In addition to hinting at a change of heart on a payroll tax holiday, the President made a pretty shocking admission, I thought, or at least a severe vote of no confidence in his economic team:
MR. HARWOOD: Mr. President, let me ask you a question about course correction. Sometimes a leader, even if you think you’ve done the right things, but if the people you’re trying to lead don’t think so, you’ve got to somehow accommodate that, just like you would in a relationship. He was talking about marriage. (Laughter.)
As you go forward, is there any way in which you want to signal to the American people that you’re going to change your approach? And specifically — we’re coming up to the midterm election — have you asked your Treasury Secretary Tim Geithner and your top economic advisor Larry Summers to stay with you through the end of your term, or might you make some changes?
THE PRESIDENT: Well, look, I have not made any determinations about personnel. I think Larry Summers and Tim Geithner have done an outstanding job, as have my whole economic team. This is tough, the work that they do. They’ve been at it for two years, and they’re going to have a whole range of decisions about family that will factor into this, as well. But the bottom line is, is that we’re constantly thinking, is what we’re doing working as well as it could? Do we have other options and other alternatives that we can explore?
Apparently, it wasn’t an idle hint. Bloomberg reports that Summers could leave at the end of the year:
White House officials expect Lawrence Summers to leave his job as the president’s National Economic Council director after November’s congressional elections, according to three people familiar with the matter.
His departure would leave Treasury Secretary Timothy Geithner as the only member of President Barack Obama’s original top-tier economic team. Summers, 55, and the president have discussed his future plans, according to one person.
The article goes on to say that officials are talking about putting a “prominent corporate executive” in the NEC job, to head off persistent criticism that the President is anti-business (idle speculation: Warren Buffett?). I’d prefer a new hire, someone already an assistant to the President who has his trust, like Summers a former denizen of Harvard. Maybe he or she could slide over into that job…
More seriously, Summers doesn’t only run the National Economic Counsel, he’s the chief economic policy adviser to the President and the one man responsible for blocking dissenting voices from reaching the Oval Office. Geithner remains as a part of that blockade, but everything I’ve heard indicates that Summers is the main person narrowing the conversation on economic policy in the White House. And he’s a skilled operator at doing so, something that his successor, regardless of who it is, will not match.
Summers will probably start teaching again and working for a hedge fund or something. I hold out hope against hope that he’s out of work for 99 weeks, like millions of other Americans who are suffering right now. And maybe then he would recognize that his brand of warmed-over neoliberalism, which puts the state of the banks ahead of the state of the people, didn’t work this time. And maybe he would reassess things a bit.
Beyond that, it’s kind of surprising that Geithner, embattled from the very beginning, may end up the last man standing in all of this, after Summers, Christina Romer and Peter Orszag all fall by the wayside. So far, Austan Goolsbee and Jacob “deregulation didn’t lead to the financial crisis” Lew, the replacements for Romer and Orszag, don’t look to be the types to shake things up on economic policy. And Summers’ replacement probably won’t, as well. But one less big operator on the team may allow for a slight diversity of voices, and with the previously alluded-to Elizabeth Warren newly arrived, maybe the policies will tilt in a small direction.
Or, Obama could go get Volcker.
UPDATE: The White House confirms this, Summers is leaving at the end of the year. He managed to announce it before the elections. He will continue to serve on the President’s Economic Recovery Advisory Board, which has been a dumping ground for Paul Volcker (trade in the offing?). I’m just going to attach the statement:
Dr. Lawrence H. Summers, Director of the National Economic Council and Assistant to the President for Economic Policy, announced his plans to return to his position as University Professor at Harvard University at the end of the year.
Dr. Summers is the chief White House advisor to the President on the development and implementation of economic policy. He also leads the President’s daily economic briefing.
“I will always be grateful that at a time of great peril for our country, a man of Larry’s brilliance, experience and judgment was willing to answer the call and lead our economic team. Over the past two years, he has helped guide us from the depths of the worst recession since the 1930s to renewed growth. And while we have much work ahead to repair the damage done by the recession, we are on a better path thanks in no small measure to Larry’s wise counsel. We will miss him here at the White House, but I look forward to soliciting his continued advice and his counsel on an informal basis, and appreciate that he has agreed to serve as a member of the President’s Economic Advisory Board.”
Dr. Summers said “I will miss working with the President and his team on the daily challenges of economic policy making. I’m looking forward to returning to Harvard to teach and write about the economic fundamentals of job creation and stable finance as well as the integration of rising and developing countries into the global system.”
Dr. Summers overseas the coordination of economic policy making across the Administration, leads the President’s daily economic briefing and has been a frequent public spokesman for the Administration’s policies.
Under Dr. Summers’s leadership, the National Economic Council has been at the center of economic policy making in the Obama Administration. He served as an architect of the Recovery Act and other job creation measures and the Financial Stability Program. As co-chair of the President Auto Task Force, he led the restructuring of the U.S. automobile industry. He has also played a leading role in managing our international economic relationships including China, developing the President’s health care plan, opening the broadband spectrum, and in international climate negotiations.
UPDATE II: Interesting that the statement was so rushed that they didn’t even add President Obama’s name to the quote that they wrote for him. It’s still not fixed.