I am always glad when President Obama gives a good populist speech on economic issues. Unlike many folks both on the left and right, I believe that speeches and words do matter, and I’d always rather have Obama framing the message in a populist way.
The irony, though, is that the hot rumor blazing through DC right now is that Larry Summers is about to be named as Obama’s pick for the Chair of the Federal Reserve. Larry Summers, the ultimate anti-populist. Larry Summers, the guy who helped pushed the bank deregulation bill that created these monstrous Too Big To Fail banks. If the rumor is true, well … wow, that is depressing. It is hard to imagine a worse pick politically for Obama than Larry Summers. There are so many reasons that this is the wrong pick for that job that I will run out of time to write them all long before I stop thinking of new reasons to list.
It’s not just that Summers is the poster child for banking deregulation. It’s actually the gender thing that has to top the list. The other leading candidate is achingly obvious: Janet Yellen is incredibly well-experienced, incredibly well-credentialed, and highly respected by policymakers and economists alike. And Obama is going to blow off this kind of woman, is going to blow off a perfect chance to make history by appointing the first woman Fed chief, so that he can appoint a man fired by Harvard for making sexist comments about women? Seriously, Mr. President?
And the quote is hardly the only time Summers is known for treating women with disrespect. There were his arrogant power plays against Brooksley Born in the 1990s, when she was right about regulating derivatives and Summers was dead wrong. There were multiple references in Ron Suskind’s book where he was described as being demeaning to women like Christina Romer. There is Sheila Bair’s book where she describes being repeatedly undermined by Summers. In fact, from my years in the Clinton administration and my friendships in Obama administration, I can tell you that I have yet to talk with a woman who has worked with Summers who has many good things to say about him.
I’d say gender politics are rather important for this President, who is only President because he has done well with women voters, and because he was able to energize so many women volunteers and donors. What does it do to your gender politics, Mr. President, to pick a man with Summers’ sexist history and reputation over a very well qualified, experienced, and respected woman?
Then there is this factor, which is a very big deal with Larry Summers: as one friend of mine who knows Summers well puts it, the first requirement for a Fed chief is that you always think before you speak, and Larry has proven he lacks this skill set. Markets have been known to react very quickly (and badly) to thoughtless remarks by Chairs of the Fed, the result meaning billions of dollars of wealth vanishing in a matter of hours, and Larry Summers has a history of saying and writing thoughtless things. Is this really the kind of person we want in this job?
There are plenty of other reasons this is bad idea for economic policy and political reasons, but what this choice boils down to is what kind of Fed Chief do we want? There is a very senior White House official who has been calling around to influential people in town advocating for Summers, and the big reason he says he is the right choice? That Summers will have the courage to say yes to Wall Street.
Let me repeat that: Summers will have the courage to say yes to Wall Street.
I guess because that sure did the trick for Alan Greenspan in the lead-up to the financial crisis? What is fundamentally wrong with America’s economy, the deepest source of our economic misery, is that way too many policy makers have had the “courage” to say yes to Wall Street. By deregulating the big banks, by not prosecuting the financial fraud that led to the 2008 collapse, by giving the biggest banks almost unlimited subsidies and bailouts, we have created an economy of, by, and for the top 1%, and it needs to change. Larry Summers is not that change. The “courage to say yes” statement only reinforces that this pick would be for all the wrong reasons.
Here’s the deal: Larry Summers was one of the central players over the last 20 years who made America’s economy what it is. From helping to push through the repeal of Glass-Steagall and other financial industry regulatory reform, to stopping Born from regulating derivatives, to the cautious pro-Wall Street, modest-stimulus policies of the early Obama years, Summers helped create an economy where financial crises happen, Too Big To Fail banks get bailed out and keep getting bigger, 90% of the wealth being created goes to the top 1%, wages keep getting eroded, and job creation is still moving way too slow. Larry Summers owns this economy, it is his baby, and do we really want the father of this warped economy picked as Fed Chief? The politics of that are just horrendous for the middle class that Obama continues to give speeches directed toward.
Larry Summers is the wrong guy for the wrong job at the wrong time. This pick is terrible politics and worse substance. Progressives and women’s groups will fight this tooth and nail, and any chance of the President looking like he is a fighter for the middle class on the economy will go up in smoke.