It's official. Larry Summers, the director of the National Economic Council, is leaving the White House. He'll be returning to Harvard before the end of the year.
Summers's announcement comes on the heels of Peter Orszag's and Christina Romer's departures, but it's unquestionably the biggest of the three. As head of the NEC, Summers ran the White House's economic-policy process. He was also, by most accounts, Obama's lead economic adviser. His West Wing office put him physically closer to the president than any other member of the team. His long experience in government -- including a stint as Treasury secretary during the Clinton administration -- gave him a level of political seasoning that the other council members didn't have, and that Obama relied on heavily at the outset of his presidency. His reputation for brilliance gave him an edge in an administration that prizes academic accomplishment.
But Summers was also the most controversial member of the team. He'd worked part time for a hedge fund before joining the Obama administration. His tenure at Harvard was marred by an unfortunate comment about whether women were less likely to excel at math and science than men. He participated in the deregulation of the financial sector under Bill Clinton. And Summers's strong personality made him a lightning-rod for criticism and dissatisfaction within the White House: Many felt that his role as economic adviser to the president had overwhelmed his role as manager of the president's economic process.
Summers wasn't much liked by liberals. Stephanie Taylor, co-founder of the Progressive Change Campaign Committee, said his departure is "a big victory for anyone who voted for change in 2008 only to see Summers work from the inside to water down Wall Street reform, block President Obama's promise to protect Net Neutrality, and urge other pro-corporate positions." But his role in internal debates was often unpredictable: Summers was one of the administration's strongest advocates for rescuing Chrysler. On the other hand, he was also fingered for vetoing Christina Romer's argument for a $1.2 trillion stimulus before it even got to the president's desk.
His departure leaves a tremendous power vacuum in the Obama administration's economic policy team -- and at the exact moment that the recovery seems to be slowing. With Orszag, Summers and Romer gone, the administration is without three of its strongest voices. That makes the choice on NEC director -- the person who will have to build and manage the economic policy process as the new team gets its footing -- a lot more important. With Summers, the administration got a very strong economic adviser, but not someone known for his managerial talents. Now, as a host of less senior voices vie for influence, the administration might approach the choice of his replacement differently.
The early reports are that the White House wants to replace Summers with a female CEO, if possible. One candidate might be Ann Fudge, the former CEO of Young and Rubicam Brands, and current director for GE, Unilever and Novartis. In February, the White House named Fudge as one of two CEOs serving on the president's bipartisan National Commission on Fiscal Responsibility and Reform, so she's certainly on their radar.
Two other obvious choices would be Summers's deputies: Jason Furman and Diana Farrell. Farell wasn't a CEO, but she did come straight from the decidedly private-sector McKinsey Global Institute, where she served as director. Previously to that, she worked at Goldman Sachs, which may not be a plus in this particular political moment.
Tuesday, September 21, 2010
Larry Summers: Professional Lightning Rod