It's an open question whether the post-convention surge of the McCain-Palin ticket could have been stopped without the financial crisis. It certainly gave Obama the opportunity to say that Republican deregulation and free market mania got the country into this mess in the first place. The problem is that the next presidency will probably be defined by the hard times ahead. Pessimistic Democrats think that President Obama is going to be so overwhelmed by financial problems that he'll be a one-term embarrassment like Jimmy Carter. Optimists hope he'll rise to the challenge to become the new FDR, somehow finding a way to pay for healthcare reform, Kyoto-2 and middle-class tax cuts.
Tom Daschle, Obama's top political adviser and a former senator, has already been damping down the euphoria about the new Democratic dawn in Congress, reminding Dems that the midterm elections in 2010 could be a disaster if the economy is still in the mire. Joe Biden takes another tack, warning that America's enemies in Tehran and Pyongyang (not to mention Moscow and Beijing) and some of its putative friends in Baghdad and Kabul are going to be testing the backbone of the new president.
Who'd be in Obama's cabinet?
Ambitious senior Democrats have been googling an Obama town hall meeting held in New Hampshire in December 2007, back in those distant days when Clinton was the frontrunner. At this meeting, Obama talked about the need for bipartisanship and how, if elected, he'd like to appoint Republicans to his cabinet.
Although Obama said it was too early to give names, when pressed he had some ready. A possible secretary of state was Indiana Senator Dick Lugar, who "embodies the tradition of a bipartisan foreign policy that is sensible, that is not ideological, that is based on the idea that we have to have some humility and restraint in terms of our ability to project power around the world." A potential secretary of defence was Nebraska Senator Chuck Hagel, a Vietnam vet and early critic of the Iraq war. And there was Governor Arnold Schwarzenegger: "What he's doing on climate change in California is very important."
Since then Obama has also mooted keeping on Defense Secretary Robert Gates, a career CIA analyst who is more technocrat than Republican loyalist, and making billionaire Warren Buffet secretary of the treasury. But for Dems like former UN ambassador Dick Holbrooke and New Mexico Governor Bill Richardson (who both ache to be secretary of state) and General Wes Clarke (who thinks the Pentagon should be his), talk of appointing Republicans is pure agony.
The current betting is Richardson for state, Hagel for the Pentagon, Daschle for White House chief of staff and Schwarzenegger for energy. Then ex-Marine General Tony Zinni for national security adviser, Susan Rice for UN ambassador and party chairman Howard Dean for health and human services.
The treasury job had been pencilled in for Laura Tyson, who chaired Bill Clinton's council of economic advisers. She is still favourite, but post-meltdown there is talk of Tim Geithner, who runs the Fed in New York. Even likelier is New Jersey governor and former Goldman Sachs co-chairman Jon Corzine. As chairman of the Democratic senatorial campaign committee in 2004, Corzine ensured that Obama got the Senate nomination in Illinois. A dark horse is Sheila Bair, a moderate Republican who has done a first-rate job running the Federal Deposit Insurance Corporation.
There's no escaping Palin
Some Republicans are already talking about Sarah Palin's prospects for the nomination in 2012. She has name recognition and the devotion of Christian conservatives, and it's not hard to stand out in a field that includes Mike Huckabee, Mitt Romney and Tim Pawlenty. However, it seems from the discreet politicking underway at the Republican convention, former Speaker Newt Gingrich and former Florida Governor Jeb Bush are both looking at 2012. But they haven't taken into account Palin's secret weapon. Genealogists have discovered that she's a ninth cousin of FDR. Better still, she's a tenth cousin of Princess Diana.
A touch of schadenfreude
Anyone wondering why the US treasury and the Germans failed to work together during the banking crisis should look to relations between Treasury Secretary Hank Paulson and German finance minister Peer Steinbrück. On their first meeting in Washington 18 months ago, Steinbrück was caught in traffic and arrived late. But nobody does that to a Goldman Sachs-trained master of the universe. Paulson restricted the meeting to the 11 minutes left on his schedule and insisted it be conducted standing up.
At the time, Germany was chairing the G8 and Steinbrück says his efforts to rein in hedge funds "elicited mockery at best or were seen as a typical example of Germans' penchant for over-regulation." So Steinbrück is now far from displeased to predict that as a result of this crisis "the US will lose its status as the superpower of the world financial system."
