The next president wont actually take office tomorrow, but, at least as far as the economy is concerned, it sure may seem that way.
[IMGCAP(1)]Thats the only conclusion you can come to when you assess the Bush administrations continuing inability to calm financial markets and reassure consumers that everything will be OK. A combination of his extremely poor communications skills, a tremendous lack of credibility on economic issues, very low approval rating and lame-duck status, the still-growing serious doubts about the rescue plan and how it is being implemented, and all of his failed previous attempts to keep things calm has meant that, at best, President Bush no longer has much of an impact as far as the economy is concerned.
But it actually may be worse than that. A number of senior Wall Street types have told me that Bushs remarks over the past month or so not only may not have helped, but may have made things more difficult. Several said they wished he would stop making statements on the economy altogether.
Combine the presidents inability to lead on the current economic crisis with a Treasury secretary who has caused great consternation because he seems to have completely changed his mind on what the economic rescue plan will be; a secretary of Commerce, chairman of the Council of Economic Advisers, and Office of Management and Budget director who have been largely or completely missing in action during the crisis; a Federal Reserve Board chairman who prefers to work behind the scenes; and a Securities and Exchange Commission chairman who many believe is one of the biggest causes of the problem. What you get is no credible leadership on the credit and stock market crises and economic downturn at a time when the country desperately seems to want it.
At this point in its last year in office, no one in the Bush administration, including the president, is able to provide this leadership. If it ever existed at all, that opportunity passed a long time ago. And the House and Senate leaders on this issue dont have the national credentials to take control.
That leaves only one person: whoever is elected president.
Unlike the situation in almost all previous elections, the country is likely to look to the president-elect for guidance and reassurance almost immediately after the results have been announced. Even though he wont be sworn in for about 10 weeks, the president-elect will have the opportunity to get involved in the economic policy debate almost instantly. His choice for Treasury secretary, which, because of the ongoing economic problems, will likely be among the first appointments, will be seen almost immediately as the go-to person for the incoming president and a strong indication of where he is headed. The other members of the new administrations economic team will also be listened to more closely and their statements and actions analyzed far more carefully than anything said by the current officeholders, that is, by those who are actually in a position to make policy decisions.
Most presidents-elect havent immediately stepped into the fray either because there has been no crisis that needed to be addressed, they were part of the administration they will be succeeding, or the White House had the credibility needed to do what had to be done. In addition, especially in recent years when confirmation hearings have become so contentious, those nominated for a Cabinet position mostly have preferred to fly below the radar until the Senate approved their nominations.
And not all presidents-elect have been willing to get involved before they formally took over. In his book, The Defining Moment, Jonathan Alter says Franklin Roosevelt after the election in 1932 intentionally allowed the economy to sink lower so that he could enter the presidency in a more dramatic fashion. According to Alter, FDR refused President Hoovers offers to be involved in economic policymaking before Inauguration Day, which in those days wasnt until March 4. That meant there was a four-month wait for the new economic policymaker in chief to provide any leadership.
Even though he will take the oath of office in January instead of March and the country will get new economic leadership about six weeks sooner than was the case in the early 1930s, there are three reasons it will be hard for the new president-elect to wait until then before getting involved in some way.
First, not doing so will seem like, or will be characterized by some, as an abdication by the president-elect of his new responsibilities and will make him appear weak, indecisive, and unwilling to govern. That will eliminate much of the early support the new administration will need when it actually gets started and will put it in a deep leadership hole from which it may never be able to climb out.
Second, even if he doesnt want to get involved, U.S. and global financial markets will virtually demand that the president-elect be very visible on the economy. In fact, at this point, the markets are far more likely to take their cues from the president-elect than from the president.
Third, Congress is also going to want a great deal of guidance from the president-elect, especially if its a Democratic president and Congress. The much larger Democratic majorities in the House and Senate that today seem almost certain will want to know the new presidents plans as they craft their own responses to the downturn.
One question at this point is whether the Bush administration will welcome the president-elects participation. Will it, as Hoover did with FDR, try to get the next president involved, or insist that this is its job alone until Jan. 20? The other question is whether what the Bush administration wants will make any difference.
Stan Collender is managing director at Qorvis Communications and author of The Guide to the Federal Budget. His blog is Capital Gains and Games.