Some Good News From Team Obama

While I remain worried that those who will have their hands on the levers of government do not have a clue how to bring the country out of this tailspin, there was some good news in Obama's announcement yesterday of his economic team:

On trade, neither Geithner nor Summers seems inclined to pull up the drawbridge and go down the protectionist road. Ever since the Democratic primaries ended, Obama has curtailed talk of calling a halt to the bipartisan era of free trade, suggesting this was all “overheated and amplified” rhetoric. With this contingent of advisers, it looks increasingly likely that he will not follow through on talk of withdrawing from NAFTA. However, it remains to be seen whether these advisers will press for ratification of the Colombian and South Korean free trade agreements.

What does this portend on tax policy? Buzz has begun that the Obama administration might not be so anxious after all to raise taxes on anyone in a recession and might instead reap the benefits of the Bush tax cuts through 2010. John McCain will enjoy a big “I told you so” — and the rest of the country can avoid an ill-conceived plan to hike taxes on investors and small businesses. Nevertheless, in a halting answer during his press conference, the President-elect continued to harp on his campaign pledge of a tax cut for 95% of Americans and to urge that the rich could pay more, while leaving open the possibility that the Bush tax cuts might simply expire on their own in 2010. (The market dove as he spoke on this topic.)

Yes, the market went down 40 points as he answered that question. I hope somebody will point that out to him.

If this analysis of the appointees is right, Obama's administration will at least avoid 2 areas that made the economic crisis of the late 20's and early 30's worse: protectionism and tax increases.