Readers may wonder why I haven’t written about my visit on Monday to the Treasury, but truth be told, I headed out afterward with Mike Konczal and Steve Waldman to get a drink, and we all looked at each other quizzically. I said something along the lines of “I’m not certain there is anything to write about,” and they nodded in agreement. I had less than a half page of notes.
That isn’t to say we didn’t spend nearly 2 1/2 hours in a high-ceilinged conference room, and that we didn’t engage with Treasury officials, including Timothy Geithner, in what looked like conversation. But the assumptions of both sides re process as well as substance were so far apart that it often felt like we were talking past each other.
One part of the dynamic was the home court advantage the Treasury enjoys. This is their drill, their offices, they no doubt used their spiel on others and have it pretty well debugged, and more important, they play well off each other (they give the impression of having good rapport with each other; there was some banter on their side). So they have message discipline and stay unified and still manage to look relaxed and informal. By contrast, we seven bloggers (the others were Tyler Cowen, Alex Tabarrok, Phil Davis, and John Lounsbury) were on hold in the very large corridor till the conference room cleared up, which meant we didn’t even have the chance to ask each other, “And what do you want to ask about?” Our interests were likely to be (and were) somewhat divergent, but it would have been nice to know to what degree.
Despite our heterogeniety, we all took a skeptical posture towards the Treasury team. One has to think they anticipate that, which then begs the question of what they expect to accomplish with these meetings. We aren’t journalists, so the access card does not work; the infrequency and format of these sessions means they don’t build personal rapport (and there are good reasons why not; from our end, it costs time and money to go to DC; from their end, we aren’t important enough to warrant more frequent contact).
So they may have other motivations, but a safe assumption is that they regard this as marketing, and a famous cliche is “50% of what I spend on advertising is wasted, I just don’t know which 50%.” We probably look like part of the wasted 50%, but they can’t be certain, and the costs to them of having this sort of meeting are low, so they might as well keep the experiment going.
In the last session I attended (November), one consultant (Lee Sachs) and one official (Assistant Secretary for Financial Institutions Michael Barr) made presentations, which did provide some focus. This time, Barr (who was even more Midwestern earnest than last time) threw the session open to questions from us, and quickly got a complaint (repeated in various forms over the meeting) that the Treasury had done a poor job of explaining what its goals had been for financial regulation and what the finreg bill stood for.
We’d ask questions (usually too long and complicated), they’d offer replies which were sorta responsive but not really, in that the kept stressing what had been done and why that meant the banking system was much safer (higher capital requirements, living wills, central clearing of “standard” derivatives), and we weren’t buying it, but our pushback (predictably) went nowhere.
The most revealing bits were the asides and the use of language (for instance, the first remark on housing included a mention of renters; the fact that they see this as a group to be concerned about suggests the officialdom will be loath to do too much for homeowners, hopeful analyst reports from the Street to the contrary). One interesting set of exchanges involved regulatory authority. Steve Waldman and Tyler Cowen both made articulate cases (Tyler from remarks in the meeting, Steve from pattern and practice) that there was good reason to doubt the authorities would use their clout; there was no effective reply because none could be made (it basically boils down to “trust us”).
One bit I am still puzzled about is the amount of time Geithner spent with us. He is famed for keeping a tight schedule, and he showed up at 4:30 PM and stayed 50 minutes, which was 20 minutes beyond the official meeting close. Although the Treasury staffers who had run the session before arrived Geithner were articulate and knowledgeable, he is particularly adept in this smallish meeting format and seemed to noodle our questions enough so that his responses were typically more direct yet managed to incorporate a lot of thoughtful nuance (not that he didn’t avoid certain issues, mind you; he argued that Treasury had limited authority on a certain issue; I pointed out ways in which Treasury more than enough leverage to bring a bank to heel; he avoided acknowledging the matter I raised; more on that in due course). He did make some minor disclosures (like saying he wasn’t supposed to talk about Fed policy, then doing just that, hinting that the catfood commission might recommend changes in taxes, which in context might mean more consumption taxes, as in a VAT).
I could try to reconstruct in more detail who said what to whom, and I’ve avoided reading other posts on the meeting (I’ve been told Alex Tabarrok posted right away and have seen the headlines for John Loundsbury’s posts). But I’m not sure I can reconstruct them, and more important, I’m not certain what (or more accurately, whose) ends it serves.
Finally, one reader did tell me Alex Tabarrok got some comments criticizing him for falling into Treasury’s orbit by meeting with them. While in theory one could lose one’s edge by staring the opposition in the eye, sports teams do this as a matter of course. If we saw the staff of the Treasury more often and we had something to gain, that could be a concern, but these sessions take a lot of time, and I question what the upside for bloggers is. The immediate one is getting one’s nose inside a new tent, but that is a matter of novelty and wears off after the first encounter. I suspect the main effect is that we and Treasury each sharpen our games a teeny bit by engaging directly on points of contention.
How does the US avoid a VAT? Critics on the right have been claiming that this is the stealth policy of this administration. I’d appreciate some insights from those who understand this proposition.
This is a matter of the wrong medicine at the wrong time. As long as we are running a big trade deficit, either the private sector or government needs to borrow or else prices and wages fall (which makes the debt burden as a % of GDP worse). And right now, businesses are saving (as in not investing, big corps are a bit but medium and small companies are paying down debt, which is a form of savings).
So the first issue is that the idea that we need to balance the budget now is barmy. And if we want to balance the budget, we need to get serious about our trade deficit.
But no one wants to run a budget deficit now. This is something Geithner mentioned (I am independently of the same view), a bigger deficit is in order now, less monetary easing, but with no political support for deficits, we have the Fed trying to do too much.
Second is the problems touted as big problems are way overstated. Social Security can be “fixed” simply by raising the caps on payroll taxes. The problem with Medicare is cost escalation, not demographics, and we again lack the will to fix our way too costly, not very effective health care system. Taxes are the wrong solution to this issue.
Thanks, I’m not remotely concerned with the deficit or social programs. I’ve mentioned in past posts that even for those voicing fears over the deficit, I suspect that expressing ‘concern about the deficit’ is a form of shorthand for expressing general disapproval over the way this administration is prioritizing.
What do you suggest might be done to improve the trade deficit? I take it that you mean the US needs to start exporting more and importing less. How’s that going to happen?
I don’t see it, and with the caveat that I’m not suggesting I speak from authority, it seems to me that domestic consumption is the only way to increase demand. That means increasing consumer confidence and the only way I can see that happening is with a thorough house-cleaning in November.
I heard Christie speak and I’d be a lot more willing to trust moderate Republicans like Christie, or even Senator than Dems on the economy. Dems have, after all, had the complete run of the joint. Even as a hostile critic of Obama, it never occurred to me that the Dems might do a poorer job on the economy than Bush or McCain.
But I digress. If you can see any way to improve the trade deficit, please let us know. Thanks, as always.
Sorry about the bungled edit, that should be Senator Brown MA.
Finally, one reader did tell me Alex Tabarrok got some comments criticizing him for falling into Treasury's orbit by meeting with them. While in theory one could lose one's edge by staring the opposition in the eye, sports teams do this as a matter of course. If we saw the staff of the Treasury more often and we had something to gain, that could be a concern, but these sessions take a lot of time, and I question what the upside for bloggers is. The immediate one is getting one's nose inside a new tent, but that is a matter of novelty and wears off after the first encounter. I suspect the main effect is that we and Treasury each sharpen our games a teeny bit by engaging directly on points of contention.
Just look at what happened with the “progressive” blogs. Granted, those who became Democratic party astroturfers were already directly “political” and pro-Democrat (if not party cadres to start with) in the first place.
But in principle the same co-optation and corporatization can be preformed on the econoblogs.
I’m not surprised that Geithner’s willing to float the idea of more regressive taxation, since they’ve been floating that since the start. (I first started seeing VAT propaganda last fall.) In principle it fits perfectly with class war via “austerity”. It’s only the word “tax” which is politically toxic, which is why they’d prefer to avoid it for as long as possible.
One bit I am still puzzled about is the amount of time Geithner spent with us. He is famed for keeping a tight schedule, and he showed up at 4:30 PM and stayed 50 minutes, which was 20 minutes beyond the official meeting close.
Why do you assume the actual Geithner schedule is the same as the one they told you? I’d bet the 50 minutes was calculated to make it look like he gave you 20 actual minutes. Sort of like how boxes of fish sticks or canisters of slim-jims consistently contain “one extra” beyond the number stated on the box. It took me awhile to figure out that that was calculated, and you’re really not accidentally getting something for free. (That was when I was a kid; I don’t eat junk like that anymore.)
You are incorrectly assuming I valued more time with Geithner. I needed to be on an airplane, and that extra 20 minutes cut into my drinking time.
And that 20 mins was not scheduled, it was an option. For some reason Geithner decided to stay on. Who knows, maybe he had a phone call he didn’t want to return :-)
As for political blogs being coopted, first many of the writers are in DC, so there isn’t an expense/travel time sink/general annoyance factor in being summoned to an out of town meeting on your own dime. Second, the access card can be played with them. By contrast, how much econoblog content results from personal contact? I don’t even bother writing up the few conferences I go to. so in my case, just about none, and that’s true for most econobloggers. Third, Google “veal pen” + Obama. Many of them are at risk of having their air supply cut off.
I didn’t assume you personally wanted the bonus time with him. I just doubt that it was really spontaneous on his part and that he was being truant from any significant element of his schedule.
I have seen heard of some contraction among the hack blogs, like the hack from Openleft going over to Dailykos. I suppose once they fail utterly in their astroturfing for November they’ll be cut off even further. That’ll be one occasion for Schadenfreude amid the nightmare, I suppose.
Next time you get invited you might prepare a list of questions and insist upon getting answers instead of just listening to administration flunky BS. Of course, I wouldn’t count on a subsequent invitation after a performance like that.
Incidentally, how many treasury officials at the meeting had shaved heads?
Its more than just "drinking time" …
Yves said; "Despite our heterogeniety, we all took a skeptical posture towards the Treasury team. One has to think they anticipate that, which then begs the question of what they expect to accomplish with these meetings."
"¢ They strengthen their empowerment. You serve to legitimize and validate their corruption and power by lending your good name to the process of it.
"¢ It gives your readers a false sense that they are being listened to by a "?responsive' government. Nothing could be further from the truth.
"¢ They can claim that they have bent over backwards to solicit opinions from all societal elements.
"¢ They cause you to waste your time, your readers time, and your own valuable resources that might have otherwise gone into something more productive, like maybe organizing election boycotts as a "?vote of no confidence' in this over the top corrupt deceptofatzi government.
"¢ And yes, they cut into your drinking time.
Better to stay away. Deceptofatzi scum bags all!
Deception is the strongest political force on the planet.
I rarely comment on your site, but please be assured I am thankful for the contributions you and others make.
Re: the Treasury meeting. I believe that one of the most cursed phrases/postures of modern life is “impression management.” Obviously, the boys on Team Obama practice it 24/7, but they are not alone and certainly not the first.
Unfortunately, impression management — a fancy name for PR — is increasing exponentially today while truly substantive and informative communication shrinks in comparison. As our problems exacerbate, impression management accelerates. Whether it is with the finance mess or global climate destruction, the principalities and the powers all seem to spend more time on their message sculpting. If Marie Antoinette were working in the White House or up on the Hill or on Fox News and much of the main stream media (or for that matter, most political campaigns, her advice most likely would be, “Let them eat illusions!”
Thank you for your comment with which I agree and the “Let them eat illusions” jibe is insightful.
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