There is a strong chance that Lawrence Summers is going to be returned to the post of Secretary of the Treasury. If so, he’s pulling a “Donald Rumsfeld” who served as Secretary of Defense twice — the first stint under Gerald Ford and then of course under George W. Bush.
Others in the running for the post first held by Alexander Hamilton are New York Fed Chief and Summers protege, Timothy Geithner. Former Fed Chairman Paul Volcker is on the list. Interestingly, many on the political left are making the case for former Bob Dole staffer and FDIC chief Sheila Bair, who has in the eyes of many performed brilliantly in organizing an FDIC response on the housing crisis. Laura D’Andrea Tyson is not much discussed in the news but has become close to Obama and would be a solid choice. New Jersey Governor and former Goldman Sachs executive Jon Corzine is also on the list and is the enthusiastic preference of the labor community.
I think that there are more and even better choices. Among the frontrunners, I’d prefer Geithner, Tyson, or Corzine.
Tim Geithner who is the smartest, most unassuming financial markets technician among the lot. Geithner is probably the closest thing we have to a modern version of John Maynard Keynes. I also like Laura Tyson who I think could be useful in launching a campaign of “Tysonomics” which values some elements of industrial policy in a national economic plan vs the manic neoliberalism of “Rubinomics.” Finally, Corzine — who understands better than the other contenders that America’s social contract at home must be dramatically changed — would be a fantastic choice. His only blemish is that he worked for Goldman Sachs — though I think Corzine thinks that was the low point of his working career and wishes he hadn’t spent much time there.
Rumor has it (unconfirmed) that Summers recently had dinner with Gloria Steinem as part of an image repair strategy. Summers has also been reaching out to many economists on the left who generally opposed the manic neoliberal vector that former Treasury Secretary Robert Rubin and Summers had put the nation on during Bill Clinton’s presidency.
I have been surprised about the quick rehabilitation of Summers in Obama Land — particularly given Obama’s promises to the labor community and his strident position during the campaign against the kind of trade deals that Summers and Rubin promoted.
If he is appointed over Geithner, Tyson, and others — we need to quickly get a sense of whether or not the economic views of Summers have changed. Can he embrace a smarter version of globalization than he helped create? Can he help promote an alternative to the winner takes all capitalism that Summers helped to reify and which made people like Robert Rubin mega-wealthy? Can he embrace a genuine re-write of the American social contract that pushes forward the rights and position of labor? Can he abandon the fiscally conservative ideology of the Brookings Institution’s Hamilton Project that he and Rubin helped hatch?
We need to know the answers to these questions. I find it strange that Obama is seriously considering someone whose previous work and profile is so at odds with the goals Obama has proffered in his campaign. If Summers is appointed, we have to hope that he is not the Summers we knew eight years ago.
Larry will have to prove to us that he is different. He will have to prove to us that he is not the harbinger of Clinton Term III.
I spoke to one of the world’s leading, successful financiers Tuesday night who told me he prefers Summers to Geithner at Treasury. But I countered that Larry Summers will probably continue his work as one of Bob Rubin’s chief acolytes — and Rubinism is one of the chief reasons that this economy has been trampling the Middle Class and labor in favor of the super-wealthy financial elite. This financier told me that Rubin and Summers are quite different in fact but few knew of the tensions between them. I told him I’d love to hear more about that as it could help me appreciate Summers more than I do now.
I will keep an open mind, but we are beginning to see trends that if Obama does bring back Summers — and possibly keeps Gates at Defense — that he is not ready to make the first term of an Obama administration about the new great leaps forward we need. He may be crafting a hybrid of Bill Clinton and George W. Bush holdovers.
Indeed, there is a chance that Obama I could turn out to be GW Bush III & Clinton III.
– Steve Clemons