7 Reasons to Fight Obama on Picking Out-of-Touch Crony Capitalist Larry Summers as Fed Chair
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Economist Dean Baker reveals that if you want to find the “smoking gun” in the Obama administration that led to a focus on deficit reduction instead of jobs, look no further than a memo drafted by Summers in December 2008, a month before Obama’s inauguration. The memo, which was wrong about the economy on several counts, set the stage for policies that drove an ongoing jobs crisis and led to Obama’s creation of a deficit commission led by former Senator Alan Simpson, a zealot for cutting Social Security and Medicare, and Morgan Stanley director Erskine Bowles. (The duo relied on famously discredited work by economists Carmen Reinhart and Kenneth Rogoff to push austerity).
Since he left the National Economic Council in 2010, Summers has been talking down austerity and talking up the importance of jobs and the middle class. But how he acts when in power and how he talks when out of it are two vastly different things. His doubtful record on adequately stimulating the economy and his political baggage are so worrisome that many — even some business-minded folks — have warned that his leadership at the Fed would be harmful to the economy. The Economist magazine has cautioned that Summers would likely be a Greenspan style "maestro" at the Fed, less interested in transparency and consensus-building in his decision-making than Yellen. In the NYT, Binyamin Applebaum explained that many financial analysts fear a Summers nomination "could lead to slower economic growth, less job creation and higher interest rates..."
Americans are still suffering from the effects of the Great Recession and years of wrong-headed economic policy. We need a Fed chair focused on unemployment and investing in the economy.
4. He's a blatant sexist.
Given the increasingly vital role that women play in the economy, clearly we need a Fed chair who respects them and understands that they are not second-class citizens.
The most famous case of Larry Summers’ sexism relates to his comments while president of Harvard suggesting that women do not have the natural faculties to do higher mathematics and science. Beyond this inappropriateness, there is also a smell of sexism in his dismissive response to Brooksley Born, who valiantly attempted to regulate derivatives trading while she was head of the Commodity Futures Trading Commission. At that time, a gang of male economists, Alan Greenspan, Robert Rubin and Larry Summers, worked overtime to silence her in a way that if not sexist, was at least egregiously mistaken and cost the American people horribly.
Obama claims to want diversity in his administration, but there’s a conspicuous absence of women in his inner circle. No woman has ever been chair of the Fed, but right now, a highly impressive woman, Janet Yellen, is on hand to do the job. As the first African American president, Obama has been a trailblazer. Does he really want his legacy marred by a tone-deafness to the need for qualified women in positions of authority?
There has been noticeable sexism in efforts to derail Yellen’s candidacy, despite her powerful resume. Her well-known cool head, dignified public persona, and demonstrated prescience on economic matters all serve to distinguish her from Larry Summers. It would be a slap in the face to both women and men to overlook an excellent female candidate in favor of a grossly unsuitable male one.
5. Summers had an ugly role in the Enron fiasco.
When Enron was manipulating California’s power market, creating stratospheric electricity prices and horrifying outages, Larry Summers was on the scene promoting the interests of the bad guys.