Could Bank-Boy Tim Geithner Be the Real White House Favorite for the Federal Reserve?
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Whoever said "What you don't know can't hurt you" doesn't know much about economics. That goes double for the nomination of Lawrence Summers to head the Federal Reserve. For all the ink that's been spilled on the topic, there's at least one surprise ending people don't seem to be considering.
Remember the last time Summers was strapped to a trial balloon and exposed to this kind of a public dart-throwing contest? It was back when Obama was searching for his first Treasury Secretary. There was a public outcry against Summers then, too, and guess what happened:
We got Tim Geithner instead.
I'm against the Summers nomination too, but as they say: Be careful what you wish for.
By now everybody and their brother has weighed in on the idea of a Summers nomination, and the hostility is as palpable as the summer heat. (We already knew what everybody and their sister thinks about Summers.)
But it's clear that the President and his team really, really want Summers. Knowing the depth of the hostility -- and the many reasons for that hostility -- they've nevertheless floated one trial balloon after another: first that he was one of the leading candidates, then that he was neck-and-neck with Janet Yellen (Vice Chair of the Fed's Board) for the post. Now we're told he's the leading candidate.
They like him. They really like him.
That doesn't appear to be the majority opinion about someone whose personality is often described as " prickly." In fact, there are those who think that adjective's carrying one syllable too many for Summers.
In the week of another major economic address from the President, it's worth asking: What does this deep Love of Summers tell us about the White House and today's Democratic Party?
Summers of Love
Ezra Klein, whose White House sourcing is eminently reliable, has provided the launching pad for most of the Summers trial balloons. Klein and co-writer Evan Soltas stated unequivocally this morning that "President Obama wants Summers for Fed chair." That comment, like other Summers leaks issued through their blog, went uncontradicted by the Administration, providing further confirmation of their accuracy.
Barack Obama thinks Larry Summers is the right man for the job, and you can take that to the bank (sorry about the pun). What are we to infer from this information?
It certainly tells us that the President is very forgiving of Summers' flaws, which include his apparently shocking attitudes toward women, his spectacular failure to foresee the financial crisis, his pivotal role in deregulation, the many millions he's made from the same Wall Street bankers he'd have to regulate, and his long record as a bully to subordinates, peers, and colleagues.
Economically, that last defect may be the most frightening portent of all. Summers is known for hectoring and shouting down anyone who disagrees with him, and if there's one thing the economy needs right now it's new and dissenting voices proposing smarter and bolder policy alternatives. Encouraging those voices is precisely what Summers doesn't do, and that's a grave warning sign for Presidential policy.
To be clear, Summers is not a wild-eyed Visigoth on stimulus/investment or job creation. He holds a far more reasonable position on these issues than anyone on the Republican side. He's more reasonable than Tim Geithner, too.
What are the political implications of a Summers nomination?
In a word, bad. In 11 words: Democrats would be insane to let the President nominate Larry Summers. Why?