About a year into Barack Obama's first term, I remember having a conversation with Larry Summers, then the president's top economic advisor. He observed that one clear difference between the Obama era and the time he and I had served together during the Clinton administration, when he was at Treasury in various roles and I was at the Commerce Department, was the amount of time and attention international economic issues received.
The early Clinton years saw a kind of golden moment for international economic policymakers. Later this year, we will mark the 20th anniversary of one of that administration's notable achievements, the passage of the NAFTA deal. But on the trade front, the Clinton era also saw the passage of the Uruguay Round, the admission of China to the WTO, a major focus on trade cases with countries like Japan and on trade enforcement generally, an unprecedented focus on trade promotion, especially with what we called back then Big Emerging Markets (BEMs), and a host of smaller deals. In addition, with the Tequila Crisis (Mexico's 1994 currency meltdown) early in the administration and the Russian and Asian crises of the second term, emergency economic intervention also took precedence in top-level administration meetings. The National Economic Council was established under Clinton and immediately, with Bob Rubin at its helm, achieved the greatest influence it has enjoyed during its history. And with Rubin and later Summers at Treasury, maintaining the good will of international financial (especially bond) markets was also seen as vitally important.
Of course, a large part of the reason the Obama team has focused heavily on domestic economic concerns is the crisis the president inherited -- one that was, in fact, the most pressing international economic issue of its day. But as the crisis was brought under control, the administration's approach grew more balanced. In fact, the Obama team has achieved more internationally than most observers have noted. Among the most important contributions of outgoing Treasury Secretary Tim Geithner, a Clinton-era veteran who grew greatly throughout his tenure in Alexander Hamilton's old job, was his willingness to candidly and actively participate in discussions surrounding the euro crisis and his efforts at building critical economic relationships with emerging powers both through the G-20 and through mechanisms like the Strategic and Economic Dialogue with China, which he co-chaired. What is more, Obama's promise to double exports within five years has been among the administration's most successful job-creation efforts, with early growth on the ambitious trajectory set by the president and overall performance approaching his targets. Meanwhile, the State Department and the White House have worked to put together support programs for countries like Egypt in order to help with the growth and job creation that are so important to stability.
Given the prospect of gradually accelerating growth at home and an extensive roster of opportunities and challenges abroad, the years ahead may create an opportunity for even more emphasis being given to international economic initiatives.
With Geithner's departure as well as that of U.S. Trade Representative (USTR) Ron Kirk and Labor Secretary Hilda Solis, the longstanding opening atop the Commerce Department, and the expected departure of Energy Secretary Steven Chu, the president faces in the next few weeks a series of personnel decisions that will say a great deal about the role international economics will play over the next four years.
The nomination of outgoing White House Chief of Staff Jack Lew to succeed Geithner sends an early signal that the president will continue to prioritize domestic economic issues, including fiscal questions. Lew, a former head of the Office of Management and Budget, is widely respected but is seen by those who have worked with him in Washington as a pick calculated to help work issues with Capitol Hill more than on the international economic stage. That said, the decision to replace Lew with Denis McDonough, the former deputy national security advisor, will place someone with acute awareness of the importance of international economic issues (especially in places where national security concerns are in play, such as the Middle East) in an even more prominent spot. Which is saying something, considering how influential the effective and smart McDonough was during the first term.