It's Summers time

By Reihan Salam

During the transition, when President Obama unveiled his economic policy team, I think we were all struck by the number of highly impressive Clinton veterans who were taking what had been considered minor roles. For example, Gene Sperling, a key architect of Bill Clinton's domestic successes, agreed to serve as a a "counselor" to Tim Geithner in the Treasury Department. Then of course there was the much-noted fact that the new head of the National Economic Council, Larry Summers, had, as Treasury secretary, once been Geithner's boss. Moreover, Summers had been passed over for a second chance at running the Treasury Department. You have to assume that Summers, no shrinking violet, was promised a lot of influence.

And sure enough, Summers has already become a source of controversy. In The Nation, Chris Hayes describes Summers as a "center-right neoliberal" who is already playing an outsized role. Moreover,

Summers has already come to dominate the White House economic policy shop. One person close to Obama's economic team told me that on economic policy, "it's looking like it's Larry's show." This leaves a disconcerting vacuum in the White House for a labor-liberal voice equal in stature and clout.

Interestingly, Hayes suggests that Biden could prove an effective labor-liberal counterpart to the Axis of Summers. I'm no expert, but my sense is that this would be very bad news for labor-liberals, the obvious intelligence and Stakhanovite work ethic of Jared Bernstein aside.

Geithner, meanwhile, is also amassing power and influence thanks to his diplomatic prowess, which Summers famously lacks, and his strong rapport with President Obama. According to Noam Scheiber, who I'm guessing is exceptionally sourced, the Geithner-Sperling combination might also tilt fiscal policy to the left of where the center-right neoliberal Summers would like it to be. But of course this is, as Scheiber's clever subtitle ("Geithner-Summers psychodrama, Round 1") suggests, the first skirmish in what will likely be a long war. This is very good news for those who like paralysis.

Back in the heady pre-inaugural days, I heard a number of curmudgeons, some of whom had served in the Bush White House, argue that the structure of the Obama White House would prove unworkable. In environmental policy, for example, you had a former EPA administrator as a White House environmental czar; you had a strong secretary of energy with a strong interest in climate change policy; and an actual EPA administrator who would presumably have a lot of institutional clout. On healthcare, this puzzle was solved, at least temporarily, by naming Tom Daschle the head of HHS and White House health care czar. But the basic question remained: who was in charge?

At the time, I had a somewhat more optimistic take. Just as Goldwater-Nichols had rationalized the command structure of armed forces, by created combatant commanders who would essentially force inter-service cooperation, perhaps Barack Obama had a plan to centralize authority in the White House. (Bruce Berkowitz proposed something along these lines in his book Strategic Advantage, which I enthusiastically recommend.) The czars would be in charge, and department heads would run their fiefdoms while sticking to the game plan. Remember, this was back when I still believed that Obama had indomitable powers of foresight and persuasion. It turns out, not for the first time, that I was entirely wrong. While defending the new structure of the White House, John Podesta told Peter Baker of the Times that it "doesn't subjugate the cabinet officers"; rather, it puts a heavy burden on chief of staff Rahm Emanuel, a man widely credited with the skill of ruling by fear. Which is to say, Emanuel would be resolving disputes on a case-by-case basis, and cabinet officers were not comfortable playing second fiddle. I don't envy Emanuel, or the people he'll be berating.  

So perhaps the missteps we've seen on the stimulus package and the maddeningly slow pace of Wall Street recovery efforts (problems exacerbated, it seems, by Summers inability to work constructively with Paul Volcker) are the product of a structural flaw, one that will be reproduced when it comes to overhauling healthcare and energy policy. For the country's sake, let's hope that's not true.

This article available online at:

http://www.theatlantic.com/business/archive/2009/02/its-summers-time/413/