A low volume, high quality source from the demand side perspective.The podcast is produced weekly. A transcript is posted on the day of.

Tuesday, June 9, 2009

Larry Summers and White House Tension?

Truth be known, one of my least favorite economists is the brilliant Lawrence Summers now of the National Economic Council, the president's economic counterpart to the National Security Council. Summers was one of the three amigos -- Rubin, Greenspan and Summers -- of the Clinton economic miracle. In that position, he helped along the dismantling of the New Deal's Glass-Steagall structure that has allowed the banks to become too big. He was the chief proponent of Timely Targeted and Temporary, the stimulus that didn't work in the early part of 2008.

We understand that Obama needed immediate legitimacy and credibility for his economic policies and that one of the ways he did it was hire the Clinton economic team. Our objection to Summers is not entirely on policy grounds. We feel a continual posturing going on in the pauses of his characteristic verbal cadence.

So a piece in the New York Times on Sunday was not entirely unwelcome to our eyes.

Obama’s Economic Circle Keeps Tensions High

Published: June 7, 2009
New York Times

WASHINGTON — President Obama was getting his daily economic briefing one recent morning when a fly distracted him. The president swatted and missed, just as the pest buzzed near the shoes of Lawrence H. Summers, the chief White House economic adviser. “Couldn’t you aim a little higher?” deadpanned Christina D. Romer, the chairwoman of the Council of Economic Advisers.

Mrs. Romer was joking, she said in an interview, adding, “There are only a few times that I felt like smacking Larry.” Yet few laughed in the president’s presence.

If the Oval Office incident was meant as a lighthearted moment, it also exposed the underlying tensions that have gripped Mr. Obama’s economic advisers as they have struggled with the gravest financial crisis since the Depression, according to several dozen interviews with administration officials and others familiar with the internal debates.

By all accounts, much of the tension derives from the president’s choice of the brilliant but sometimes supercilious Mr. Summers to be the director of the National Economic Council, making him the policy impresario of the team. The widespread assumption, from Washington to Wall Street, was that the job would be Mr. Summers’s way station until the president could name him chairman of the Federal Reserve when Ben S. Bernanke’s term expires early next year.

And the Times Piece goes on, though it does little to back up the claim of tensions. Whether Summers will go to the Fed or not is very much up in the air. I would be surprised unless he convinces somebody that he would not take the job and run the world with it.

For context, there is some audio of Summers on the podcast from the BBC's Business Daily talking about the economy.