Obama's first job: Find a new treasury head

Among the tasks U.S. president-elect Barack Obama inherits from out-going President George W. Bush is one that is both pressing and onerous — what to do about the flagging U.S. economy.

The task is much tougher for Obama because he needs to appoint a new economics team while grappling with uncertain stock markets, potentially plunging employment and disappearing economic growth.

Although some experts have called for current Treasury Secretary Henry Paulson to stay on the job, the Bush appointee has already said he wants out.

Besides, the former Wall Street banker's coin has been debased by charges that he waited too long before acting to head off September's global financial crisis.

That leaves Obama a bewildering array of candidates for the treasury job — the cabinet post most closely resembling Canada's finance minister — but no obvious front-runner.

The sage

Buffett, the Oracle of Omaha, is rumoured to be a possible Obama Treasury Secretary(CBC)Perhaps the most intriguing possibility for new treasury secretary is the Oracle of Omaha, Warren Buffett.

The most influential investor in the United States has been a longtime phone-chat buddy of Obama. Besides his impeccable pedigree in financial markets, Buffett has been a vocal critic of tax breaks for wealthy Americans and too-clever-by-half financial instruments, such as mortgage-backed commercial paper.

Right now, one betting line has Buffett a 3-to-1 favourite for the spot, according to one online betting service.

On the other hand, the 78-year-old has cut a wide swath as a philanthropist in his later years and might not be interested the political cut-and-thrust needed to survive in Washington.

The banker

Timothy Geithner, the president of the Federal Reserve Bank of New York, is also hot on the rumoured-for-Washington list. He gets credit for shaping the dramatic economic response of the U.S. administration to the mortgage-led financial crisis.

Similar to Paulson, however, Geithner wears some blame for allowing Lehman Brothers to slip into bankruptcy, now considered to be the wrong policy. Still, most experts point a longer finger at the out-going treasury secretary rather than Geithner for that failure.

"The problem is, everyone in the room goofed, and you're probably going to pick someone who was in the room," Lakshman Achuthan, managing director of the Economic Cycle Research Institute, told CNN Money on Wednesday.

Bring out your dead

If not Buffett or Geithner, a group of retreads from the administrations of Bill Clinton and even Ronald Regan pop to the top of the treasury wish list.

Next Treasury Secretary ?Odds Warren Buffett 3-1 Tim Geithner 5-1 Lawrence Summers 12-1 Robert Rubin 16-1 Source: wheretobet.com

Robert Rubin, Clinton's former treasury top dog, currently sits on a number of boards and is considered to be one of the smarter political economic thinkers in Washington circles.

On the other hand, he is 70 years old and known as a deficit hawk. With the current thinking in Washington in favour of running red ink to boost the economy, Rubin might be out of step with the times to be of much use to Obama.

Similarly, Paul Volcker, former chair of the U.S. Federal Reserve Board under Democratic president Jimmy Carter and Republican president Ronald Regan, has been mentioned as a possible treasury secretary.

Volcker, however, brings all kind of political baggage, first linked to the failed economic policies of Carter during the late '70s and the staunchly conservative policies of Regan during the '80s.

The next three — Laura Tyson, Lawrence Summers and Gene Sperling — have the same factor in for and against their candidacies: links to Hillary and Bill Clinton.

Tyson, chair of Bill Clinton's council of economic advisers, is a well-regarded professor at the University of California at Berkley.

Former Clinton Treasury official another possibility for Obama(Associated Press)

Sperling, an adviser to Hillary Clinton during the Democratic presidential primaries, also helped Clinton when she tried to introduce a comprehensive health-care system during her husband's first term as president. That effort failed spectacularly.

Summers, another former Clinton treasury secretary and senior executive at the World Bank, might have a better shot in an Obama administration, but might not represent the change in Washington Obama spoke of during the election campaign.

New names, big risks

If Obama decides to bring in someone new to the post, he does have a wealth of less-known economic types who have been advising him throughout the primary and presidential campaigns.

And many experts think the new president will tap someone new to lead his administration's economic recovery team.

"You can expect a fresh face instead of a recycled face," said one adviser.

Foremost among those possible fresh faces is Obama go-to guy Austan Goolsbee.

The person credited with developing Obama's proposal to raise taxes on capital gains and dividends is an economist at the ultra-conservative University of Chicago who rejects the standard free-market orthodoxy of that institution.

Another potential top economic cop is Jason Furman, senior fellow at the Brookings Institution, a prominent Washington think-tank. Furman ran Obama's economics team but has substantial free-market credibility, including support for Wal-Mart and America's existing free-trade agreements.

The business hands

U.S. presidents sometimes pick treasury heads who come from industry as opposed to academia. In those cases, experience with investment markets and dealing with businesses was more important than theoretical knowledge.

Obama's industry candidates have the advantage that, while they understand business, they also are new faces and embody the theme of change.

Eric Schmidt, president and chief executive officer of search engine Google, has been mentioned. His appointment would give the administration a window on the growing technology sector and offer the always-important California a seat at the cabinet table.

Indra Nooyi, chairman and chief executive officer of PepsiCo, would fulfil Obama's diversity message. The India-born Nooyi is the head of a Fortune 500 company who spearheaded the company's drive into environmental sustainability and corporate responsibility.