The Mystery of President Obama

Barack Obama speaks to supporters and the nation following his victory. Photo by Daniel Acker/Bloomberg News/Landov.

On January 20, Barack Obama will be sworn in as the 44th president of the United States. And like Franklin Delano Roosevelt did as he took the White House while facing the Depression, he'll have to make it up as he goes.

The nation should know before Obama replaces George W. Bush much more of what he plans to do for the economy and business. Sure, there are his myriad campaign proposals—like raising the top income-tax rate and capital gains and dividend taxes on the wealthiest earners, or taking a new approach to trade agreements that emphasizes labor and environmental standards. But this promises to be a transition like no other, or at least unlike any other since 1932, when that economic crisis dominated the transfer of power.

First off, watch to see who Obama picks to be his Treasury secretary and who will fill the top economic jobs in the White House. You don't need to be a genius to picture Austan Goolsbee, the interesting University of Chicago economist, heading the Council of Economic Advisers. And you can imagine Jason Furman, who has been Obama's main point man on economics, heading the National Economic Council, a position filled by Bob Rubin and then Gene Sperling in Bill Clinton's two terms.

Treasury Secretary will be interesting, to say the least. The person clearly needs to be someone Wall Street—that's an antiquated term since there are no more investment banks—trusts, or at least doesn't fear. But it can't be someone who helped to get us into this mess. So I wouldn't look for Lloyd Blankfein or John Mack or Jamie Dimon to be signing the dollar bill anytime soon. Tim Geithner would seem like a solid bet. The head of the Federal Reserve Bank of New York has street cred, and he hasn't been seen as being part of the problem. But you could make a case that he was part of the slow Bush-administration response to the mess. Geithner would send a centrist signal to the markets and trading partners.

My favorite candidate would be Michael Bloomberg. Obama could talk the billionaire mayor out of running for a third term, making the case that, while he's needed in New York, he's in greater demand in Washington. Bloomberg has market cred and isn't part of the problem. Plus, he'd give Obama a valuable Republican-Independent appointment to the cabinet.

The other interesting proposition floating around is who runs the TARP (Troubled Assets Relief Program) after Neel Kashkari leaves. Will there be a special rescue czar, and could Obama persuade, say, Warren Buffett to take the gig for one year?

In many ways, the questions of how Obama will actually lead are greater now that he's president elect than they were when he was simply a presidential candidate. And the truth is, we don't really know what direction the Obama economic plan will take given the realities of the market crash. Will he remain as committed to deficit reduction? Will he veer left? Or will the left be wildly disappointed?

So to get one sense of where the future is headed, look to the past. I just finished Jonathan Alter's The Defining Moment, his account of F.D.R.'s 100 days. One is reminded of how much of the New Deal was improvised and unplanned, and how tensions were high between Roosevelt's diverse advisers. F.D.R. had, after all, run opposing Herbert Hoover's profligate spending and promising a balanced budget. But he also promised "bold, persistent experimentation" and that's what the United States got in plans ranging from the Civilian Conservation Corps to the genuinely socialistic National Recovery Administration. There was also a wholesale remaking of the nation's monetary structure including the formation of banking insurance under the F.D.I.C. and the Securities and Exchange Commission, run by Joseph P. Kennedy. F.D.R. was wise enough to know that a speculator like Kennedy would be best to run an agency devoted to regulating speculation. Hopefully Obama's bugaboo about lobbyists—he wouldn't take their money during the campaign—won't keep him from appointing some of the smart ones.

America's financial architecture is about to be remade and the shadow banking system—hedge funds and mortgage lenders, private equity and credit-default swaps—are all about to be brought under federal supervision. It's just a matter of what kind of regulations emerge from the ashes of the old Wall Street. This is where Obama likely will move at his briskest pace, rather than with things like health care, which is slow and cumbersome and fraught with political peril. (See Clinton, Hillary Rodham.) At this point, after the passage of the SCHIP that George W. Bush vetoed, the one that provides more health insurance for children of working families, Obama has a very tough road. But on financial regulation, he has something where he can declare victory relatively quickly and at relatively little cost.

But it's really all a mystery. Back in 2000, if you were predicting the Bush years, you would have bet on a humble foreign policy and no presidential interest in nation building. You would have looked at Bush's friendly relations with the Democratically controlled Texas legislature and predicted a period of bipartisan bonhomie. Obviously things turned out differently. Times change, and so do candidates when they become president. Right now, it's worth holding on to hope because it may prove to be, with President Obama, as with so many others, quite fleeting.

Matt Cooper