Mr. Geithner could use all the help he can get, even while he pushes the administration’s policy agenda.

Name-calling and direct insults won’t do it.

Meanwhile, on the economy, a little humility is in order. The latest GDP report came in at a disappointing 2.2 percent, about a half-point below expectations and weaker than the 3 percent fourth-quarter number. There may be an economic stall that will also stall President Obama’s reelection.

Weekly jobless claims in April are running 20,000 ahead of March. That might mean next week’s employment report will be another disappointment. And over the eleven quarters of the Obama recovery, real GDP has averaged only 2.4 percent. Compare that to the postwar average of 4.5 percent, and the tax-cutting Reagan recovery of 6.1 percent.

So when Mitt Romney says, “It’s still about the economy, and we’re not stupid,” he’s got a powerful point. But it’s a point that needs to be answered by President Obama, not his treasury man.

The rich tradition of American-government history teaches that the head of the venerable old Treasury Department should not be the campaigner in chief. 

Larry Kudlow — Larry Kudlow is CNBC’s senior contributor. His new book is JFK and the Reagan Revolution: A Secret History of American Prosperity, written with Brian Domitrovic.

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