Larry Summers's departure seems less surprising today than it would have in the spring, when it looked as if the economy were really picking up--optimism that led to the ill-considered decision to tout a "Recovery Summer" that never came to pass.
It's unclear to me whether Summers is leaving voluntarily or not. (I don't buy the Harvard curfew.) When I wrote about this possibility in April, I thought he'd leave around election time because he was not well suited for the job of NEC director--traditionally, an impartial broker--and had nowhere else to go, with Tim Geithner at Treasury and Ben Bernanke at the Fed. The administration was, as Clive Crook rightly points out, "over-rich in talent (and egos)." And, yes, Summers rubbed a lot of people the wrong way and many of them wanted him out.
What surprises me a bit is that Geithner appears to be staying put. That's not a comment on his performance but on the degree to which he and Summers are thought of as a unit, such that people in the administration refer to them, annoyingly, as "Tim-and-Larry." One of the things I was most interested to learn while reporting this April profile of Geithner is that the two had clashed over elements of the financial rescue plan (and that Geithner had usually won). My conclusion, which I think is pretty broadly accepted now, although maybe not, is that Geithner, not Summers, was the true architect of the plan that, as he himself likes to put it, "broke the back of the crisis" which was necessary for a recovery.
Clive noted this Summers-Geithner tension at the time, and again today. My piece, he says, "described a Geithner who had put himself firmly in charge of economic policy" and relegated Summers, his former mentor, to a "subordinate role." I don't think that's what I wrote. In any event, it's not the impression I intended to convey, as it bestows too broad an influence on Geithner, and too narrow of one on Summers.
I think it's more accurate to say that in the debate over how to stop the financial crisis, Geithner and Summers participated as equals, and Geithner's ideas--stress tests, etc.-- generally prevailed, while many of the things Summers advocated, such as firing Ken Lewis (critics please note that this cuts against the caricature of the Wall Street stooge), did not come to pass. This won Geithner credibility with the president, which may explain why he's sticking around.
But Geithner is not an economist, and my strong impression is that he was not a major architect of the economic recovery plan. Certainly, he was not in charge of it. Summers took that role, at least according to my sources and to the best accounts that I've seen. One of them is this New Yorker profile of Summers, which identifies him as having essentially been the one who decided the size of the stimulus package (overruling his colleague, Christina Romer, who suggested a much larger one).
Fairly or not, Summers came to be thought of as firmly in charge of economic policy. When the recovery stalled, and the administration decided it could not (or would not) pursue additional stimulus, his departure was probably inevitable. At least, that's my take on events.
We want to hear what you think about this article. Submit a letter to the editor or write to firstname.lastname@example.org.