James Pethokoukis

Politics and policy from inside Washington

Is Larry Summers on his way out?

January 5, 2010

The anti-Larry Summers buzz grow louder ( such as here, here and here.) There is a lot going on here. Liberals blogs have been all over him for pushing the $800 billion stimulus plan instead of the $1.2 trillion option presented to Obama by Christina Romer.  Liberals, including Paul Krugman, thought it was too small then and have double-downed on that opinion since.  (Alas, no high speed rail or modern-day WPA program for them.)

And the fact that the WH seems unwilling to propose some sort of massive second stimulus that focuses on jobs only makes matters worse — that even though their original unemployment forecast has proven far too optimistic. Then there was a quote from Summers who said the first stimulus wasn’t even supposed to boost jobs as opposed to output.

Not that liberals have ever loved Summers. He was part of Team Clinton which chucked the left-wing agenda in favor of deficit reduction. There was his stormy tenure at Harvard. And Summers worked at hedge fund DE Shaw, a  big no-no since the financial meltdown.

And all of this happens alongside healthcare reform, which liberals are angry about since deficit concerns helped deep-six the public option.

Unless the economy double-dips, I don’t seem a major shakeup on the WH econ team before the midterms. If the midterms go badly for Dems, though, Summers might depart. Maybe Geithner, too.  Though who would replace them if Wall Street folks and ex-Clintonites are off limits with an angry base?  Mark Zandi?  Jared Bernstein from the Veep’s office? Leo Hindery? I could see Rahmbo at Treasury, though.

Comments

Pretty smart guy, this Summers, much smarter than I. Failed, though, to connect the dots on derivatives and the monstrous distortions caused by the GSEs. Bit of a blind spot, it seems. Like so many at that level of power and intellect, probably too lost gazing at his own reflection to realize his worldview is a narrow as a country cracker like me. Too bad, really, having one’s name remembered as the voice of reason for encouraging an $878 billion stimulus to nowhere instead of one above the $1 trillion mark. But, whether he likes it or not, he is just a Keynesian now, part of our gang sending the dollar to the outhouse, industry to India, and kicking liberty to the curb. If he is on his way out, it just proves that intellect and common sense are mutually exclusive.

Or, maybe he is showing his handlers that he has got some serious buyers remorse with all the spending on political puffery? Nah, probably just too many egos in the room.

Lazy Jack

 

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