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May 23, 2010
David Warsh, Proprietor


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Is Summers Headed Home?

Though as a journalist I have been right far more often than I have been wrong about Lawrence Summers in the nearly thirty years that I have followed his career, I have occasionally misjudged him. For example, I argued that he’d be a good president of Harvard University.

Last year I speculated that he’d be a short-timer once it became clear that President Obama wasn’t about to appoint him chairman of the Federal Reserve Board or Treasury Secretary. After the in-house jostling calmed down and Summers remained director of the National Economic Council, I rehearsed the opportunities that would be available to him as a powerbroker if he remained in Washington, and hoped he would remain a well-trammeled and successful adviser to the president for many years to come

 It now seems more likely that he’ll be headed home to Harvard in the winter.

True, that’s not what people are saying.

Take the Financial Times Analysis by Edward Luce last week – a generally sound appraisal of the prospects of the five-member team with whom the president  meets for around 45 minutes most mornings – Summers,  Treasury Secretary Timothy Geithner, Council of Economic Advisers chair Christina Romer, budget chief Peter Orszag, and Jared Bernstein, economic adviser to vice president Joe Biden.

“All the signs are the President wants to keep the team he has,” wrote Luce, who ten years ago wrote speeches for a year for then-Treasury Secretary Summers. “In spite of his ebullient style Mr. Summers… is highly valued by the president,” and, towards the end of his article, he continued, “Mr. Summers himself sounds as though he is digging in his heels…. As the saying goes, Mr. Summers serves at the President’s pleasure. For the time being, that pleasure appears to be mutual.”

Then there was The Wall Street Journal story a month ago by Jonathan Weisman, under the headline Obama Prods Economic Team To Stay (subscription required). “President Barack Obama, trying to head off a staff exodus after the November elections, has been pressing members of his economic team to stay until the economy is on a stronger footing,” the article began, attributing the news to “Democratic officials.”

For now, Weisman continued, “Two top economic-team members once seen as on their way out appear to be staying put.” Treasury Secretary Geithner had survived early criticism to be strengthened by his handling of the financial overhaul. And Summers, “who also absorbed heavy criticism and who was anxious to rejoin the private sector, will remain to navigate a brewing tax fight, officials said.”

Even the National Economic Council website treats Harvard as so much history. It states, “Dr. Summers was the Charles W. Eliot University Professor at Harvard University until January 2009” (emphasis added). 

That much, at least, is the equivalent of a head fake.  As for the news stories,  Luce and Weisman might have mentioned Harvard University’s academic leave policy, which requires Summers to be back in Cambridge in January 2011 if he wants to keep his faculty appointment. 

Other universities are less strict. Massachusetts Institute of Technology sources say, for example, that Olivier Blanchard has obtained permission to remain a third year as chief economist at the International Monetary Fund.

Harvard, however, has a record of allowing no exceptions to the two-year rule, at least since Henry Kissinger’s battles with University Hall.

So what’s going on here? Why the stories?

Defense is one possibility. Who wants to be seen as a lame duck while there are eight months to go on the clock – including the mid-term-elections? Offense is equally likely. No doubt the president would like to keep his chief economic adviser for another eighteen months.  Perhaps the administration is lobbying Harvard.

Summers’ other opportunities weigh in the balance: a successful marriage to Harvard English professor Elisa New (between them they have six children, all from previous marriages); the prerogatives that come with being one of Harvard’s fewer than twenty university professors, including the freedom to teach precisely what and where he wishes (or not at all); membership on the executive committee of an economics department that is one of the three or four best in the nation; and, of course, the famous day-a-week of consulting time that Harvard professors are permitted to spend in the moneyed world.

Check it out? Journalists do funny things to test their intuitions, it’s true. Even though I once peered through the windows of the Francis Avenue home then owned by Maxwell Kennedy, one of Robert F. Kennedy’s children, to see if he was living in it, in a season when he was thinking of running for Congress to replace his brother Joe (he wasn’t, and didn’t), I am not inclined to gather information about the office suites at the Harvard Kennedy School of Government and Harvard Business School where Summers has hung his hats.

Instead I looked at Kissinger clips the other day. The famous Harvard professor went to Washington with the Nixon administration in January 1969.  He resigned in January 1971, but the government department promised to refrain from filling his post before the end of Nixon’s first term. When he didn’t return, the department looked elsewhere. Kissinger became Secretary of State instead.  In 1963 John Kenneth Galbraith was permited to remain an extra five months in Dehli as ambassador to India because a border war with China had begun.  When Edwin O. Reischauer resigned in order to remain US ambassador to Japan 1961-1966, Nathan Pusey exercised his prerogative as Harvard’s president to hire him back as a university professor.   

That kind of forbearance is not, I think, in the cards for Summers – university professor or not. For various reasons, the jobs at Treasury and the Fed have been filled. “Larry” more nearly resembles another one-named economist, “Marty” – his mentor, Martin Feldstein, who also returned to a happy 25 years at Harvard after two tumultuous years as chief adviser to President Ronald Reagan during the second half of his first term. Summers could write the general interest book he has long contemplated.

Like everything else, it will come clear in due course. But where’s the fun in that?

.                                           xxx

The FT’s Luce had a good week last week. In the shrewdest pre-election story I have seen – Obama Must Learn Reagan Lessons to Pass Jobs Test – he noted the widespread expectation that the Republican Party would ring up landslide victories in the fall, led by Tea Party candidates. He wrote:

[T]he elections of 1982 – which was Ronald Reagan’s first mid-term ordeal – rather than 1994, may offer a more salient comparison to today. Then, like now, unemployment was running at historic post-war highs – 10.8 per cent was the Reagan era peak, compared to 9.9 per cent so far in 2010. Yet Mr. Reagan managed to contain the Republican Party losses to 27 seats in the House of Representatives and just one in the Senate.  If Mr. Obama could engineer a similar result this November, it would be considered something of a triumph.

I don’t know anyone more helpful for understanding the strange dynamic that has overtaken the Republican Party than Bruce Bartlett, columnist and author of  Imposter: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy and The New American Economy: The Failure of Reaganomics and a New Way Forward

Bartlett has seen it all. He started his political life in the mid 1970s as a Congressional aide, first to Rep. Ron Paul (R-Tex.) and later to Jack Kemp(R-NY), becoming a pro-growth “supply-sider.” He served in the Treasury Department in the Reagan administration. Afterwards, he worked for populist ideologue Jude Wanniski for a time, before making peace with the social safety net (like Reagan himself). He gradually repositioned himself as a fiscal conservative, serving again in the Treasury under George H.W. Bush. He writes a regular column for Forbes and participates in a Washington blog.

“In the end,” Bartlett writes at the end of The New American Economy, “the welfare state is not going away, and it will be paid for one way or the other. The sooner Republicans accept the fact, the sooner they will regain political power.”  

Time is not on the Tea Party’s side.

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