Inauguration week round-up: Clinton, Geithner, China, and Gitmo

To Hillary Clinton’s credit: Appointing George Mitchell and Richard Holbrooke as special envoys shows Secretary Clinton’s strength (the real, non-steroidal kind). Both of these guys were legitimate candidates to be Secretary of State themselves, both are among the very best the Democratic party has to offer and both are among the few people available to Clinton or Obama who can offer the right combination of strength, stature, tenacity, creative and credibility to have any chance of making progress in the difficult regions in which they will work.

Mr. Smoot, Meet Mr. Hawley: And so it begins. Already the many-headed-stimulus-creature that is being cooked up in the laboratories of the Congress is starting to get even uglier. It’s not just bloated and built on a core strategy of “something for everyone.” Now, it’s showing signs of a protectionist impulse that many worried would be a hallmark of this Congress and perhaps this administration. Steel lobbyists have pushed for “buy American” provisions for components of new infrastructure projects. While this sounds sensible when you are trying to create jobs, these provisions cut both ways and will be seen as an invitation by foreign governments to create similar such provisions, cutting out U.S. suppliers and by extension U.S. workers.

At the same time, Tim Geithner is going hard after the Chinese for manipulating their currency to keep prices low on their exports. While this is a legitimate concern, the monetary policy saber-rattling is political grandstanding here that is not the most effective way of delivering a message to a Chinese government that is already worried that an Obama Administration tactic will be to scapegoat them. As Geithner rightly noted, we need their stimulus to work and we need to coordinate the global stimulus effort with them. And given the contraction in growth they showed in the fourth quarter, falling to 6.5 percent, China is entering some pretty precarious waters for 2009 — where we will have a strong national interest in helping them maintain stability. Sometimes the best diplomacy is not the most public diplomacy.

Geithner is also likely to discover shortly that U.S. brow-beating of other countries re: their economic policies is going to be much harder following the past few months of heavy-handed and only modestly (at best) effective intervention in U.S. markets by the USG. Further, let’s be honest, the United States has not exactly embarked on a long-term course of strengthen the dollar. In fact, no country in history has ever gotten out of the kind of debt crunch we are building up daily without reducing the value of its currency to reduce the value of the debt it has outstanding.

How Refreshing: The immediate shift on treatment of detainees and the commitment to shut Guantanamo has had an immediate impact on international perceptions of the United States, swiftly reconfirming hopes about Obama. Traveling international it is like night and day with just weeks ago. Americans are embraced, congratulated, and here, where I have spent the past week, the local Internet network went down because of demand from locals and visitors trying to watch the inaugural on line. (Or maybe it was that new super-worm infecting the net worldwide. I think I will choose the former explanation as it is the last day of vacation and I want to savor it.)

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