When a crisis occurs, what should a President do?
I think a President needs to:
1. Recognize the crisis
2. Listen to the right people to deal with the crisis
Bush has been heavily criticized in the past on both aspects when it comes to crisis. He either did not recognize the crisis on a timely fashion (i.e., the 9/11 event), or appointed incompetent officials to deal with it (i.e., FEMA in Katrina).
Now let’s exam both McCain and Obama. Last week’s financial turmoil should serve as a preview of how candidates handle crisis. After all, this is a "once-in-a-century" financial crisis according to former Federal Reserve chief Alan Greenspan.
Recognize the crisis:
As late as last Monday (9/15) when Lehman Brothers filed the largest ever Chapter 11 bankruptcy, McCain claimed the economy was fundamentally strong.
Then, within 36 hours, as he stumbled over his record of championing deregulation, he flip-flopped over the government takeover of AIG and declared that “our economy in crisis”.
On 9/15, Obama said the crisis sweeping Lehman Brothers and other Wall Street firms posed a major threat to the U.S. economy and underscored the need to modernize the financial system. (Actually Obama called for the overhaul of the financial-regulatory system and tougher enforcement well before this past week's financial tsunami.)
Listen to the right people
McCain called Martin Feldstein, the well-known Republican economist and Reagan administration adviser, John Taylor of Stanford University, who served in President George W. Bush's Treasury and Carly Fiorina, once the chief executive officer of Hewlett-Packard Co.
Obama called former Federal Reserve Chairman Paul Volcker, and former Treasury Secretaries Robert Rubin and Larry Summers.
OK, let’s see what Bloomberg has to say about these two groups:
Feldstein, for all his intellect, was ineffective in the Reagan administration; then-White House deputy chief of staff Dick Darman cut him out of important action. Volcker, first at the Treasury and then as chairman of the Federal Reserve, was a towering figure in every way.
Taylor is a well-regarded academic. In four years as undersecretary of the Treasury, he left few footprints. Summers, as both deputy secretary and secretary, left a lot.
Fiorina is smart and quick; to put it charitably, Rubin will forget more about financial markets than she'll ever know.
The bottom line: “It was a mismatch.”
So, here is the preview. You take your pick.