Larry Summers to be Treasury Secretary?

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Everyone who speculates on President-Elect Obama’s most likely choice for Secretary of the Treasury has the same two names:    Larry Summers and Tim Geithner.   I have known them for a long time, and worked with both in the Clinton Administration.   Either one would be excellent.   As a result of some public opposition to Summers, Geithner has now pulled far ahead according to the Intrade odds: 45% to 27% as of November 14.    But if I were to place a bet at these odds, it would be that Obama will go with Summers.   For one thing, Geithner is needed at the New York Fed, where he has been one of the key players managing the financial crisis.

 

 

Geithner and Summers are both said to have baggage that might disqualify them.   I disagree.   Some say Geithner is tarred by association with the Bush Administration, because he has been working with it on the crisis.    But his position is non-partisan, and some continuity in managing this crisis is desirable.   More to the point, it was in the Clinton Administration (under Larry Summers) that Geithner rose from obscurity to prominence.    Some say that the President-elect should not choose either of the two, precisely because they are associated with the Clinton Administration, whereas Obama campaigned for change.   But that is the most absurd argument of all.   We need somebody experienced in the Treasury job, above all at a time such as now.  The sort of competence these two showed at the 1993-2001 Treasury, especially at crisis management, and the track record of that Administration, is what we want to change to, not what we want to change from.    All the economic indicators improved during the Clinton Administration, as surely as they have worsened since then:  employment, growth, inflation, budget balance, poverty, and so on.  They have the sort of baggage we want a Secretary of the Treasury to carry !

 

Most sensationally, Summers is said to be tainted by his time as President of Harvard.    Too much has already been said about this.   But I will make just a couple of observations.    First, although Summers may not be Mr. Personality, and he will never be elected to high office nor chosen to head offices for women’s rights or the environment, he has all the most important qualities for the Treasury job.   Despite a tendency to say what he thinks, I don’t think he committed any true faux pas or became involved in any mini-scandals during 8 years in the government — no easy feat.   (The closest he came to a faux pas, or what counts for one in the media, was a statement that the argument that was then being made for abolition of the estate tax was based on greed alone rather than efficiency.   He quickly retracted the statement without bothering to try to explain what he had meant, having already by then become familiar with the rules of political brouhahas.)    In his time in Washington, he learned how to get along with politicians across the spectrum, from socialists to the far right.   It’s true that he wasn’t able subsequently to get along with the full range of faculty in the Harvard English Department, but that is a tougher task.  

 

Finally, I continue to be surprised at how the press describes Summers’ ill-fated and ill-considered (but “off the record”) remarks regarding explanations for the lack of women in academic science departments.  He is most often reported as having suggested that women generally have less aptitude for science than men.   Memories of these remarks in some quarters probably accounts for the recent decline of Summers in the betting odds, though he also has defenders among women with whom he has worked.   I link to the text of what he actually said here,  and urge readers to make up their minds for themselves.   But I don’t read his speculative remarks about the various hypotheses quite the way most people have assumed.   To me the most outrageous line in the remarks was, rather, the suggestion (made to illustrate the penalities for being out of the academic workforce for a couple of years) “that no economist who had gone to work at the President’s Council of Economic Advisers for two years had done highly important academic work after they returned” !  

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