White House economic adviser Larry Summers will resign from the the National Economic Council at the end of the year. Many observers see the opening as an opportunity for the president to bring on one of two underrepresented groups: women and corporate executives. In fact, the top pick for Summers' replacement is both: Anne Mulcahy, former Xerox chief executive.
Those calling for Obama to pick a CEO aren't necessarily wrong, but their reasoning is: CEOs are not uniquely smart about the economy.
To be sure, most CEOs are very smart. Many of them are brilliant. But their advice for the Obama administration isn't exactly scarce at the moment. The White House already reaches out to CEOs for advice and criticism more than George W. Bush. Even without this listening tour, the administration would have to bunker themselves in the tunnel under the White House not to hear what various CEOs interviewed on CNBC and the WSJ think we should do for the economy: cut the corporate tax rate and invest in things that help their bottom line.
Here's a good example. Intel super-smart CEO Paul Otellini told CNN the White House "doesn't get" how to create jobs. Fine. How would Otellini create jobs? In a well-received February speech, he laid out a three-part plan: (1) Expand the Research and Experimentation tax credit and other tax credits for companies that innovate; (2) Slash corporate income tax rates which, at the nominal rate of 35 percent, are among the highest in the world; and (3) invest in education. Those are good ideas -- so good that President Obama is already pursuing all of them, already! But the bottom line is that Otellini is interested in policies that give his company money to do things it's already doing.
Compare Intel with Siemens, another multinational company, which focuses on energy and health care products. When I spoke with Siemens CEO Eric Spiegel this year, he told me that Siemens needs assurances that the government will take more action to tip the scales toward clean energy: tax credits for solar products, a carbon tax to benefit cleaner energy, and so forth. Once again, Siemens chief exec is interested in policies that give his company many to do things it already wants to do.
That's totally fine! Making more money is what CEOs are supposed to do. But making policy is what the head of the National Economic Council is supposed to do. And the first job isn't necessarily good practice for the second. As Ezra Klein notes, the NEC coordinates the president's economic process by running meetings, facilitating debates, and finding compromises that make workable policy.
The fact is that any decision the White House makes will create winners and losers in the business community. If we cut corporate income tax rates and eliminate some corporate benefits, the recipients of those cut benefits will say Obama is killing jobs. If we pass a carbon tax, coal producers will say Obama is killing jobs.
These are the questions that Obama's economics team needs to answer. If we want to lower corporate income taxes, what tax benefits do you eliminate to make reform deficit-neutral? What kind of carbon tax package could possibly attract moderate Republican votes? I have no doubt that there are some CEOs who would be brilliant in this capacity, but there is no reason to think that the experience of dealing with shareholders and corporate earnings reports makes an individual inherently suited to answering those questions.
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