Independent Investor: Next President Must Hit Ground Running
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Given that, the period between Election Day, the first Tuesday of November, and Jan. 20, Inauguration Day, worries me. The typical presidential transition requires 11 weeks. That feels like a lifetime given today's rapidly changing financial crisis.
President Bush must be concerned as well since last week he signed a new executive order detailing how his administration will handle the upcoming transition. Similar executive orders have been signed by past lame-duck administrations but normally not until after Election Day.
Both candidates' transition teams are working to get up to speed on everything from absorbing existing policies in dozens of areas, the freefall in the financial markets and the handling of two very active war zones. All this pre-election activity is being conducted behind closed doors because traditionally candidates do not want to appear arrogant or "cocky" by putting the cart before the horse.
Unfortunately, this time around the nation cannot afford the luxury of waiting weeks or even months until the new president is in the Oval Office. The issues are just too pressing.
I believe, after eight years of Republican ideology and staffing, a Democratic win will mean a wrenching change in Washington. Fortunately, Sen. Barack Obama seems adept at setting up effective organizational efforts. His transition team is pursuing those same goals in working out the smoothest transition possible. In contrast, Sen. John McCain, if he wins, will have more leisure and less to do since Republicans already staff most of the office. Of course, given his "maverick" campaign stance, one would expect him to clean house as the new president over time.
Richard E. Neustadt, one of the few scholars who have made a study of presidential transitions, believes there are three most immediate dangers to a new president in transition.
The first pitfall: the new president could be caught by surprise by either domestic or foreign events or both. Second, under enormous pressure to act and appear in charge, he could make decisions without all the pertinent facts; decisions that could haunt his administration and the nation for years to come. And finally, the new president, after years of campaign promises that once elected he will [fill in the blank], will take on the mantle of "I know best" in implementing policies without understanding the realities that face him. Neustadt warned to watch hubris, haste and naivete in a new president's early days.
The present global environment is ripe for committing just those kinds of qualitative mistakes.
The economic crisis, for example, will not wait for the transition. Clearly the question of who will replace Treasury Secretary Henry Paulson and his staff will be a critical decision and one that should be given the new administration's top priority. No matter what one thinks of Paulson, he has lived and breathed this crisis. The treasury secretary understands its most intimate details and all of the players involved. His replacement will not only need to get up to speed but handle each unfolding event while implementing the new president's policies - ditto for his staff.
The same could be said for our foreign policy appointments. Wars don't wait around for the next leader of the free world to get acclimated. There is a danger that our opponents will use this period of transition to strike hard while we focus on getting our economy back on track. The new president must be prepared for that eventuality.
In addition, both candidates have campaigned on a platform of health care, energy, economic stimulus, cutting taxing and more while keeping spending under control. When asked repeatedly what campaign promises they would need to sacrifice based on the economic realties of the country, neither would answer. That worries me as well.
So how have transitions faired over the last several presidencies? Most historians judge Ronald Reagan's effort as the most successful while Jimmy Carter's and Bill Clinton's were somewhat disappointing. Democrats overall seem to have more difficulty managing transitions. But this time I believe there is little room for error regardless of which candidate wins.
Bill Schmick is a licensed investment adviser representative and portfolio strategist as well as a registered financial planner with Berkshire-based Dion Money Management, which manages more than $550 million for middle-class Americans from coast to coast. Direct your inquires to Bill at 1-877-850-7942, Ext. 146 (toll-free), or at wschmick@dionmm.com. You can also visit www.afewdollarsmore.com for more of Bill's insight.
