Yes, Larry Summers is Leaving
One angle in my recent profile of Tim Geithner concerned his relationship with Larry Summers, his former mentor and the director of the National Economic Council. I contend that Geithner, not Summers, has emerged as Obama's key adviser on financial matters, and that Summers isn't happy about it. (Not everybody was convinced.) Since my piece appeared, the buzz that Summers is looking to leave--or is being pushed out--has picked up. Earlier today, my colleague Marc Ambinder wrote about this, defending Summers against his critics while leaving open the possibility that he may, indeed, leave. My own view is a bit less sanguine. I think Summers is going to leave sooner rather than later, possibly before the mid-term elections, and if not then, soon afterward.
But Summers didn't get the Fed job either. Apparently that didn't sit well. Administration insiders told Simendinger that Summers demanded a series of perks as compensation, including cabinet status, golf dates with the president, and a personal car and driver. In the "No Drama" Obama administration, such behavior stands out. And it isn't the first time Summers has been the target of leaks. Last June, only a few months into the administration, Jackie Calmes of the New York Times ran a Summers-focused piece on "tensions" in the economic team. A little later, Al Hunt wrote a column suggesting Obama was frustrated with Summers's poor coordination of the economic team. I heard the same thing from several sources, one of whom groused about the time spent "cleaning up Larry's messes."
Summers always seemed a bad fit for NEC director because the job entails dispassionately presenting the president with the counsel of his competing economic advisers. Summers doesn't do "dispassionate" and he didn't want to limit himself to fielding others' advice--he had plenty of his own to offer. In other words, he was supposed to be the referee, but he also wanted to play power forward. This rankled other members of the economic team, including Austan Goolsbee, Christina Romer, and Peter Orszag, enough that they're widely presumed to be the sources of many of the leaks. Summers's tendency toward bureaucratic infighting was another problem. As Jonathan Alter lays out in his forthcoming book, "The Promise," Summers maneuvered to sideline people like Paul Volcker, Joe Stiglitz, and even Orszag, behavior more characteristic of the Clinton administration than the Obama administration. Alter also reveals that Obama's nickname for Summers is "Dr. Kevorkian," which does not imply paternal fondness.
But what really makes me believe that Summers won't stick around is that all this Machiavellian intrigue has failed to win him what he wanted most: power. Summers gets plenty of presidential face time, but he's not the nexus of White House activity that everyone expected him to be, and that doesn't sit well according to the Summers associates I spoke with. In my Atlantic piece, I go into considerable detail about how Geithner, and not Summers, came to be the key person on financial matters. But it wasn't just finance. Energy and health care care were also routed elsewhere, to Carol Browner and Nancy Ann DeParle. The hand-holding of anxious lawmakers that became an integral part of the NEC job under Summers's mentor, Bob Rubin, is being handled by another economist, Mark Zandi, a former McCain adviser. Marc points out that Summers does "ride herd over the administration's infrastructure renewal program." But I'd wager that infrastructure renewal is not what Larry Summers pictured for himself when he arrived at the White House. The question in my mind is not why Summers would leave, but why he would stay?
If Summers's situtation is untenable, two questions arise: Who succeeds him at NEC? And where does he go next? I, too, heard--but, alas, could not confirm--the rumor that Rahm Emanuel has put out feelers for a possible successor. Calling around to administration and Wall Street folks, though, there seems to be no shortage of candidates. Some names floated were former Clinton Treasury official Roger Altman, former Clinton chief of staff Erskine Bowles, and Austan Goolsbee. I'm told that Summers's deputy, Jason Furman, is an unlikely choice, so toxic is the feeling toward the current NEC. My own bet to succeed Summers would be Peter Orszag. The argument against this is that Orszag has more power and a larger staff at OMB than he would at NEC (he'd have to give up his car service, too). But I'm not persuaded. Orszag is coming off a big victory with health care, it'd be a natural time for a move. And beyond the standard measures of power, the NEC job offers the one thing hyper-ambitious DC types are helpless to turn down: regular face time with the president. The fact that the pieces are in place to enable such a move--Treasury adviser Gene Sperling (Orszag's former boss) is moving over to OMB as deputy and could easily move up--also seems like an indicator. We'll see.
I don't know what's next for Summers, and neither did anyone I spoke with. Fed chairman is out of the question, and contra the periodic blogger hyperbole, Geithner seems ever more secure at Treasury. A university presidency isn't going to happen. So a return to Harvard, Wall Street consulting and an FT column might be the likeliest option. (Alternatively, Summers could pull a Janet Reno, stay put forever, and force me to live down this item.) The natural time to leave would be after the mid-terms--but if Democrats get thumped, it might look like Summers got pushed out. The embarrassing leaks seem designed to bring about an announcement sooner rather than later, which might, in the end, be the best thing for all parties because it would inoculate Summers against a mid-term rout.
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