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April 22, 2005

Why Oh Why Are We Ruled by These Fools?

Ah. Economic policymaking in the Bush administration. From the Financial Times's Andrew Balls:

FT.com / Home UK - Treasury feels White House heat on policy. By Andrew Balls: [T]he US Treasury suddenly called for China to move immediately to a flexible currency. Two senior administration officials said the call to change tactics on China was a political decision made at the White House. The Treasury's policy - widely supported by China experts who say Beijing is less likely to move in the face of public hectoring - was overturned because of White House concern at rising protectionist pressure in Congress. The sharp change was the clearest sign yet that economic policy in President George W. Bush's second term is going to be led firmly from the White House.

A tight team of close associates of the president is calling the shots, say current and former administration officials. This group consists of Dick Cheney, vice-president, Andrew Card, the president's chief of staff, Joshua Bolten, director of the Office of Management and Budget, and Karl Rove, the president's political adviser who has assumed a broader co-ordinating role, including overseeing economic policy....

[O]verruling the department on foreign exchange matters, traditionally the Treasury's domain, marked a new departure. It is not clear exactly who made the call on China.... Richard Medley, head of Medley Global Advisors, tells clients that there is no one dominant voice on economic policy.Messrs Cheney, Card, Bolten and Rove, the key decision-makers, take the lead on different economic policy issues.... The White House inner circle is widely acknowledged to consist of very smart people, but they are not economists and do not have financial market backgrounds. Some current and former administration officials worry that when the decisions are taken, there is often no economist in the room...

Posted by DeLong at April 22, 2005 07:30 PM