When Obama and Clinton were running for the Democratic nomination for president, I tended to side with Obama. The reason was not one I’ve heard anyone else mention. My fear was that Clinton would be another George W. Bush, just on the left. By that I mean that she would have been too insular. I thought that Obama would be more broad in where he looked for input. But that hasn’t been the case. Obama has been very insular. And when it comes to economic policy, it seems that the people he listens to are a group of New Democrat, pro-banking nitwits.
I’ve been thinking about this because of all the speculation about Larry Summers being nominated as Federal Reserve Chair. It isn’t that Summers would make a terrible choice for the job. I have big problems with him, especially his strong dollar policies (under and then following Robert Rubin) while he was in the Clinton administration. But there are far worse candidates for the job. The big problem is: why would Obama be so keen on Summers?
The answer, I think, is just that Obama’s insular economic decision making team is dominated by the kind of people who think that Larry Summers rocks. Obama could have just picked Janet Yellen, the current Vice Chairman of the Fed. She is extremely well qualified for the job and she is, as the pronoun indicates, a woman. Obama could have nominated arguably the best person for the job and also done something historic. Apparently, that didn’t matter. Or more likely, that didn’t even occur to Obama’s economic clique.
It’s pretty clear that a Summers nomination is not going to fly with most of the Democratic Party. As Dean Baker wrote, “There is a multi-count indictment that includes his support for the repeal of Glass-Steagall, his opposition to regulating derivatives, his notorious comment about women possibly lacking the ability for sophisticated mathematical reasoning, and his protection of the big banks in his years as President Obama’s National Economic Adviser.” And now a Senate Democratic leader told Talking Points Memo, “Given the level of opposition to Larry Summers within our caucus, confirming him would be a huge challenge and probably a pretty ugly process.”
But that doesn’t mean Obama won’t do it. In fact, he has often taken pride in thumbing his nose at the Democratic base. That’s how he got his New Democratic economic team in the first the place. Think what a Summers pick would mean, however. It would mean that Obama didn’t care about shoring up his base for the coming fights with the House Republicans. It would mean that he thought that Summers was so important that it trumped everything else going on in his second term. It would mean that he really didn’t care about his party.
I wonder if that’s not the case. After all, this talk about a Summers nomination has been festering. The White House could have leaked information to indicate that Summers isn’t in contention. Hell, they could have forced Summers to withdraw his name from consideration because he wanted to spend more time with his kids. But we haven’t heard a peep. And remember: that wasn’t the case with Susan Rice. So I think it is possible that Obama is still thinking he can ram Summers through as the Fed chair. It isn’t hard to believe. Generally, Janet Yellen is seen as a fiscal dove who isn’t obsessed with inflation. And in Obama’s insular economic club, that may disqualify her.
Update (30 July 2013 2:34 pm)
Matt Yglesias sent me to a Bloomberg View article by Albert Hunt, Could Geithner End Up the Next Fed Chairman? The important bit of the article is what people in the Summers camp are saying about Yellen, “No one doubts Yellen’s credentials as an economist, but questions have been raised, mainly by those in the Summers camp, about whether she has the gravitas to manage a financial crisis.” As Yglesias notes, it is hard to see this as anything except pure sexism.
I will go Yglesias one further: if Obama decides to pick Geithner as Fed chair, it will be an even more sexist pick. Then it won’t be a matter of thinking that Summers just has some great ability that no one else has. It will be that Obama just doesn’t want to pick Yellen. And what reason could there be for that? After all, no one doubts Yellen’s credentials as an economist. What else could it be? (Also: Geithner is a little weasel; who could think that he has “gravitas”?)