December 1, 2008 - President-elect Barack Obama began assembling his economic team the week ended November 28, complete with top economists who have advocated for a carbon tax or a greenhouse gas emissions trading system during their lengthy careers.
His selections throughout the week were his first major steps to lay groundwork to cut the emissions which are blamed for climate change.
Peter Orszag, 40, the incoming director of the White House Office of Management and Budget, is an expert on cap-and-trade systems, which is the method Obama proposed during the campaign to curb greenhouse gas emissions.
As the director of the Congressional Budget Office since early 2007, he has testified several times before the House and Senate on cap-and-trade policy.
Orszag will deal with Congress extensively as the head of OMB, and he has forged relationships with House and Senate leadership during his tenure.
Leading Democrats in Congress have all backed the cap-and-trade method, although their proposals differ in character.
Orzag's office was often looked to for advice and analysis on the topic.
"A key consideration in evaluating climate policies is the economic cost of cutting emissions," he said in a July 9 column in The Washington Post.
"That cost could be reduced, perhaps by a lot, depending on two key questions about domestic climate policies: whether flexibility is provided when emissions are reduced and whether allowances to emit carbon are sold or given away," Orszag added.
Summers backed carbon tax
The incoming director of the National Economic Council, former Treasury Secretary Lawrence Summers, has advocated for a direct carbon tax in recent years.
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"As long as developing countries can point to the US as a free rider there will not be serious dialogue about what they are willing to do," Summers, 54, said in a May 29, 2007, Financial Times column. "I prefer carbon and/or gasoline tax measures to permit systems or heavy regulatory approaches because the latter are more likely to be economically inefficient and to be regressive."
Obama also tapped former Federal Reserve Chairman Paul Volcker to run a new panel called the Economic Recovery Advisory Board. Volcker, 81, has has argued vocally for pricing carbon emissions, saying the economic risks of inaction are far too great.
"What may happen to the dollar, and what may happen to growth in China or whatever," he said, according to the Associated Press in a Feburary 6, 2007, story in the International Herald Tribune, "pale into insignificance compared with the question of what happens to this planet over the next 30 or 40 years if no action is taken."
It is unclear how their varying views could influence Obama or if they may come up with some sort of hybrid system.
In such a case, certain sectors of the economy, such as electricity providers, could see a cap-and-trade system, while other sectors, such as transportation, could come under a direct tax on the carbon content of fuel.
"There's going to be a serious conversation in the next administration about how to tackle this problem and marshal it as an economic opportunity," said Bracken Hendricks, senior fellow at the Center for American Progress, a liberal think tank whose director, John Podesta, heads Obama's transition to office. "A question among the top tier economic advisers will be whether to use a cap-and-trade or a carbon tax. That's the kind of debate we need."
The other members of Obama's economic team include Timothy Geithner, the president and CEO of the Federal Reserve Bank of New York, as treasury secretary.
Geithner, 47, joined Treasury in 1988 and has served three presidents.
Obama said Geithner has "extensive experience shaping economic policy and managing financial markets," and that he has an "unparalleled understanding of our current economic crisis."
"Tim will waste no time getting up to speed," Obama said. "He will start his first day on the job with a unique insight into the failures of today's markets - and a clear vision of the steps we must take to revive them."
Obama selected Rob Nabors to be the deputy director at OMB.
He previously served as the clerk and staff director for the House Appropriations Committee.
He also tapped Christina Romer as h
is director of the Council of Economic Advisors.
Romer is co-director of the Program in Monetary Economics at the National Bureau of Economic Research, and has been a visiting scholar at the Board of Governors of the Federal Reserve System.
Obama said Romer, a 50-year-old economic historian, is perhaps best known for her work on America's recovery from the Great Depression and the robust economic expansion that followed. In her current capacity, she is a member of the government agency that officially determines when the US enters and exits a recession, Obama noted.
That experience "will serve her well as she advises me on our current economic challenges," Obama said.
The president-elect picked Melody Barnes, 44, to run the Domestic Policy Council.
Barnes is co-director of the agency review working group for Obama's transition team, and served as the senior domestic policy adviser for Obama's presidential campaign.
The final nominee Obama announced the week ended November 28 was Austan Goolsbee, 39, as the staff director for the Economic Recovery Advisory Board. Goolsbee, an expert on tax policy, has been a longtime Obama adviser and has taught at the University of Chicago Booth School of Business since 1995.
Obama said his new economic team would immediately begin developing recommendations to implement the massive economic-stimulus plan that he announced on November 22.
That plan seeks to save or create 2.5 million jobs though programs to rebuild US infrastructure, including new solar and wind-energy projects.
Next page: Energy key to Obama stimulus plan
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