Geithners European Challenge

Treasury Secretary Timothy Geithner testifies before the Senate Budget Committee March 12.

Image: Win McNamee/Getty Images

UPDATE, March 20: Timothy Geithner has had a brutal couple of weeks. His didn't get what he wanted at the G20 finance minister's meeting in London. Yes, finance ministers agreed to pursuing expansionary policies. But they didn't buy Geithner's plan for a specific growth target target of 2 percent of gross domestic product. And since returning to the US, Geithner has faced questions about what he knew and when he knew it regarding the AIG bailout. The only good news for the Treasury Secretary has been the president's unqualified support. As long as he has that, he's safe from his chorus of critics.

Poor Timothy Geithner.

The Treasury secretary gets beat up on Saturday Night Live as being out of his depth, snookered by that Nigerian prince scam on the internet. At a White House press briefing, Obama spokesman Robert Gibbs gets asked if the president still had confidence in Geithner. Yes is the answer, but the mere question is not a good sign. And, of course, there's the problem that he's still waiting to staff up his top underlings at the Treasury. Is this what becomes of a Boy Wonder?

This weekend, Geithner, 47, will be in London for the G20 finance ministers meeting, the prelude to the big head-of-state meeting in early April. Given all the jockeying that's gone on, it looks like Geithner is in for a rough time.

He's asked the Europeans to do more with stimulus packages so that the world faces down the current finance-credit imbroglio with enough muscle. Our pals across the pond are not so keen on that. They're more debt-averse given the European Union's restrictions on national debt and they feel like their much more expansive social safety net is already leading them to pay out more as the economy gets worse. In other words, they shell out more unemployment, retraining, and other assistance anyway so why, they argue, do they need more stimulus? Germany's stimulus package for this year—they didn't do one at all in 2008—is 1.5 percent of gross domestic product versus 2 percent for the United States. Italy's is a mere 0.2 percent.

Still, Geithner's optimistic that he can be persuasive. Wednesday, he told reporters gathered at the Treasury Department: "There is a broad-based recognition that our fortunes are closely linked to the fortunes of the rest of the world, and if we don't get the world moving with us, then we face some prospect of a deeper, longer-lasting recession in the United States." Good luck. The Europeans would like the summit to focus more on regulatory reform of the financial system and less on stimulus.

Geithner's basically doing the right thing. We're in a mess and we need as much raw, Keynesian firepower trained on the problem as we can get. It's Europe's problem, too, so why not encourage them to do more? The problem is that Geithner—who has spent his short life moving up the government technocrat ladder at a brisk clip—hasn't shown the kind of swagger needed to persuade the surly Europeans. If there's one thing that helps a Treasury secretary, it's a certain kind of swagger, whether it was James Baker's macho or Bob Rubin's quiet confidence. The medium is the message, and in Geithner's case it doesn't seem to be working.

In this sense, Geithner is not proving as adept as another government star/New Yorker, Richard Holbrooke. Like Geithner, Holbrooke was phenomenally precocious. Holbrooke, a young foreign service officer in Vietnam, became the youngest assistant secretary of State in the Carter administration and then went on, famously, to be the U.S. Ambassador to Germany under Bill Clinton and to negotiate the Dayton Peace accords. He then became a cabinet official too—the U.N. Ambassador, living in the ambassador's residence at the Waldorf Astoria. Holbrooke's outsized personality gives him an abrasive quality, but he's also known as one of the greatest, most effective, and highly persuasive diplomats ever. Part of that has come from having a large, public persona. He's schmoozy with the press, a fixture in New York's social circuit.

Don't get me wrong. Geithner is a charmer too. Pete Peterson, the former Blackstone chair, was a key mentor and helped Geithner become chairman of the New York Fed. Before that, Larry Summers picked Geithner out of the civil service ranks and brought him into the top tier of the Clinton administration. But Geithner has never had a real gait. I wasn't that surprised to hear that his appearance on PBS's Charlie Rose this week was his first time on the show. Holbrooke's been on so much you might think he was a co-host. Sitting at Charlie's table, Geithner seemed very smart. Just not big.

The point is that in international economics, so much of the work is about psychology and persuasion. If you present well, you can bolster confidence and that makes a real difference—to the allies and to the markets. That's why Geithner's roll-out of the administration's plan for disposing of toxic assets was received so poorly. It was only partially complete, and Geithner's lackluster presentation didn't help matters anyway.

Of course, Barack Obama likes his people cool and low-drama. It's no wonder that Geithner got Treasury and Holbrooke wound up, not as secretary of State, but working for Hillary Clinton as America's negotiator for Pakistan and Afghanistan. (For her part, Clinton's no stranger to brash men who like the limelight.) But sometimes in government you need people who are Holbrookian. Larry Summers fits that bill, but Geithner doesn't.

It may turn out, in the end, that Geithner's cool, low-key style was right for these turbulent times. Let's hope so. At the moment it doesn't seem that way. Geithner seems too meek to persuade the Euros and too low-key for the job at hand. Poor Tim? Poor us.