What Gene Sperling Needs to Get Done

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NEW YORK (MainStreet) — Gene Sperling, a former economic adviser in the Clinton administration, has been appointed by President Obama to serve as the new head of the National Economic Council, a position that will give him a leading role in crafting the country’s economic policy.

Sperling replaces Lawrence Summers, who also served under Clinton and played a big role in crafting the stimulus package and the government’s bailout of the auto industry in 2009—two policies as controversial as they were successful.

Sperling boasts a long resume in politics and finance. He served as an economic adviser for eight years under Clinton, and as the director of the National Economic Council from 1996 to 2000 (this will be his second time in this role). He has also served as an economic adviser to everyone from Gov. Mario Cuomo of New York to John Kerry during the 2004 presidential campaign, and currently works as a counselor to Timothy Geithner, the Treasury Secretary. More surprisingly, he worked as a consultant for The West Wing, a popular TV series about the White House (his wife was a writer).

Now Sperling is set to retake this position during a very different financial period than the fiscal prosperity of the late ‘90s. The unemployment rate remains well over 9%, the housing market is still unstable and economists remain concerned about a number of risks that could plunge our economy back into a recession.

At this point, most of the big legislation that will be passed with regards to the economy has likely been passed. It seems doubtful we will see another stimulus package or financial reform bill or set of bailouts come about in the current Congress. So much of the tasks that lie ahead for Sperling, and the rest of the economic team, are more about managing the policies that already went into effect, perhaps tweaking the direction and tenor of government policy as needed.

MainStreet put together a quick to-do list for the incoming White House economist and the entire economic staff at the White House. Mr. Sperling, if you’re reading this, consider this a little sneak preview of what we expect you’ll find in your inbox on day one of your job.

Kick Start Hiring

The main task for the White House and its economic team going into 2011 and 2012 is to find ways to boost hiring in the private sector.

Since late 2008, the government has pumped hundreds of billions of dollars to expand public work projects, bail out private companies and get banks lending to small businesses again, all with the end goal of increasing hiring rates. But instead, we are faced with a situation where private firms now have more than $1 trillion in assets, yet refuse to expand their work forces significantly.

This leaves the Obama administration relatively few options. Sperling and the White House will need to continue their outreach to the business community to entice them to loosen up their payrolls a bit and start hiring again. Moreover, Sperling may have to take the initiative to prove to America’s businesses and corporations once and for all that the White House is not in any way anti-business, and now is in fact a safe time to make a strong investment in the economy.

Confront Mortgage Loan Mayhem

While the administration deserves praise for much of its handling of the economic crisis, one area where it seems to have erred quite seriously is in pushing lenders to renegotiate mortgage terms with troubled homeowners in order to keep more Americans in their homes.

Instead, the government’s Home Affordable Modification Program (HAMP), which was intended to prevent some 3 million to 4 million foreclosures, is expected to only prevent about 700,000. Moreover, several banks have been found to process mortgages improperly, which could exacerbate an already unstable housing market.

Much of this comes down to banks either acting too rashly when dealing with homeowners or simply refusing to renegotiate mortgages, preferring instead to foreclose. But if the situation is not remedied, America may quickly become a foreclosure nation.

These blunders will, at least in part, become Sperling’s burden to bear as this drama unfolds.

Revise Tax Policy

The White House and Republican leaders managed to come to an agreement at the end of last year to extend Bush-era tax cuts for both the middle class and the wealthy, but the deal itself is only temporary, and it’s set to expire by 2012.

However, several politicians and economists have already voiced concerns about this arrangement, pointing out that if taxes do go up again in 2013, it will essentially be a double whammy, because health care taxes are slated to increase that year as well.

If Sperling sticks around long enough, he will likely be embroiled in the public battle over whether or not to extend these tax cuts permanently, and the effect this would have on the country’s deficit. If you thought that battle was heated in 2010, just wait until it revs up again in 2012.

Play Defense

Ultimately the big theme of Sperling’s tenure may simply be a matter of playing defense for policies that already came to pass. Republicans, now in charge of the House of Representatives, are gearing up to repeal as many policies from the past two years as they can, and to investigate others like the stimulus and bailouts in order to find out where the money went.

Meanwhile, by the second half of this year, the president and his team will need to tout and defend their economic achievements as much as possible in advance of Obama’s re-election campaign in 2012. As the new face of Obama’s economic policy, Sperling will likely be front and center, telling the world why the White House did well after all.

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