My Summers Vacation

So what did they talk about at that hastily called Congressional Democrat/Presidential caucus designed to eclipse Alan Grayson’s hearings on NSA spying during the last day before the August recess?

Why, what a swell guy Larry Summers is of course.

Obama defends Summers to congressional Democrats, says he’s not close to Fed chair decision

By Ed O’Keefe, David Nakamura and Paul Kane, Washington Post

Updated: Wednesday, July 31, 2:40 PM

In a tense exchange with Rep. Ed Perlmutter (D-Colo.) during a closed-door meeting with House Democrats, Obama defended Summers’ role in helping to restore the U.S. economy and “expressed frustration” with a growing negative campaign against him, according to one lawmaker who was present.

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The potential Summers nomination came up in separate meetings with both House and Senate Democrats, according to attendees. House Minority Leader Nancy Pelosi (D-Calif.) said Obama only discussed Summers when asked about the Fed selection process.

“It wasn’t really about Larry Summers – it was about how important this decision is, the ramifications of who the chairman of the Fed is and is there for a long time to come and recognizing that there are differing views in our caucus on the subject and how we go forward, but understanding that whoever the president chooses will be received with great respect by our caucus,” Pelosi told reporters.

Obama also faced questions about Summers during a more than hour-long session with Senate Democrats. According to one Democrat present, the president appeared to grow frustrated at the questions about Summers and Yellen. Obama described their ideological differences on economic policy as “paper thin,” the senator said, requesting anonymity to describe the president’s private discussion.

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White House press secretary Jay Carney later said Obama was defending Summers as a valued former member of his economic team that helped craft policy to help the nation recover from the Great Recession.

Obama defends Summers, tells Dems: Don’t believe everything in HuffPost

By Mike Lillis and Peter Schroeder, The Hill

07/31/13 01:31 PM ET

“He gave a full-throated defense of Larry Summers and his record in helping to save the economy in the dark days of ’09,” Rep. Gerry Connolly (D-Va.) said after the meeting. Obama, Connolly added, “felt that Larry had been badly treated by some on the left and in the press.”

Rep. Brad Sherman (D-Calif.) said Obama told the Democrats “not to believe everything you read in The Huffington Post,” a reference to the liberal website that’s been critical of Summers’s record.

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After Obama held a similar meeting with Senate Democrats, Senate Majority Leader Harry Reid (D-Nev.) acknowledged that Democrats have differing opinions about which candidate is best-suited to replace Bernanke. But he was quick to emphasize that the choice is ultimately Obama’s to make.

“That decision comes from the president,” Reid told reporters in the Capitol. “And whoever the president selects this caucus will be for that person.”

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Pelosi added she would ultimately back whomever the president selects. On Wednesday, Pelosi downplayed the Summers discussion.

“It wasn’t really about Larry Summers,” Pelosi told reporters after the meeting. “It was about how important this decision is, the ramifications of being chairman of the Fed will be there for a long time to come, recognizing that there are differing views in our caucus on the subject and how we go forward, but understanding that whoever the president chooses will be received with respect by our caucus.”

At the meeting, Obama also argued that “it’s unfair to criticize Summers for the fact that the stimulus bill wasn’t even larger, because who amongst us thinks that you could have passed a larger stimulus bill?” Sherman said.

Don’t send Summers to the Fed

Felix Salmon, Reuters

Jul 24, 2013 14:59 UTC

The arguments for Yellen are very strong; the arguments against Summers are strong; the arguments for Summers are weak; and the arguments against Yellen are all but nonexistent. (While there are lots of people who think that Summers should not be Fed chair, there’s pretty much no one who feels the same way about Yellen.)

As a result, if Obama picks Summers, it won’t be on the merits; instead, it will be on the grounds that Obama likes Summers, and is in awe of his intelligence. (Summers is, to put it mildly, not good at charming those he considers to be his inferiors, but he’s surprisingly excellent at cultivating people with real power.)

What’s more, the move would be a calculated snub to bien pensant opinion. Never mind the utter shambles that Summers made of Harvard, or the way he treated Cornel West, or his tone-deaf speech about women’s aptitude, or the pollution memo, or the Shleifer affair, or the way he shut down Brooksley Born at the CFTC, or his role in repealing Glass-Steagall, or his generally toxic combination of ego and temper – so long as POTUS likes Larry, and/or so long as Summers is good at working key Obama advisors like Geithner, Lew, and Rubin, that’s all that matters.

The choice of Summers would also be the clearest signal yet that Obama feels that he did what needed to be done to deal with the financial crisis, and that financial reform is, for the rest of his presidency, going to be a very low priority. Summers is a deregulator in his bones; he didn’t like the consumer-friendly parts of Dodd-Frank, and his actions have nearly always erred on the side of being far too friendly to Wall Street. He considers monetary policy to be largely irrelevant in a zero interest rate environment, and there is no chance whatsoever that he would take a robust leadership role with respect to the Fed’s other big job, which is regulation. If you want to repeat all of the Clinton-era mistakes of financial regulation, you can’t do better than appointing Clinton’s very own Treasury secretary.

Not Even Wall Street Wants Larry Summers at the Fed

By: Jon Walker, Firedog Lake

Monday July 29, 2013 7:59 am

One of the few potential justifications for President Obama picking Larry Summers to head the Federal Reserve, despite the strong opposition to him from many liberals, was that Wall Street preferred him. According to a CNBC poll, though, this is not the case. Summers is even less popular with Wall Street than he is with liberal bloggers and Democratic senators.

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It seems the only real qualification Summers has going for him is that Obama really likes him. He is not the most experienced, the best qualified, the most popular, the easiest to confirm or the politically smartest choice.

Yellen/Summers and the Twilight of the VSPs

Paul Krugman, The New York Times

July 31, 2013, 6:31 am

Whatever happens with the Fed succession – and boy, did Obama’s inner circle make a gratuitous mess of this one – it’s been one heck of a revealing episode, and not just because of the sexism on display, which started out with thinly-veiled talk of “gravitas” and eventually went into full-blown masculinity panic.

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Anyway, it’s also clear that Summers made some pretty big mistakes in his campaign. Neil Irwin points to his silence on monetary policy, which was supposed to be cagey but ended up looking slippery; John Cassidy points to his failure to offer any kind of mea culpa for past errors, which arguably was about preserving gravitas but ends up making him seem unreformed.

But why did Summers make these errors? In part because he is a whip-smart academic, the terror of the seminar room, who likes to play political operator – and as a political operator, he’s a great academic. But there is, I’d argue, a larger issue: Summers did not recognize the extent to which the political world has changed. He’s been carefully cultivating an image as a Very Serious Person, in a world where VSPness has gone from a source of cachet to being a liability on both right and left.

Think about it. Carefully cultivating a reputation for Seriousness does you no good on the right in a world where the Republican Party is more or less officially committed to crank economic doctrines, and where the GOP’s universally acknowledged intellectual leader is an obvious flimflam man.

Meanwhile, many if not all Democrats are well aware that the VSPs have been wrong about everything for the past decade or more, from the risks of financial deregulation to the fear of nonexistent bond vigilantes. Coming across as the return of Robert Rubin may have seemed savvy back in, say, 2008; it’s worse than useless now.

I suppose Summers might still get the job – but if so, it would be purely because the president is willing to spend a substantial amount of political capital on his behalf. The point is that behavior that was supposed to make Summers a safe choice has actually ended up making him unappealing to both sides.