President Barack Obama

Within the past  few days, two of the four most important economic advisors and policymakers within the Obama administration have resigned.. They are Peter R. Orszag, budget director at the U.S. Office of Management and Budget, otherwise known as OMB, and Christina Romer, who chairs the Council of Economic Advisers. Remaining on the economics team is Treasury Secretary Timothy Geithner and Larry Summers, Director of the White House National Economic Council. Supposedly, Romer and Orszag are leaving of their own accord, to pursue “other opportunities.” Some speculate that policy differences with Larry Summers and even President Barack Obama were a factor. My own sense is that the worsening economic crisis in the U.S. as well as the overall global economic crisis, and the increasing evidence that massive increases in public debt by Washington has not only failed to end the recession and restore robust economic growth; the risk of a sovereign debt crisis in the United States is now a reality.

The resignations of Romer and Orszag are the first ramifications of a failed economic policy. The more tangible result will be the upcoming midterm congressional elections in the U.S., which will almost certainly witness the Democrats losing control of the House of Representatives. From there, things will get worse, as America enters a double-dip recession, while Congress is mired in gridlock and imposes paralysis on the remaining two years of Obama’s presidential term.

As the economic clouds darken in America, it is likely that the resignations of Orszag and Romer are the crest of a wave.

President-elect Barack Obama has announced the names of his top economic advisers at a Chicago news conference. He indicated they would manage a massive economic stimulus package designed to save the U.S. economy from the worst financial crisis since the Great Depression since the 1930s.

The names and positions announced include:

Christina Romer, co-director, National Bureau of Economic Research

Timothy Geithner, currently the president of the New York Federal Reserve, will serve as the next U.S. treasury secretary.

Lawrence Summers, himself a former treasury secretary in the Clinton administration, will be appointed to become the new head of the White House’s national economic council.

Christina Romer of the National Bureau of Economic Research was selected to chair Barack Obama’s Council of Economic Advisers.

During the Chicago press conference, President-elect Obama said he had selected a team that would offer new ideas for confronting the global economic crisis.

Barack Obama stated very emphatically, “We need a big stimulus package that will jolt the economy back into shape. I look forward to working closely with them in the months ahead. And that work starts today, because the truth is, we don’t have a minute to waste. Our financial markets are under stress. While we can’t underestimate the challenges we face, we also can’t underestimate our capacity to overcome them.”

The announcement of Timothy Geithner to head Treasury sent the Dow Jones index up sharply. Geithner, who has also been vice chairman of the interest rate setting Federal Open Market Committee, was very involved in the bailouts of insurance giants AIG and Bear Stearns, and in the decision to allow Lehman Brothers to go bankrupt.

Obama’s top strategist, David Axelrod, said Geithner was “intimately involved with the situation now in his role as president of New York Fed. By temperament and experience, he’s the right man to lead the Treasury now.” Apparently, the stock markets and financial community agree with Axelrod.