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**FEBRUARY 10, 2022**

Kuttner on TAP

Another Free-Trader to a Key International Post?

Biden is said to be considering Jay Shambaugh, former head of the
Hamilton Project, as the Treasury's top international official.

The post of Treasury undersecretary for all things international has
been vacant for a year. This is a power position once held by Larry
Summers. The undersecretary is the Treasury's point person with the
IMF, the World Bank, the G7 economic summits, currency politics, and
global tax and trade policies.

A leading candidate is Jay Shambaugh, according to Politico
,
whose Wednesday article cited "three people familiar with the matter."
If true, this a bizarre choice.

Shambaugh is an exponent of the naïve globalism that has long
undermined U.S. economic interests-and that Biden has been working to
reverse. Shambaugh's stance would undercut Biden on industrial policy
to reshore American jobs, as well as his firm stance against China's
predatory trade strategy.

Shambaugh served on the Obama Council of Economic Advisers from 2015 to
2017. There, he was a huge supporter of the Trans-Pacific Partnership, a
corporate trade deal that Congress refused to approve. He characterized
TPP as "one of the biggest buttons we could push that would increase
growth." He has described tariffs

as a tax on the consumption of low-income households.

From the Council, he went to Brookings, where he became head of the
Hamilton Project, a centrist research enterprise founded and
underwritten by Robert Rubin. Shambaugh epitomizes the orthodox economic
thinking of the Clinton and Obama eras on trade.

Why is Shambaugh even under consideration? He would be a thorn in the
side of three top Biden economic officials-Katherine Tai, the U.S.
trade rep who has reversed the traditional policy of corporate
globalism; the president's chief of the National Economic Council,
Brian Deese, a prime architect of the shift to industrial policy and
reshoring; and national-security adviser Jake Sullivan, who has reversed
his own previous support for naïve globalism for the sake of economic
security. Shambaugh is well to the right of the current Council of
Economic Advisers.

One likely promoter is Shambaugh's prospective boss, Treasury
Secretary Janet Yellen, who has publicly attacked Biden's China
tariffs as taxes on consumers. The other key undersecretary, in charge
of domestic finance, is Nellie Liang, a thoroughly orthodox official
whom Yellen brought over from the Fed.

There is often fraught negotiation between the White House and Cabinet
secretaries on key subcabinet jobs. According to one knowledgeable
observer, it is hard to imagine the Treasury's top international
official being appointed over the objections of the NEC and the NSC.

Though Biden has embraced industrial policy for the sake of U.S. jobs,
there remains a powerful undertow by the old guard in league with
financial and corporate interests, at the Departments of Treasury,
Commerce, the Fed, and the career staff of USTR. The last thing Biden
needs to do is reinforce that with this top Treasury appointment.

****

~ ROBERT KUTTNER

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**Robert Kuttner's latest book is**

The Stakes: 2020 and the Survival of American Democracy
.

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