The guessing game about who will replace Lawrence Summers as President Obama’s top economic advisor is ramping up.
With Wall Street and Washington fond of speculation, the names of two high-powered Southern Californians surfaced Tuesday to add to a growing list of possible successors for Summers as director of the National Economic Council.
The latest buzz was that Obama would tap one of two big names from Newport Beach mutual fund giant Pacific Investment Management Co.: widely regarded fund manager Bill Gross or Chief Executive Mohamed El-Erian.
The White House quickly poured cold water on that speculation.
“The president is considering a number of qualified candidates from a diverse set of backgrounds, but we are very early in the process and he has not made a decision about the position nor has he offered a job to anyone,” said White House spokeswoman Jen Psaki.
A spokesman for Pimco, which manages $1.1 trillion mostly in bond investments, said it does not comment on “speculation and rumors.” But insiders at the company said Gross, 66, and El-Erian, 52, were shocked to see their names mentioned for Summers’ job, and that both thought the report was absurd.
Their names joined those of corporate chieftains and Nobel Prize-winning economists as potential replacements for Summers, whom the White House said last week would be leaving at the end of the year to return to Harvard University.
Those possible corporate candidates include former Xerox Corp. Chief Executive Anne Mulcahy, General Electric Co. Chief Executive Jeffrey Immelt and Citigroup Inc. Chairman Richard Parsons.
Economists and academics mentioned include Laura Tyson, a UC Berkeley economist who chaired the National Economic Council from 1995 to 1996 under President Clinton; former Labor Secretary Robert Reich; and Nobel Prize-winning economists Paul Krugman and Joseph Stiglitz.
The White House said last week Obama was unlikely to pick a successor to Summers for several months. But officials also said that the president would consider someone from the business community, expanding the field of candidates for the job from the usual economists and academics.
Such a move would address criticism that the administration has not been friendly to business interests, said Edward Mills, a research analyst for financial policy at FBR Capital Markets.
“If you get a top-notch CEO or former CEO, it sends a very strong message to the business community that their concerns are taken under advisement or at least are part of the conversation,” Mills said.
Pimco has a dour view of the U.S. economy, best reflected in El-Erian’s oft-quoted “new normal” thesis — an expectation of slow growth and high unemployment for years to come as the nation struggles with the hangover of debt built up over the last two decades.
That outlook would make it difficult for El-Erian to be a cheerleader for the administration’s policies.
Gross, meanwhile, has been a vocal advocate of more government aid for the housing market at a time when the administration has pledged to begin reducing the government’s role in the market.
Last month, Gross said he favored a controversial proposal for the government to relax lending standards for mortgage finance giants Fannie Mae and Freddie Mac so that the agencies could refinance loans for millions of Americans — including those whose mortgages exceed the value of their homes.
Appearing Tuesday at a forum hosted by the National Journal, Summers said the administration has not been anti-business, but the symbolism of choosing a corporate executive is something Obama will have to weigh.
“The president will … hire whoever he thinks best,” Summers said.
Summers’ reputation as a brilliant economic thinker, and his stature as a former Treasury secretary and president of Harvard, has led to speculation that Obama would seek a big name to replace him.
“I’d love to see Joe Stiglitz for that position,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington. He noted that Stiglitz, a major proponent of government stimulus, chaired Clinton’s Council of Economic Advisors from 1995 to 1997.
But Obama could opt to elevate somebody already in the administration, as he did with two other recent vacancies on his economic team.
Many analysts said putting a woman in Summers job could be a priority. With the departure of Christina Romer as head of the Council of Economic Advisors, replaced internally by Austan Goolsbee, all of Obama’s top economic advisors are men.