Larry Summers, an economic advisor in the Obama administration, watches as U.S. President Barack Obama and Vice President Joe Biden speak in the East Room of the White House in Washington, January 30, 2009.
Credit: Reuters/Jason Reed
WASHINGTON (Reuters) - Blunt, brash, brainy and occasionally self-mocking. Larry Summers, the White House economic adviser, is all of these things. In a career spanning academia, government and finance, he has rubbed some people the wrong way and infuriated others.
So when President Barack Obama named him director of the National Economic Council, skeptics could be forgiven for wondering how Summers would fit in with the "No Drama Obama" management style. Eighteen months later, the question persists.
But on the eve of a key G20 meeting, Summers appears comfortable with his role in tackling the world's Hydra-like economic problems.
Sitting in a wingback chair in his office overlooking the White House Rose Garden, the 55-year-old former Treasury Secretary said he has worked to soften some of his rougher edges. He acknowledges he is still "maybe a little blunter than would sometimes be ideal."
That may be an understatement.
Debates within Obama's economic team can approach a World Wrestling Federation smackdown. In stories leaked to the press, Summers has been accused of shutting key people out of meetings, including Paul Volcker, Council of Economic Advisers Chairman Christina Romer and CEA member Austan Goolsbee.
In his book, "The Promise: President Obama, Year One," Jonathan Alter describes an especially heated exchange between Summers and Romer. "Don't you threaten me!" Summers blurted at Romer, who shot back: "Don't you bully me!"
Such reports have helped to fuel speculation about Summers' clout within the administration. His past foibles and successes have made him a particularly intriguing figure in Washington's favorite parlor game of guessing who's up and who's down.
Is he likely to leave the administration, as some bloggers suggest, or is he going to stay on for a while, as many close associates now insist?
Is he losing sway to people like Timothy Geithner, the current Treasury secretary, or to Volcker, the former Federal Reserve chairman and an outside adviser to Obama?
"The conventional wisdom seems to be that Summers' power has faded somewhat as Geithner has burnished his image and Volcker has taken on more prominence," said Stephen Stanley, chief economist at Pierpont Securities. "He has generally been much lower profile in 2010 than in 2009."
But that view fails to take into account the breadth of Summers' portfolio within the White House, not to mention the amount of face time he has with Obama.
The reality is that, as the administration grapples with a host of prickly economic issues -- financial reform, soaring budget deficits, high unemployment, a fragile U.S. recovery, Europe's monstrous debt crisis -- Summers' influence remains undiminished, according to many insiders.
He leads a daily economic briefing for the president most mornings and weighs in on a plethora of issues, from international economics and financial regulation to healthcare and energy policy.
His position at the NEC, though, is far more of a behind-the-scenes role than his old job at the helm of Treasury. He has been selective about his public appearances. When he gives interviews or speeches, he measures his words carefully, a caution he seems to have mastered after hard lessons.
The Obama administration is also especially careful to reserve the role of economic spokesman for Geithner, who had a rocky debut stemming from issues with his personal taxes that surfaced at his confirmation hearings and, later, a botched initial rollout of Treasury's plan to stabilize the banks.
But that suits Summers just fine.
TOO CLOSE TO WALL STREET?
As a senior figure at Treasury during all eight years of President Bill Clinton's administration, Summers is credited with policies that helped to fuel the '90s economic boom and record budget surpluses.
Working alongside former Treasury Secretary Robert Rubin, he was seen as the intellectual force behind interventions that helped to quell major financial crises, including turmoil in Mexico, Russia, Asia and the collapse of the giant hedge fund Long-Term Capital Management.
In 1999, his role as a financial firefighter helped to land him on the cover of Time magazine, where he was hailed along with Rubin and former Federal Reserve Chairman Alan Greenspan as part of a "Committee to Save the World."
But Summers, who eventually succeeded Rubin as Treasury secretary, is also closely associated with the broad financial deregulation passed under his watch. As a result, he has been vilified by some on the left as too close to Wall Street.
Then there was his stormy five-year tenure as president of Harvard University. He had disputes with some faculty members and sparked a firestorm after raising the question in an academic discussion of whether differences in aptitude contributed to the underrepresentation of women in top careers in science and engineering.
The controversies led to his resignation in 2006. He was later hired by the hedge fund D.E. Shaw and began writing a column for the Financial Times while continuing to teach at Harvard.
But Washington would soon beckon again.
BACK IN THE FRAY
The story of how Summers came to work for Obama goes back to late July 2008, when storm clouds were gathering over the financial markets less than two months before Lehman Brothers imploded.
Having clinched the Democratic nomination after a bruising primary battle with Hillary Clinton, Obama had just returned from a weeklong trip to the Middle East and Europe. Worried about turmoil at mortgage finance giants Fannie Mae and Freddie Mac, Obama's then small group of economic advisers sought to broaden their circle.
Rubin, Volcker and investor Warren Buffett attended the gathering at the Omni Shoreham hotel in Washington, along with Summers, who had remained neutral during the primary. Summers, who had been warning in his FT column and some speeches about the dangers of the building crisis, made an impression on Obama for his ability to distill the comments around the table and frame the issues.
The campaign began reaching out to him to participate in a series of conference calls, which occurred often daily in the aftermath of Lehman's collapse. Summers was frequently asked to open the calls. As the market crisis worsened, he had conversations with then Treasury Secretary Henry Paulson and advised the campaign to seek flexibility in the structure of the financial rescue package that was taking shape.
Summers dove into policy mode. "It's in his blood," said Jason Furman, his deputy at NEC, who during the campaign was the point person for coordinating economic advice for Obama.
When Obama was elected and was preparing to choose a Treasury secretary, Summers was seen as a leading candidate for the job. It went instead to his protege, Geithner, then the president of the Federal Reserve Bank of New York.
Summers was offered NEC instead. Friends of both men say this led to some initial awkwardness in the relationship but that they seem to have moved past it.
NO SHRINKING VIOLETS
Summers is hardly the only strong personality on Obama's economic team and within the top ranks of the White House. Romer, Goolsbee, Geithner, Volcker and White House budget director Peter Orszag are not shy about expressing their views in closed-door meetings. Nor do any of them hesitate to challenge Summers if they disagree with him.
On the political side, Rahm Emanuel is nicknamed "Rahmbo" for his hard-charging style. David Axelrod, senior adviser to Obama, has a lower-key manner but is not one to hold back his opinions.
There will be some changes on the economic team soon. By many accounts they have nothing to do with personality clashes but rather are part of the turnover that often occurs in administration's around the two-year mark.
Orszag plans to leave in July. There could be other departures, too, but contrary to some reports, Summers isn't going anywhere, say his associates.
Goolsbee said that given the gravity of the issues the economic team has had to confront, it's not surprising there have been debates. "We faced borderline catastrophic crises in the housing market, financial markets, the job market, the macroeconomy and several others," he said. "Things had to be done with a kind of speed that just ripped up the normal playbook of Washington."
Jared Bernstein, who participates in the economic briefings as the chief economic adviser to Vice President Joseph Biden, said Obama is not only comfortable with the vigorous debate on the economic team, "he kind of insists on it. The thing Obama doesn't like is if he feels like he's not being given the full picture and all sides of an argument."
Bernstein said economic meetings aren't always contentious and that there are some lighter moments. "There's a lot of joking about how wonky we all can be," he said, noting that Axelrod and the other political advisers poke fun at the pointy-headed tendencies of the economists. "Guilty as charged," Bernstein said.
Yet, Summers still stands out in this crowd.
Like many academics, he's a night owl who stays up reading. NEC meetings are sometimes convened as late as 10:30 p.m. and his staff are never surprised to receive emails from him at odd hours like 1 a.m.
He often runs late, regularly showing up for chief of staff Rahm Emanuel's 7:30 a.m. morning staff meeting at 8 a.m. He keeps a refrigerator of Diet Cokes in his office and drinks them throughout the day. In a few instances, he has dozed off in meetings.
During the '90s, reporters frequently contrasted the heavyset, slightly rumpled Summers with the fit and impeccably groomed Rubin. A similar contrast exists between the lean Obama, who rises at 6 a.m. every morning to work out, and Summers, who can be fiercely competitive at his hobby of tennis but jokes that his game is pretty good by a "physique-adjusted" measure.
Both Obama and Summers are Ivy League-educated, cerebral and gravitate toward big-picture ideas. "There's a respect there between them," Axelrod said. "(Obama) has no problem challenging Larry and Larry accepts the president, not just as a president, but I think as an intellectual peer. The president gets this stuff at a very high level and when Larry makes a presentation the president always has some pretty penetrating questions for him."
Summers presents Obama with scenarios, said White House deputy communications director Jen Psaki. "What will happen if we do X? What will happen if we do Y? What will happen if we do Z? Here's the answer to the seventh question you will ask."
Obama likes to look at issues from all angles and during meetings will sometimes zero in on the person in the room who has said the least. He will try to draw that person out to make sure he hears from a variety of perspectives.
Read Full Article »