Clinton's State Department
by Charles Lemos, Mon Dec 22, 2008 at 08:47:40 PM EST
The New York Times is reporting that Senator Clinton if confirmed as the nation's 67th Secretary of State will seek "to build a more powerful State Department, with a bigger budget, high-profile special envoys to trouble spots and an expanded role in dealing with global economic issues at a time of crisis." A more robust State Department is certainly a welcomed change and the idea of special envoys is also a good one because it engages dialogue above normal channels but it is concerning that Clinton's State Department may be expanding into a domain traditionally held by the US Treasury Secretary. To a degree, some clarification of the role Mrs. Clinton is hoping to carve out is required.
Mrs. Clinton's push for a more vigorous economic team, one of her advisers said, stems from her conviction that the State Department needs to play a part in the recovery from the global financial crisis. Economic issues also underpin some of the most important diplomatic relationships, notably with China.
In recent years, the Treasury Department, led by Henry M. Paulson Jr., has dominated policy toward China. Mr. Paulson leads a "strategic economic dialogue" with China that involves several agencies. It is not yet clear who will pick up that role in the Obama administration, although Vice President-elect Joseph R. Biden Jr. is frequently mentioned as a possibility.
Under President Bush, the Treasury Department has been largely a forgotten player. Both Paul O'Neill and John Snow were effectively on the outside looking in when it came to setting to economic policy. Hank Paulson has fared somehow better in this regard and in fact it was widely reported that when he was approached on the vacancy, Mr. Paulson actually demanded that he have a role in the Administration's economic policy making. He wasn't there just for show.
Still, Timothy Geithner deserves a chance to run a revitalized Treasury. It bears pointing out that when it comes to global financial markets, clarity is important. There is little doubt that Senator Clinton will be a formidable Secretary of State, certainly the most powerful since James Baker and perhaps since Henry Kissinger. And there is little doubt that Senator Clinton can and should speak to global development issues where relevant but she should leave the complexities of global financial markets to the professionals at the Treasury Department. Global financial markets spook easily and clarity is paramount. If by an expanded role, Mrs. Clinton means greater coordination, that's fair but there should be no question that when it comes to economic policy it's the Treasury Department that should take the lead.
As president of the New York Federal Reserve Bank, Mr. Geithner worked with Fed Chairman Bernanke and Treasury Secretary Paulson in putting in place a stunning array of emergency measures to prop up the financial system after the collapse of Lehman Brothers. Still, the decision to let Lehman fail was a blunder but that misstep wasn't Mr. Geithner's alone.
Mr. Geithner is talented and capable, but he is certainly no match for Clinton's star power. It's important that she not eclipse him and let him shine on his own. After faltering under the Bush Administration, it is doubly important that we restore the Treasury Department to its previous higher standing in the Cabinet and not further dilute its authority.