Tom Scocca had the best reaction to the Larry Summers resignation that I’ve seen, with the best headline: “Larry Summers Is Resigning to Spend More Time With His Money.” He’s leaving the Administration with accomplishments like low-balling the stimulus and protecting the banks, to go back to Harvard, where he gambled with the college’s endowment and lost. Summers got religion and started arguing for more stimulus after blowing the first one, but he put the Administration in the position to make such policies politically impossible. From failure to failure, ever upward.
Thoughts now turn to what happens next, and Zach Carter has the right idea, though I’m not sure NEC is as important as he makes it out to be:
Larry Summers is out, and President Barack Obama now faces a critical decision. He can focus on policy, naming a replacement who wants to ease the economic strains on American households, or he can focus on politics, naming a candidate who appeases the corporate executive class and their backers in the Republican Party. The choice should be obvious. On the economy, good policy is also good politics [...]
So who should Obama name to take Summers’ place? Joseph Stiglitz. His intellectual qualifications cannot be impugned — he is a Nobel Prize-winner whose academic work is revered on both the left and right. But his policy acumen is equally proven — he has been chief economist for the World Bank, and Chairman of President Bill Clinton’s Council of Economic Advisers.
And his policy record during the Clinton years is absolutely superlative. Stiglitz aggressively fought Treasury Secretary Robert Rubin’s efforts to deregulate Wall Street — efforts that paved the way for the Great Financial Crash of 2008. Stiglitz also fought Rubin by pushing for job-creation rather than deficit reduction. Rubin appeared to win that battle for a while, but once it became clear that the job growth that took place under Rubin’s deficit attack was purely the result of an unsustainable bubble, Stiglitz emerged as the victor.
I’d also put in a word for the Roosevelt Institute’s Rob Johnson, but Stiglitz works too. However, basically Summers has already been replaced by Tim Geithner. Summers turned the management position of the NEC into an advisory one, and the replacement will have to get in line behind Geithner if they want to do any advising.
Now, the larger point is that there’s an opportunity for some real changes to the inner circle in the next few months. The President doesn’t really have a team of rivals, but an insular set of voices saying mostly the same things on policy and politics. Summers is gone; Rahm Emanuel’s about to run for mayor of Chicago; David Axelrod and Jim Messina and some of the political folks are going to take off to run the re-election campaign. There’s going to be a power vacuum and an opportunity to have a new perspective.
I’m not certain the President will take it, but the goal should be to make it painful for him to go with the same old crew. Bernie Sanders objecting to Jack Lew’s appointment as director of the Office of Management and Budget, because of his ties to the “failed policies of the past” is a good start.
Progressives have already expanded the playing field on this front. Elizabeth Warren is an assistant to the President and has already begun with a flourish. I don’t think she’s in line to be the next Chief of Staff (though I hope the suggestions of Ed Rendell or Tim Kaine are just imagined voices in Matt Bai’s head). But Warren and alternative voices like hers need more of a say in the White House, to save this Presidency.
UPDATE: Just as an FYI, Sanders was the only Senator to vote against Lew’s nomination to OMB. He passed 22-1. Registering the objection is good, but that’s where we are.





50 Comments


Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About FDL News Desk
If I were a betting man…
http://www.paddypower.com/bet/politics/other-politics/us-politics?ev_oc_grp_ids=363669
Rahm will ride off into the sunset just as the house of cards he foolishly helped erect comes tumbling down. Just as he did with Clinton. I hope that, Far-Side like, the sunset Rahm rides into is actually a painted concrete backdrop.
I’ll believe this administration is serious about fixing the problem of a parasitic, criminal financial sector when William K. Black gets appointed. Of course, I’m not holding my breath.
Reich has endorsed Tyson
kinda surprised no one has offered up Arthur Levitt – too old ?
and no, I’m not endorsing, just seems to be a natural pick for them given their prediliction for all things Clinton
same with Rattner
no kidding – if Black were nominated, I’d get a Change tattoo :D
“he has been chief economist for the World Bank, and Chairman of President Bill Clinton’s Council of Economic Advisers.”
On the face of it not much of a recommendation, I’d even venture to say that it’s anything but.
I’d lean towards Micheal Hudson, or William K. Black, but our leaders scoff at the reality based community.
If Obama really wants to inspire us to vote he will pick the biggest Lefty he can find. If he wants to save the economy he he will go Left because Neohooverism has failed.
Warren seeks to let credit unions have the same rules as banks? Sweet! This is truly good news.
And why is it that I only heard about this now instead of yesterday?
Obama is not going to go left in this lifetime. Obama will select a seasoned financial wizard like Spit Comb World Bank Paul Wolfowitz.
Obama will pick someone who will tell him what he already wants to hear. That’s my prediction, anyway.
Joseph Stiglitz is the only logical choice a Democratic President would make.
So – is it going to be Laura or a corporate CEO?
summers didn’t fail obama … he did what he was tasked to do: he served wall street, just like he always has. In this case instead of further deregulation, his stance was more of a defensive one: fend off serious regulation of wall street. And he did it well and now that the current corrupt power order has been solidified, just like rahm and orszag, it’s time to move on. The threat has been neutralized since the republicans will be gaining more seats and hence providing obama with more convenient excuses why he just has to acquiesce to big business and wall street interests to “help” out the little people. It’s a page from the clinton playbook: the republicans made me do it!
Z
Not sure what that means. Will Credit Union executives be enabled to cheat their customers like the Too Big To Fails?
These days when I see good news, I almost don’t recognize it. All my money is in a credit union btw )
If Obama picks another hack NeoHoover will anyone trust our banks books? Will anyone trust Wallstreets books?
They will trust Obama will try to bail them out but thats it.
Thanks. Took the words right out of typing fingers. Summed up nicely.
It doesn’t fucking matter what Elizabeth Warren comes up with. She does not have enforcement powers, and never will, by edict or by means of underfunding, her efforts will be spit upon.
I give up. I just give up. This time, for real. The whole farking blogosphere is one big Charlie Brown Kicking the Football.
There ain’t gonna be no “new vision.” They’re doing perfectly well with the OLD vision. :-)
Black has the regulatory background I like – but I don’t think the position will get that authority to advise in that area. Hudson is a firedog! but Obama will run from him. Either would indicate we had a Democratic President AND that the president was going to go left as the Congress goes right – hard to see that happening.
Stiglitz leans in the right direction – left – and has the Nobel which Obama would like – and therefore has a chance – but I’d bet on Laura if Hillary gets her vote counted (Laura is center-left, more pro-corporate than I like by my standards and the apparent standards of many on FDL), or on a business CEO (female) as more likely (indeed Meg if she loses may have a lock with this bi-partisan “Democratic”).
Those areas where there has been internal conflict have come out better than those where there hasn’t. Financial industry reform, for example.
It’s good that Plouffe is back and Warren is inside. It’s good that Summers and Rahm are leaving but bad that Romer had to leave. It’s good that Bernie Sanders is going to try to block Lew. It will be interesting to see how much Republican help Sanders will get on this. Will their opposition to Obama or their fealty to the MOTU win out?
What do you mean, IF?
Not exactly a page from Clinton history – Clinton without a 60 vote Senate actually pushed through a tax hike on the rich and got committee readings of a health care bill more progressive than Obama’s HCR. Then 1994 actually did force a divided government approach where he could not even be certain his veto would be upheld.
Obama pretended that he could not fight for the left when he controlled all parts of the government – a bit different approach.
It means that any regulations that Warren gets established for the CFPB will apply to all financial institutions on the same basis, instead of separate regs for banks, thrifts, and credit unions.
Solvency issues for credit unions are handled by the National Credit Union Administration. For banks by the FDIC. Thrifts through the Office of Thrift Supervision in Treasury.
I try to be hopeful but if Obama goes for another hack there will be consequences.
Since January of 2009, I have felt like I am at a non-stop Cubs Game — constantly rooting for a team that fills you with hope and thinking a win is on its way . . . then BAM . . . you get hit in the head while drinking a beer in the bleachers section that gives the win to the opposing team. The horror . . .
Very interesting and I would like to hear some insights on the choices propounded by these ‘left leaning’ economists
.
http://www.huffingtonpost.com/2010/09/23/summers-replacements-rubinites_n_735453.html
Thanks PW,
Like hack @13, not sure what it means and in the article you linked, with Geithner seemingly reassuring TBTF that they have until next July to figure out how to do, “work arounds” to any likely new regulations, I can’t call it sweet just yet, as much as I might like to.
My guess would be that Obama having been informed of Jamie Diamond’s lunches with Boehner, even after he bailed the fucker out, will now turn to a Corporatist (it’s all good for bankers anyway). Here he has a very Monopolist friendly track record, which cannot be denied. If the Bankers won’t loosen their purse strings in the midterms, the Corporatists who, other than the Insurance Racketeers, have been feeling much less love from Obama have much to gain and so they will.
nah – it isn’t a perpetual Cubs game. It’s a perpetual replay of the 1919 World Series with the Dems as the Sox. The game is fixed.
O will need lots o dough if he decides to go for a second term. And I recall seeing an article within the past 6 months that Wall St political contributions had shifted decisively back to the Rs. So O will have appoint a Wall Streeter to win back their contributions.
Maybe I’d keep perpetually posting wishy hopey stuff if I had access to Cabalist (J-list) too.
Lucy, football, etc.
Lew was right about the 1999 Financial Services Modernization Act of 1999 (modification of G-S) not having much effect on the crisis – but the 2000 commodity bill’s failure to include areas that needed regulation – again a result forced by GOP control of Congress and the influence of Greenspan – can be argued. The point to be argued on the commodity bill is whether we could have survived if Bush had not dropped all regulation in 2003 and not allowed liar loans to run. I think Clinton should have veto’d the commodity bill but it is hard to veto something over something that is not in it – indeed he was looking a blue dog/GOP veto over-ride most likely if he tried – but he should have tried. The CFMA simply continued an existing 1992 preemption of state laws that prevented any such law from treating eligible OTC derivatives transactions as gambling or otherwise illegal, but it also extended that preemption to security-based derivatives that had previously been excluded from the CEA and its preemption of state law. But the point was that the attempt to stop US firms using outside the regulated broker-dealer affiliates of securities firms, often outside the United States in London or elsewhere to do derivative trades may have increased their volume. Again it is hard point to make.
Lew may indeed be totally correct – While in my world Clinton should have veto’s the CFMA so as to get more regulation into it, and while the G-S modification did not affect the 2008 crisis it was not needed and could have on its own fueled it in a non-regulated derivative world if it had not already been fueled by investment banks in the US and overseas, I put 95% plus of the blame at Bush 2003-2005 non-regulation and liar loan looking the other way attitude.
Yeah, sure dude, you’re right … I know the democratic base was really pushing for nafta back in 1992 … which took a back seat to the health care reform that he never seriously fought for.
And I always thought that congress passed legislation … and voted on it … before it reached the president’s desk, but in your clinton cultist deranged version of reality, a president “can’t” veto if he’s not sure his veto will be upheld … even though he knows if the vote is or is not veto-proof when it hits his desk.
reckless deregulation, welfare reform, a huge jump in the financialization of our economy, free trade treaties, the increased concentration of the media, increased hl-b visa limits, the deaths of hundreds of thousands of iraqi children due to sanctions, preventing college students with marijuana possession convictions from getting federal financial aid, and passing The Violent Crime Control and Law Enforcement Act which helped lead to this wonderful growing police state we live in and increased the amount of inmates by 50% during his reign. … all not bill clinton’s faults to those that truly suffer from clinton derangement syndrome.
Z
You do know that the dems controlled the house (258-176) and senate (56-44) when clinton was elected in 1992 … and you do know that, with that majority, clinton put much more energy into passing nafta than health care reform? Or have your delusions washed that from your memory?
Z
It wasn’t the work of the Three Amigos? Yeah,…
And a lot of what this whole scapegoating progressives is all about IMO is to lay the groundwork to put the blame on progressives for not supporting them enough and being too principled when the unprincipled obama administration caters to republican wishes … all in an attempt to help out the little guy in some way, of course … after the midterms.
Z
Bingo! Yves had a great guest post up this morning explicitly expanding on this point. As for the likelihood of a Summers replacement of a significantly different stripe or the loud thwacking sound of the Treasury Department door hitting Geithner on the ass on his way out, the audacity of hope has long since become a vain hope for audacity.
that’s right, Geithner will be the guy turning off the lights.
The current state of politics just confirms what I’ve thought for a long time… that older, white men just loooove to reward bad behavior.
Women… not so much (despite the exceptions in the senate & the house).
For some reason, testosterone seems to impair one’s ability to take the long view of things, making short-term gains one’s ultimate goal.
it’s possible that she’s asking for rules to allow credit unions easier access to home lending markets, imho. I may be wrong, but I don’t think most credit unions are allowed to do business in this market.
The litmus test is that the person has to want to cut SS. Of course, that includes all the usual characters.
Actually, he/she has to think the stimulus was just right, FinReg was revolutionary, and entitlements need to be cut drastically. Oh, and no public option.
Yeah, I read that too … although I had reached that conclusion earlier.
Here’s the post if anyone wants to read it: http://www.nakedcapitalism.com/2010/09/summers-gave-obama-cover.html
Z
Lew’s testimony (unfortunately the verbal exchange is not easily found):
The deregulation of the financial industry goes back to the Carter years. Where exactly does Lew place the “prededed deregulation”. The deregulation of the Savings and Loan industry was the proximate cause of the Savings and Loan Crisis during the Poppy Bush years. And he thought that commodities trading needed deregulating and combination of insurance, banking, and brokerage in a single institution wasn’t a problem? And the provision to deny the government the power to regulate new products, such as credit default swaps, was not a problem?
The memory hole is rapidly swallowing up Phil Graham’s flim-flam on behalf of the financial industry.
And Clinton couldn’t twist Blue Dog arms on this?
And Obama wants this guy as head of OMB, which vets regulations for economic impact?
I’m with Sanders on this one. Make the Republicans decide whether they want the guy.
I’m a male and I agree with this. Women are less susceptible to corruption within positions of power within our country. It was bunny greenhouse that pointed the finger at haliburton and the no-bid contracts, cheryl watkins that stood against enron, it was Cathleen Rowley that exposed the FBI’s mistakes prior to 9-11, Elizabeth Warren that stands up against the banks, Brooksley Borne that wanted to regulate the derivative markets, and Sheila Blair that at times stands up to the banks, etc. None of the males in positions of power stand for anything but themselves for the most part.
And beyond that, the cowards in power lay it on the females to take the fall … especially the bush administration which went after Martha Stewart for doing things that many of their frat pals have done, stuck it to the woman who was the General at Abu Ghraib and protected the males in the CIA that had to have been involved in the torture on some level, and went after Valerie Plame to get at her husband for exposing one of their lies they used to justify the war.
Testosterone is too often an anti-intellectual potion … … it’s primal emotion and adrenaline over reason … it tells you that you can power through and “make” things happen rather than recognizing that there are certain things that can not be changed and must be factored into ones strategy to maximize your chances of success.
I wished there were more women leaders. When was the last time that a woman leader started a war? Margaret Thatcher?
Z
A new vision in the White House? Is there a presidential election scheduled that I am unaware of?
The cossacks work for the Czar.
Too bad we have to wait a few more months before Summers leaves – wish he would take Geithner with him.
I recommend that Obama, who appears to be an acolyte of Milton Friedman, take this opportunity to invite Joseph Stiglitz, Paul Krugman, and Linda Bilmes into his circle of advisers. Both Stiglitz and Krugman were correct in their assessments of the stimulus last year. Krugman also appears to be the guy to turn to in defending Social Security against the attack being mounted by Simpson. Bilmes, who teaches public policy and public finance at Harvard, co-authored The Three Trillion Dollar War with Stiglitz. The President would benefit from the advice of all three and we certainly would, too.
Obama would never nominate someone who would blow his committment to protecting the wealthy elite from losses or culpability in the economic meltdown. It’s clear that’s why Summers, Geithner, and Bernanke are there.
Sorry — Scocca missed the headline boat on this one …
“Larry Summers Is Resigning to Spend More Time With YOUR Money.”
I’d wager that the replacement will be at least as awful as the original.