Wednesday, October 8, 2008

How the Economic Crisis Will Affect the Cabinet

The economic crisis has changed many calculations. Certainly, if Barack Obama wins his most important choice may be his new Secretary of the Treasury, a job that became vastly more influential with the passage of the Bailout last week. But if history is any guide, another Cabinet post may prove just as critical in an Obama administration: The Secretary of Labor.

In 1933, Franklin Delano Roosevelt took the reins of governmental authority. The four most important Cabinet posts went to men largely forgotten by history. Treasury Secretary William Woodin helped establish the FDIC to ensure bank deposits, and the FDIC is still a major stabilizer in the current crisis, but he resigned due to ill health after one year. Cordell Hull was a largely successful Secretary of State who served until 1945. Almost no one remembers FDR’s Secretary of War George Dern or his Attorney General Homer Cummings. But, his Secretary of Labor, Frances Perkins, stayed with FDR throughout his tenure and left the most indelible marks on his administration.

When FDR asked Perkins to take the job, she agreed to do so only after the incoming President promised to pursue a progressive agenda: limiting the work week, unemployment insurance, Social Security. FDR agreed to these, although he told Perkins that she would have to build up public support for Social Security before he would present it to the Congress. To help her in this task, Perkins enlisted the support of Msgr. John A. Ryan of the Catholic Bishops Conference and the two were so effective that Social Security was established within two years and Catholics became linked to the New Deal political coalition for more than a generation.

The challenge facing the next president is deeper than resolving the credit crunch though, mercifully, not as challenging as the crisis FDR faced. Over the past several decades, the structure of the economy has become top-heavy: CEOs make millions, even when they are fired, while the wages of average workers are stagnant or falling. Fancy financial instruments have diverted money that should go into infrastructure improvements. Money sent abroad to pay for oil should be used to convert the auto industry into a 21st century manufacturer of non-gas guzzling cars. The free market system is in desperate need of a legal structure that rewards work over speculation, smart investments in manufacturing over risky investments in derivatives.

If Barack Obama wins in November, he would be well advised to turn, like FDR, to a woman to lead the Labor Department and there is one woman who could fit the bill perfectly: California Congresswoman Linda Sanchez. She is not only a friend of organized labor, her tenure on both the Education and Labor Committee and the Judiciary Committee have made her an expert on the ways that the law can influence the labor market and the educational system that feeds the labor market. If that were not enough, her service on the Foreign Affairs Committee provides her with a wealth of expertise and contacts to address trade issues that will be at the heart of government’s restructuring of the rules of the road for the economic future.

Political appointments such as Cabinet positions usually go to those with a special expertise or strong political ties to the President. Sanchez endorsed Barack Obama this year and trudged through the snows of Latino communities in Connecticut stumping for him. Connecticut was the only Northeast state to go for Obama on Super Tuesday. There was a personal cost to her endorsement: Sanchez’s older sister, Loretta, who is also a California congresswoman, endorsed Hillary Clinton. So, Sanchez has both the expertise for the job and a demonstrated political to Obama.

There is less than a month to go in the election. We can bet that the month will be largely spent discussing foolishness: Obama’s sitting on a board with William Ayers, McCain and his wife owning many houses, Sarah Palin’s latest gaffe. The nation would be better served if the candidates were asked to name some of the people they would want in their Cabinet. And, Obama would be smart to put Linda Sanchez at the top of his list. A bold choice worked for FDR and it could work for Obama too.

Michael Sean Winters

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