No clear choice for Treasury chief
During the campaign, when Barack Obama needed an authoritative voice to defend his tax and spending proposals, he turned to Lawrence H. Summers -- the Clinton administration Treasury secretary and former Harvard president who has one of the sharpest minds in modern economics.
Now, as President-elect Obama considers his choice for Treasury secretary, Summers’ name is again front and center. But this time, the decision is not so clear. Obama faces conflicting advice from his close advisors, from Capitol Hill and from important Democratic constituencies.
Some argue that, with the economy gripped by a deepening crisis, he needs the country’s best and brightest to help him deal with it, chief among them Summers.
Others warn that Summers’ sharp elbows and his penchant for controversy could make him a damaging distraction at a time when the nation and the new president can least afford it. And they worry that Summers’ wide-ranging knowledge, expansive personality and combative impulses could clash with the president’s desire to have the White House deeply involved in the biggest problems facing the new administration.
These voices argue that a more reassuring pick might be the venerable former Federal Reserve Chairman Paul A. Volcker, perhaps teamed with New York Federal Reserve Bank President Timothy F. Geithner.
Obama’s choice will have huge symbolic importance, offering voters an early chance to assess his judgment and decision-making process. Regardless of who is chosen, the Treasury secretary will play a central role in the administration’s economic team -- influencing the substance of policy and how effectively it is pursued.
Summers, 53, clearly has Obama’s ear. He and 15 other members of a “transition economic advisory board” are scheduled to meet with the president-elect today to discuss what may be the worst economic decline since the Depression.
And Summers might yet end up in the top Treasury spot, especially if Obama is unable to persuade a reportedly reluctant Volcker, 81, to take the job at least for the duration of the crisis.
But Summers’ capacity for stirring controversy was clear Thursday when the National Organization for Women wasted no time questioning his fitness. “I’m not sure that Summers is the best choice for the job,” said NOW President Kim Gandy, noting that he apparently played a role in some of the deregulation decisions that contributed to the financial collapse.
In addition, Gandy pointed to remarks Summers made while president of Harvard about differences between the achievements of men and women in science. The remarks generated a furor that eventually led to Summers’ resignation as president in 2006, though he remains a member of the faculty.
Concerns about Summers go well beyond positions on deregulation he took a decade ago or his knack for incendiary comments.
High among those concerns, people familiar with the transition say, is how he would fit in with the team approach Obama and his closest aides envision for handling the economy.
Although Obama and his key aides have not settled on a detailed structure, there’s interest in having the National Economic Council -- a White House organization President Clinton created -- serve as the chief clearinghouse for policy proposals aimed at such things as reducing home foreclosures, reforming healthcare and pushing a jobs-creating energy agenda.
Under this arrangement, the Treasury Department would still have the huge job that it has taken on under its current secretary, Henry M. Paulson: stabilizing, reinvigorating and re-regulating the deeply shaken financial markets.
It would have to make Paulson’s $700-billion Troubled Asset Relief Program work, which it is only partly doing now. And the department would probably play a key role in any efforts to aid the troubled auto industry.
Even so, important areas touching on economic policy would remain outside the Treasury secretary’s domain.
From the outset, Summers’ career has been marked by soaring achievement and recurring controversy.
He seemingly was born to be an economist. Both his parents were economists and two uncles -- Paul Samuelson and Kenneth Arrow -- won the Nobel Prize for their work in the field. Summers was named an assistant professor at MIT even before finishing his doctorate, and was one of the youngest faculty members to be granted tenure at Harvard.
But as chief economist of the World Bank in the early 1990s, he drew fire after approving a subordinate’s research paper that suggested poor African nations might make money by taking in the trash of developed nations.
He survived the African trash send-up to join the Clinton Treasury Department, working his way from one senior position to another until he became Robert E. Rubin’s deputy and successor as secretary. He became Harvard president at age 46.
But his five-year Harvard tenure was rattled by clashes with faculty members that culminated at a 2005 academic conference, where he suggested that innate differences might partly explain why more men than women succeeded at math and science.
Although he apologized and said his remarks were a “serious mistake,” he was eventually replaced as the university’s president.
But Summers has staunch defenders.
House Speaker Nancy Pelosi (D-San Francisco) has gone out of her way to seek Summers’ advice and rebut criticism. Asked about him this week, Pelosi’s office issued a statement: “Larry Summers is one of America’s leading economic minds who has been a valuable resource to House Democrats to help us make the proper public policy to meet the needs of all of America’s families.”
Sheryl Sandberg, chief operating officer of Facebook in Palo Alto, said women’s groups’ criticisms galled her.
She said Summers volunteered to be her undergraduate advisor after hearing she was researching the economics of spousal abuse. At the World Bank, he repeatedly lectured the world’s finance ministers that the single greatest investment they could make was in girls’ education. When he left the Harvard presidency, the university had more female deans than at any time in the school’s history.
Summers declined to comment for this article.
As the financial world melted down this fall, those planning for a possible Obama administration became increasingly interested in finding a candidate for Treasury secretary who was steeped in the markets, experienced in crisis management and not implicated in the problem.
As a result, the focus shifted from such possible nominees as Laura D’Andrea Tyson, Clinton’s Council of Economic Advisors chairwoman, and San Francisco Federal Reserve Bank President Janet L. Yellen.
Among the remaining longshot candidates are Federal Deposit Insurance Corp. chief Sheila C. Bair; Jamie Dimon, chairman and CEO of banking giant JPMorgan Chase & Co.; and New Jersey Gov. Jon Corzine, former chairman of Wall Street investment firm Goldman Sachs.