James Pethokoukis

Politics and policy from inside Washington

Replacing Larry Summers …

Nov 22, 2010 16:07 UTC

From the White House’s perspective, the ideal replacement for Larry Summers as chief economic brain would be a female chief executive who could reach out to Republicans and the business community without irking liberals. Buzz about the candidacy of Roger Altman, the founder of investment bank Evercore, shows how difficult it may be for President Barack Obama to land that dream candidate.

The only thing more challenging than filling that job spec might be finding another Summers. He’s a brilliant academic and former Treasury Secretary who handled emerging market crises in the 1990s. As director of Obama’s National Economic Council, he’s been less a dispassionate coordinator of policymaking than the president’s maximum economist during a time of extreme financial tumult.

But Obama doesn’t necessarily need a Summers sequel at the halfway point of his presidency. With Republicans flooding Capitol Hill, the final two years of his term likely won’t see many big policy initiatives. Frankly, Obama needs a political symbol that shows Corporate America’s leaders he views them as more than just background staging for photo ops.

Ideally, he’d find that figure outside of Wall Street, which many in his liberal base blame for the economic crisis. Also, given that the Treasury Secretary and chair of the Council of Economic Advisers are now both men, adding a high-profile female to the economic team might be preferable. And just in case the Republicans want to play ball, a reputation as a deficit hawk would be a great kicker.

Two potential choices, and former CEOs, Anne Mulcahy of Xerox and Ann Fudge of Young & Rubicam, either passed or were dropped from the initial shortlist. Fudge seemed a natural – not least because her work on Obama’s debt panel has impressed Republicans. Remaining short-listers have also major drawbacks. Former NEC chair Laura Tyson has no business experience other than serving on the board of Morgan Stanley. Jared Bernstein, the chief economic adviser to Vice President Biden, comes from a union-backed think tank. Moreover, many CEOs privately profess concern about the unglamorous nature of the staff job.

So, by comparison, Altman makes some sense. Although from Wall Street, he’s built a successful mid-sized firm, met a payroll, successfully created wealth and served in President Bill Clinton’s Treasury. He’s also expressed concern about Obama’s relationship with business, most recently in a Wall Street Journal op-ed that read like a NEC job application. Altman may offer one other plus: He’d probably take the gig.

Will Roger Altman replace Larry Summers?

Nov 17, 2010 15:53 UTC

The latest buzz is that investment banker and former Deputy Treasury Secretary Roger Altman is the likely choice to replace Larry Summers as director of the National Economic Council.  A few thoughts:

1. He is another high-tax guy. At a symposium held by the Center for American Progress, I heard Altman advocate a large (like $500 billion) value-added tax ASAP to deal with the deficit.

2. Boy, if liberals were screaming about Bristol Palin making it to the “Dancing With the Stars” finale, this would make a terrible doubleheader. Not only is he a banker (from Wall Street!) who bought the tabloid National Enquirer in 1999, he is another ex-Clinton administration guy.

3. This would mean we would once again get to hear about  …. Whitewater (via NYTimes from 1994):

Roger C. Altman, a rising star in the Administration until Whitewater led both Democrats and Republicans in Congress to attack his truthfulness, submitted his resignation today as Deputy Treasury Secretary but said that it would not take effect until the Senate confirms his successor.

4. I guess this would be a sign of Obama reaching out to business. But this and a corporate tax cut would be more compelling.

Is Jared Bernstein the next director of the NEC?

Nov 11, 2010 16:48 UTC

Who will replace Larry Summers as the director of the National Economic Council? One well-placed source of mine claims it is likely to be  Jared Bernstein, currently VP Joe Biden’s economic guru.

Jared is wonderful guy whom I frequently debated on CNBC when he worked at the Economic Policy Institute. But he is definitely a pro-union, pro-tax liberal whom business would frown upon.  I would guess he, like Christina Romer, also would have preferred to have seen a bigger stimulus package in 2009.

But in the traditional NEC role as a coordinator rather than a creator of economic policy — Summers is more the latter — Bernstein would probably do a fantastic job. He’s calm, personable and —  like Austan Goolsbee —  a wonderful explainer. But if it is not Bernstein, keep an eye out for these folks. And here are the current betting market odds (via Paddy Power):


Heck of a job, Larry (Summers)

Oct 28, 2010 14:23 UTC

This, to me, is the money exchange from President Obama’s appearance last night on “The Daily Show” with Jon Stewart:

Stewart: I remember thinking well that seems like the exact same person and why would you … so in some respects I get your frustration with this idea that ‘Well jeez, are you never satisfied?’ But again, the expectation I think was audacity going in there and really rooting out a corrupt system and so the sense is has reality of what hit you in the face when you first stepped in caused you to back down from some of the more visionary … like bringing a guy like Larry Summers …

Obama: First of all … if you look at how we have handled this financial crisis — if you had told two years ago that we’re going to be able to stabilize the system — stabilize the stock market, stabilize the economy — and by the way — at the end of this thing it, will cost less than 1% of GDP … I’d say we’ll take that because we saved taxpayers a whole lot of money. And in fairness, Larry Summers did a heck of a job trying to figure out how to …

Stewart: You don’t want to use that phrase dude.

Obama: Pun intended. Larry was integral in helping to think through some really complicated stuff.

Me:  Liberals like Jon Stewart really loathe the outgoing White House economic adviser. They blame him  for, in their view, a too small stimulus and for financial reform that wasn’t much harsher on the banks. And as Stewart alluded, they despise Summers role as part of  of the pro-market, pro-deregulation, anti-deficit Clinton Gang.  In fact, they view pretty much the entire Obama economic team as way too centrist and a betrayal of his campaign promises. No wonder Republicans are way more enthusiastic going into the midterm elections.


I blame “Heckuva Job Summers” for his antipathy to infrastructure investment. Even when he claims to support it, he limits that support to projects which can be completed, from conception to ribbon-cutting, within one year.

At least Brownie seemed to recognize he was failing and felt bad about it.

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Summers speculation roundup

Sep 22, 2010 13:03 UTC

Place your bets!


Following are economists that have been mentioned as potential replacements for Summers as director of the White House National Economic Council.


A member of the President’s Economic Recovery Advisory Board, an outside panel of economic experts advising Obama. Tyson is a former top economic adviser to former President Bill Clinton. She is also a professor at the University of California, Berkeley’s Haas School of Business.


A deputy to Summers on the National Economic Council. She also sits on Obama’s Auto Task Force. From 2002 to 2009, Farrell was Director of the McKinsey Global Institute, the economics research arm of McKinsey & Company. Prior to joining McKinsey, she worked at Goldman Sachs as a financial analyst.


He’s also a deputy to Summers. Furman served as Economic Policy Director of Obama’s presidential campaign. He served in the Clinton administration as a staff economist at the Council of Economic Advisers and later worked for the National Economic Council. In addition, he was a senior adviser to a top World Bank official.


A member of the bipartisan deficit commission Obama formed early this year to tackle the deficit. Fudge was chairman and chief executive officer of Young & Rubicam Brands. She also held senior executive positions at General Mills and Kraft.


Chairman of the Commodities Futures Trading Commission, Gensler is a former Treasury official and Goldman Sachs employee. He was also a senior adviser to former Senate Banking Committee Chairman Paul Sarbanes, on the Sarbanes-Oxley Act.


Counselor to Treasury Secretary Timothy Geithner. Sperling headed the National Economic Council in the Clinton administration. He served as an economic policy adviser to the Clinton-Gore presidential campaign and was also an economic adviser to former New York Governor Mario Cuomo.


Chief economist at Moody’s Analytics, Zandi was an economic adviser to John McCain’s presidential campaign. But he has also advised the White House and congressional Democrats and Republicans.


Chairman and CEO of General Electric since 2001. Immelt is also a member of The Business Council and is on the board of the New York Federal Reserve Bank.


Chairman of Citigroup and a former chair and chief executive of Time Warner, Parsons was on the Obama transition team’s economic advisory board before being named Citigroup chairman. He also served on a task force under former President George W. Bush that examined Social Security changes.


Former Xerox Corp. chief executive. She serves on the President’s Economic Advisory Board.


Among those whose names have been discussed is Anne Mulcahy, the former chief executive officer of Xerox Corp., two people familiar with administration discussions said. Other potential candidates include David Cote, CEO of Honeywell International Inc., and Richard Parsons, chairman of Citigroup Inc., according to one of the people. Cote is a member of Obama’s commission on cutting the federal deficit and, along with Parsons and Mulcahy, has been among the executives the president has called to the White House for consultations. The co-chairman of the deficit commission, former Clinton administration official Erskine Bowles, also has been mentioned as a possibility, a third person said.

Wall Street Journal:

Former Xerox Corp. chief executive Anne Mulcahy quickly emerged as a leading candidate to replace Mr. Summers, though White House officials caution that no decisions have been made yet. A senior administration official confirmed that Ms. Mulcahy had dinner in Washington Friday evening with senior presidential adviser Valerie Jarrett. She is highly thought of within the administration, the official said, where she serves on the President’s Economic Advisory Board. Other candidates include Deputy National Economic Council Director Diana Farrell, who came to the White House from McKinsey & Company, and Laura Tyson, an economist at the University of California, Berkeley, who served in the Clinton administration as chair of the Council of Economic Advisers.


Potential Summers replacements reportedly being initially considered include Rebecca Blank, a Commerce Department official who oversees the Census Bureau and Bureau of Economic Analysis; Ursula Burns, chairwoman and CEO of the Xerox Corp.; Ann Mulcahy, the company’s former CEO; and veteran economist Laura Tyson, who held the NEC director’s post in the Clinton administration. Obama is also expected to give a close look to business executives, as well as women candidates currently serving on his Economic Recovery Advisory Board and the President’s Export Council. The president is also known to think highly of Vice President Joe Biden’s chief economist Jared Bernstein .

Washington Post:

As Obama gears up for the 2012 reelection campaign, administration officials need both a fresh face on the economy and someone who can craft a credible vision for creating jobs and restoring the nation’s economic vitality. Sources said the White House is considering whether to choose a candidate who could blunt criticism that the administration has been anti-business, such as a corporate chieftain or prominent investor. Administration officials are also eager to find a woman to fill a top economic role, since Romer’s departure left Obama with an all-male group of principals at his daily economic briefing.

More on Larry Summers leaving the White House

Sep 22, 2010 12:42 UTC

A few additional thoughts about Larry Summers leaving the White House and going back to Harvard:

1. His replacement as director of the National Economic Council will be an interesting tea leaf.  Obama’s recent replacements for WH budget chief,  Jack Lew, and head of his council of economic advisers, Austan Goolsbee, were steps toward the center. Another centrist (like Jason Furman) could hint at The Pivot, a POTUS effort to work with a congress next year that will likely be far more Republican. And a liberal pick (Jared Bernstein) though, could be a signal to Obama’s base that the president intends to double-down on Obamanomics 1.0.  Markets would like the former, not the latter.

2. On substance, the new NEC head might not be that big a deal. The position will likely revert to that of a coordinator from being the high-level policymaking job it was with Summers who was basically Obama’s maximum economist, at least in 2009.

3. I know that business is clamoring for a CEO to get the gig. And while I think it would be fantastic to get someone in the White House with significant private sector experience, I really want someone who is more pro-market more than pro-business. We need to get rid of corporate pork and take a more realistic approach to China’s anti-market trading position.

4. These are some of the names I was Tweeting (https://twitter.com/JimPethokoukis) yesterday afternoon (followed by odds from Paddy Power): Ann Fudge (5/2), Laura Tyson (11/4), Anne Mulcahy (6/1), Jason Furman (4/1), Mark Zandi (9/1), Diana Farrell (9/2),  Jeffrey Immelt (8/1), Gene Sperling (9/2), Richard Parsons (10/1), Gary Gensler (10/1).


The WH is too male dominated. Bring in some women economists and budget experts. Laura Tyson is well respected but she may not want to leave her attractive life in Berkeley CA. What about Susan Athey – the brilliant Clark medallist? What about Carmen Reinhart? Janet Yellin? Linda Bilmes? Caroline Hoxby? Esther Duflo? There are plenty of good candidates if you look hard enough.

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The departure of Larry Summers

Sep 22, 2010 11:09 UTC

So who is going to replace Larry Summers over at the White House? My Reuters colleagues list a number of options. I have come up with a number of my own over at Twitter. (The WH would love a female CEO as director of the National Economic Council, methinks.) Anyway, here is my Reuters Breakingviews column on the the impending Summers exit:

If deftly handled, the exit of brilliant-but-testy White House economic adviser Lawrence Summers could be addition by subtraction. Summers’ departure for Harvard University gives President Barack Obama an opportunity to fill a gaping hole in his administration’s skill set: private sector experience.

Businessmen, both big and small, would be thrilled to see the next director of the National Economic Council – a key role in the country’s economic leadership – drawn from their own ranks. Executives have repeatedly knocked Team Obama for overweighting academics and government apparatchiks over folks who’ve met payrolls and earned profits. Summers’ two year stint as an adviser at hedge fund D.E. Shaw made him one of the few members of the Obama White House with “real world” experience.

Certainly such a move would make it a bit less likely that president would, as he did at Monday’s town hall meeting, have to reassure Corporate America that he believes making a buck isn’t morally inferior to community organizing.

But such a decision could have policy implications as well. A CEO in the vicinity of the Oval Office might point out the risks of regulatory overhaul amid economic uncertainty. Or he/she might highlight how higher taxes can alter the risk-reward calculations of business owners and investors. Just having someone in the West Wing that business sees as offering a sympathetic ear might be enough to spur détente.

But the significance of the position shouldn’t be overstated. Traditionally, the NEC director is a coordinator more than an idea generator. In that way Summers has been something of an anomaly. He served as Obama’s maximum economist in 2009, designing the stimulus plan, helping steer financial reform and keeping a watchful eye on markets.

During the past year, though, there’s been a sneaking suspicion with the November midterm elections approaching that more policy is being conducted by the Obama political gurus than the financial guys. If so, that power shift may continue as the president continues positioning himself for a possible 2012 reelection campaign.

Still, with the economy clearly the top priority of voters, Obama’s pick to replace Summers will be given plenty of symbolic weight. And with business still nervous about taxes, deficits and regulation a friendlier face would be a way for him to sound the “all clear.”


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Why Larry Summers may not make it until 2011

May 24, 2010 17:09 UTC

David Warsh dismisses reports that Larry Summers may stick around longer than many in Washington expect:

Defense is one possibility. Who wants to be seen as a lame duck while there are eight months to go on the clock – including the mid-term-elections? Offense is equally likely. No doubt the president would like to keep his chief economic adviser for another eighteen months.  Perhaps the administration is lobbying Harvard.

Summers’ other opportunities weigh in the balance: a successful marriage to Harvard English professor Elisa New (between them they have six children, all from previous marriages); the prerogatives that come with being one of Harvard’s fewer than twenty university professors, including the freedom to teach precisely what and where he wishes (or not at all); membership on the executive committee of an economics department that is one of the three or four best in the nation; and, of course, the famous day-a-week of consulting time that Harvard professors are permitted to spend in the moneyed world.


It could have aided dilute not just racism as is taking place now but also homophobia. The guy has a lot more talent than any other idol I’ve observed. He places inside a 100% effort into all his performances unlike Kris.

Why Geithner and Summers may stick around for a while

Apr 8, 2010 13:56 UTC

I am writing a column on this, given the rumors about Larry Summers soon departing.  But a few quick thoughts:

1) The only folks who really seem hot for these guys to leave are liberal activist groups and union folks. Basically the Huffington Post crowd who want to break up the banks and spend another trillion dollars on stimulus.

2) I think the WH believes the economy will begin to be a slight breeze at its back in the months ahead, a not unreasonable economic conclusion. Why muddy the narrative with departures?

3) If Summers is sick of the job, he’s sick of the job. Whatever. But I don’t think there is a great desire to push him out by the WH political team or the POTUS.

4)  As for Geithner, his slow start, including tax troubles, made him a permanent subject for resignation rumors. But the success of the stress tests and perhaps now some movement on the China currency issue  have thickened his heat shield considerably.

5) What if the Dems lose both houses of Congress in the fall? The assumption is that there will be a total house cleaning on the other end of Pennsylvania Avenue as well. I am not so sure about that.  Replacements for the econ team would be tough to find given the party’s anti-Wall Street fervor, especially at Treasury. Plus, if Obama thinks his policies are right and progress is being made, then he is is going to stick. Recall that after the 1982 disaster for Republicans, President Reagan didn’t replace Don Regan at Treasury. Now after the Dem 1994 disaster, Lloyd Bentsen did leave, but he was never going to be a long-termer anyway.

The campaign against Larry Summers

Jan 6, 2010 10:21 UTC

A quick exit for Larry Summers? That’s the goal of an incipient whispering campaign within segments of his own party. Detractors of the superstar White House  economic adviser blame his deficit-phobia for a skimpy stimulus and resulting jobless recovery in the United States.

Many Democrats fret that a toxic tandem of so-so economic growth and stubbornly high unemployment could cause huge losses in November’s midterm elections, perhaps even a loss of the House of Representatives. So let the Blame Game begin. In particular, an amalgam of influential liberal bloggers, New York Times columnist Paul Krugman, and even nervous White House and congressional politicos have concluded that the Obama administration erred in not pushing for a 50 percent larger stimulus plan than the $800 billion effort in early 2009 — or for a massive second dose of steroids since.

Summers has been central to those decisions. He has argued that while government can partially fill the economy’s output gap, overdoing spending — and borrowing to fund it — would spook global bond markets. Such reasoning annoys Washington liberals, as it did during the Clinton years when much of the left-wing, “Putting People First” agenda lost out to the deficit reduction advocated by Treasury Secretary Robert Rubin, Federal Reserve chairman Alan Greenspan and, yes, Summers. A near-trillion dollar stimulus plan and trillion dollar deficits apparently just aren’t enough when you have visions of coast-to-coast high-speed rail and a modern-day WPA program dancing in your head. Given the kvetching on the left, you would almost think Summers was pushing for a crash balanced budget.

It’s the same brand of deficit hawkishness liberals see at work in the healthcare reform process. (Amazingly, a $900 billion plan that will almost certainly expand the budget deficit is still too fiscally strict for these folks.) Many Dems also sniff at Summers’ past employ at hedge fund DE Shaw. Hey, what value could experience outside of academia and government possibly have, right?

But Summers is certainly right to focus on controlling government deficits. Uncle Sam has at least $10 trillion in new debt to sell over the next decade and needs to maintain investor confidence. Bond fund giant Pimco, for instance, is already cutting back on Treasuries because of the flood of new issuance.

Even dyed-in-the-wool Keynesians should also concede that government borrowing can become excessive. A stunning new study by Carmen Reinhart and Kenneth Rogoff found that when government debt-to-GDP levels rise above 90 percent in advanced economies, annual GDP growth falls by one percentage point or so. The International Monetary Fund projects that America’s debt-to-GDP ratio will reach 94 percent this year.

Summers isn’t going anywhere right now. Imagine the strange optics of axing the White House’s economic guru just when President Obama is arguing that his policies are slowly righting the ship. But should the economy dip again or November’s elections prove disastrous, there will be a political price.

And while the high-profile Summers is near the top of the list to pay it, he might not be the only one. The left, brimming with anti-Wall Street fervor, would also like the president to give Treasury Secretary Timothy Geithner his walking papers. An obvious replacement would be JP Morgan CEO Jamie Dimon.

But liberals want no part of ex-Wall Streeters or ex-Clintonites. So who would that leave to replace Summers or Geithner? Who would be on the liberal short list for an Economic Policy Dream Team besides Krugman and Biden adviser Jared Bernstein?  (Certainly no one in favor of cutting taxes.) Financial markets would probably love to know.

Of course, the real problem for the anti-Summers crowd is Barack Obama himself, the man “progressive” columnist David Corn said has already left liberals “alienated from politics today.” Obama’s instincts, along with real political and fiscal limitations, seem to consistently push him toward center-left economics. But the White House isn’t like a baseball team where it’s far easier to fire the manager than get rid of problem players.


Larry Summers ran over my dog!

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