Barack Obama has succeeded where Hillary Clinton failed. She hoped to win a third Clinton term; her vanquisher is reconstituting the Clinton administration.
Obama's just-named nominee for treasury secretary, Timothy Geithner, served under Clinton Treasury Secretaries Robert Rubin and Larry Summers. Summers himself is Obama's choice to head the National Economic Council. Both are part of Rubin's circle, known for brains and relative moderation.
Few would have guessed back when Obama rose from the snows of Iowa that highly experienced economic technicians would represent "change we can believe in."
So far, President-elect Obama has acted with a ruthless pragmatism. He ignored the yowling left-wing blogosphere when it demanded Joe Lieberman's head, turned (reportedly) to the initially pro-Iraq War Hillary Clinton for his top foreign policy job, and staffed up with former Clintonites.
Obama appears to be reconsidering for now a repeal of President Bush's "tax cuts for the rich." Twice in the primaries, Obama hinted he might put off tax hikes if the economy was in distress, but he could never admit what was obvious: Proposing tax increases in the teeth of a recession was madness.
We are entering one of those cycles when liberals have to bless rather than dump on a profitable private sector, because without it there's no way for Obama to meet his pledge of creating or "saving" 2.5 million jobs. (One of Bill Clinton's most valuable insights was that a business climate fostering economic growth trumped any government jobs program.)
If Obama is wise, he'll not only jettison his plans for a tax hike that in aiming at the rich would also hit small businesses, but also will put off a "cap-and-trade" program to tax the use of fossil fuels, forswear protectionist sentiments and ditch support for a "card check" plan to promote unionization of the work force.
For now, the showpiece of Obama's economic program is a massive stimulus bill the Democratic Congress wants to have ready for his signature as soon as he's inaugurated.
In contrast, Bill Clinton ratcheted down his spending plans upon first taking office, under the influence of the very Robert Rubin who's the mentor of Geithner, et al. Circumstances have changed, and so have the views of the Rubinites, who aren't the fiscal hawks they were in the 1990s. The current crisis is yet another indication that a Rubinite article of faith – that the budget deficit basically determines interest rates – is false.
We can't know what new twists the crisis will take (the latest financial institution in need of rescue is Rubin's Citigroup). We do know Obama will need more than a ruthless pragmatism to navigate it. In his masterly "The Great Inflation and Its Aftermath," Robert Samuelson chronicles the extraordinary stalwartness of President Ronald Reagan when he allowed Federal Chairman Paul Volcker to squeeze inflation out of the economic system the last time we had a downturn this severe, in 1981-82.
That took guts. Obama will need them, too, and they won't be on loan from any adviser.
Rich Lowry is the editor of National Review.
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