Biden v. Summers

Dick Cheney used to brag about leaving the office of the president "stronger than we found it," and in some perverse, narrow sense he probably accomplished that for his office of vice president. The most influential vice president in history, Cheney succeeded in a near-total capture of the White House policy-making apparatus, transforming his office's role. This has left Joe Biden with, well, strange shoes to fill and no specific brief. But with the announcement on January 30 that he will be chairing the new White House Task Force on Middle Class Working Families, it is clear that Biden is inserting himself forcefully into the economic policy debates in the new administration.

The main players in Barack Obama's economic team can be cleaved roughly into two groups: (1) center-right neoliberals like Larry Summers, head of the National Economic Council; his deputy, Diana Farrell; and Treasury Secretary Tim Geithner; and (2) progressive labor-liberals like Melody Barnes, director of the Domestic Policy Council; Biden's chief economic adviser, Jared Bernstein; and labor secretary nominee Hilda Solis.

In the Clinton administration über-neoliberal Robert Rubin famously won against labor-liberal Robert Reich, pushing privatization, deregulation and balanced budgets over a more robust welfare state. But in the intervening years wage stagnation, rising inequality and this financial crisis have pushed the neoliberals in a more progressive direction. It's hard to imagine the Larry Summers of 1993 saying that income inequality is the "defining issue of our time," as he recently did, or, for that matter, advocating a stimulus package that may run as high as $900 billion.

The problem is that Summers and Geithner seem to have retained their dispositional trust in the market and skepticism of public sector involvement. So instead of nationalizing banks, as many economists urge, they're reportedly busy crafting a plan for TARP II similar to former Treasury Secretary Henry Paulson's ill-fated attempt to purchase bad assets from the banks. According to The New Republic's Noam Scheiber, whenever someone proposes a policy that crosses Summers's delicate threshold for Big Government, he derides it as "Putinesque." Unfortunately, reviving the financial sector may require measures that would make even Putin blush.

On top of that, Summers has already come to dominate the White House economic policy shop. One person close to Obama's economic team told me that on economic policy, "it's looking like it's Larry's show." This leaves a disconcerting vacuum in the White House for a labor-liberal voice equal in stature and clout. Enter, perhaps, Joe Biden.

In December he named Bernstein, formerly of the labor-friendly, stoutly progressive Economic Policy Institute, to be his chief economic adviser, a position with no recent precedent. Bernstein then co-wrote the first economic report released by the transition team, which attempted to quantify the benefits of the president's proposed stimulus. He is one of the people present for the daily economic briefings to the president.

In the weeks before inauguration, Biden reached out to labor leaders, including the AFL-CIO's John Sweeney, confirming that he would be a strong advocate for them in the White House. And he has publicly supported "Buy American" provisions in the stimulus package that would require participating firms to purchase their materials from domestic companies--a measure that Summers pointedly refused to endorse during a recent briefing with reporters.

Biden is "really pushing hard" on "a more progressive populist approach to economic policy," says Mike Lux, the transition's liaison to the progressive movement. "I'm just delighted that there's somebody with his clout that's doing this, otherwise our side would be in a lot worse shape."

Biden's task force is charged with "improving work and family balance, restoring labor standards, including workplace safety," and "helping to protect middle-class and working-family incomes." Its first meeting will be in late February in Philadelphia and will focus on green jobs. "The purpose of the task force," a White House official told me, "is to keep the administration's focus as it develops its economic plans on the people who need to be helped the most, especially at a time when we have to bail out banks and financial institutions."

Task forces in Washington can be highly influential or just dog-and-pony shows. It's unclear yet which this is. But it bears watching just how much influence labor-liberals have. Will the administration move forcefully and quickly on the Employee Free Choice Act--which Biden said they want to get to "this year"--or stall and compromise it to death? Will they enact a large-scale foreclosure mitigation program and bankruptcy reform or continue to sluice money to banks exclusively? Will the "fiscal responsibility summit" slated for February be just a rhetorical sop to the entitlement hawks or the opening salvo in a new war against Medicare, Medicaid and Social Security?

In the meantime, the rhetoric, at least, has been encouraging. It didn't get a lot of attention, but on January 30 Obama made probably the most unabashedly pro-union statement of any president in at least sixty years. "I do not view the labor movement as part of the problem. To me it's part of the solution," he said at an event where he signed three executive orders reforming federal workforce policy. "We need to level the playing field for workers and the unions that represent their interests, because we know that you cannot have a strong middle class without a strong labor movement."

I don't know if Larry Summers would agree, but maybe, if Joe Biden has anything to say about it, Summers's opinion won't matter.

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