Bailout

Summers clams up

By Felix Salmon

Caren Bohan has a 3,500-word profile of Larry Summers, in which she gets a lot of Washington insiders to talk about him on the record. The one person who doesn’t do much in the way of talking is Summers himself, who gets quoted all of three times; none of the quotes contains anything substantive. “If you want to do a profile, fine”, he seems to be saying. “Just don’t expect me to say anything”.

But now seems to be the time when key members of the administration’s economic team need to decide whether they’re staying or going — and a clear statement from Summers that he wants to stay is conspicuous by its absence. Last month, David Warsh laid out all the good reasons for him not to. For one thing, according to Harvard’s academic leave policy, Summers needs to return by January 2011. If he doesn’t he’ll lose his coveted position as University Professor — complete with complete freedom as to what and where he teaches, plus the ability to work one day a week for DE Shaw or anybody else, for which he could probably easily continue to pull down somewhere in the region of $8 million a year.

It’s also now clear that Obama will never give Summers either of the jobs he really wants: Treasury Secretary or Fed Chairman. So he’ll have to make do with his ill-defined current role, which gives him lots of face time with a president he genuinely admires. It’s hard to say no to Obama, but Summers is more than capable of making his dissatisfaction known within the administration when he doesn’t get his way:

First, according to informed sources, Summers asked to play golf with the president, which he did four weeks later on September 27. The economic adviser also huffed that he desired Cabinet status, an upgrade that Emanuel granted. Summers got walk-in privileges to Cabinet and other high-level meetings, for example, and he strode among the Cabinet officers who witnessed Obama’s State of the Union address. In addition, the former Harvard University president sought a personal car and driver, which happens to be a privilege that the head of the nation’s central bank enjoys. The chief of staff initially said yes, only to discover that that perk simply does not exist in the White House.

The job of the White House economic team has changed, now: we’re out of the immediate-crisis zone, and into the long hard slog back towards a world of lower deficits and economic growth driven by the private sector rather than by government. It’s painful, unrewarding work. My guess is that Summers will continue to do it if Obama manages to butter him up enough — but that for the time being he’s keeping his options open.

Full post as published by Macroprudential on June 24, 2010 (boomark / email).